1. Special Report!
Mexico
Investment opportunities

2. Aerospace Industry in Mexico
Aerospace companies are streaming to Mexico, drawn by lower wages,
enthusias9c government promo9on, a new safety agreement with the
United States and an increasingly sophis9cated workforce.
Mexico's aerospace‐related exports have more than tripled since 2004,
from $146.2 million to $683.2 million last year, and exports are
accelera9ng quickly as manufacturers move into big‐9cket items like
tails and fuselages. One aircraL maker, Canada's Bombardier Inc., says
it hopes to eventually assemble complete jets in Mexico.
At Bombardier, new assembly workers earn 6,000 pesos a month, or about
$560, according to plant manager Michael McAdoo. That's about $3.50 an
hour. Engineers can earn $925 to $1,390 a month, according to a
Bombardier job ad. That's $5.80 to $8.70 an hour.The lower costs have
translated into a 30 percent savings on parts made here, even aLer the
added transporta9on costs, Gervais said.

3. Aerospace Facts
• Aernnova, a Spanish firm that makes wings, tails and other sec9ons for
Boeing, Airbus, Embraer and others. It is building an $84 million plant in
Querétaro.
• Cessna AircraL Co. and Hawker BeechcraL Corp., both makers of business
jets, which have both moved subassembly work from their Wichita plants
to new factories in the northern city of Chihuahua since 2006.
• MD Helicopters, based in Mesa, which began making fuselages near
Monterrey in 2006.
• Goodrich Corp., which s building a 350,000‐square‐foot factory in Mexicali
to make engine nacelles for the Boeing 787 Dreamliner. The Charlo]e,
N.C., company makes aircraL interiors and engine parts in Arizona.

4. U.S. – MEXICO TRADE
U.S. Trade Balance with Mexico (Millions 2009 U.S. Top Trading Partners (Goods, % of Total
18.0%
200,000 of USD) 16.4% Trade)
151,220
133,722 135,918 128,998 16.0%
150,000 120,248 14.0%
100,000 14.0%
11.7%
50,000 12.0%
0 10.0%
2005 2006 2007 2008 2009
‐50,000 8.0%
5.6%
‐100,000 6.0%
4.4%
3.6%
‐150,000 4.0%
2.3% 1.9%
‐170,109 1.8% 1.8% 1.5% 1.5% 1.4%
‐200,000 ‐176,537 2.0%
‐198,253
‐210,714 ‐215,942
‐250,000 0.0%
Exports Imports Balance Canada China Mexico Japan
Germany United Kingdom France Netherlands
Taiwan Brazil Italy Singapore
SOURCE: U.S. Census Bureau, Foreign Trade Division, Data Dissemina<on Branch, India
Washington, D.C.
SOURCE: FTD WebMaster, Foreign Trade Division, U.S. Census Bureau, Washington,
NOTE: All figures are in millions of U.S. dollars, and not seasonally adjusted unless
otherwise specified. D.C.

5. Large labor component
Mexico has significant labor cost advantage over US
China's edge over Mexico in labor costs expected to shrink in coming years
China's labor rate to increase faster Peso sharp devalua9on also reducing
than Mexico's China's cost advantage
US$ per hour CAGR
(02 ‐10E) Indexed exchange rate1
Mexico 2%
USD per Yuan
China 18%
Mexico rate 2x China's
today, but expected
~1.2x in 2010 USD per peso
0
2002 2004 2006 2008E 2010E
US rate
21.6 23.1 23.8 25.6 27.3
($/hr)
Labor economics and Yuan apprecia9on quickly
eroding China's cost advantage
1. Indexed to January 1, 2007 exchange rate (MX$ 10.82 = US$ 1; CH$ 7.81 = US$ 1)
Note: Manufacturing labor rate
Source: The Economist Intelligence Unit; Interna9onal Labor Organiza9on; FX History, Oanda Corpora9on; BCG analysis

6. Significant logis9cs costs
Mexico's advantage greatest for high volume-to-weight
ratio products where freight costs are significant
Mexico's advantage in bulky products Cost of producing a refrigerator
Considerable por9on of global trade consists of high US$
volume‐to‐weight ra9o items (i.e. bulky) ‐8%
Shipping for these products represents a sizable
307
component of retail price 283
Freight costs
Freight differen9als can outweigh higher labor cost rates Labor
"As [U.S.] retail prices begin falling towards $600 [per PC
unit], the cost of logis9cs involved will put Mexico back on
the map" Other1
– Peter Wiegandt, Dell La9n America
China Mexico
Key will be to find cheapest labor force within
reasonable shipping distance to final market
1. Raw materials, deprecia9on, electricity, tariffs
Note: Assumes 4 hours of labor per unit
Source: Press and web research, BCG analysis

8. Commercially connected with 75% of the
GDP, 44 countries through it's free trade
agreements.

9. Why Mexico?

11. Doing business in Mexico
Industry Clusters Policy
CHIHUAHUA AutomoWve final
assembly locaWon
FORD (MOTORES)
MEXICALI SONORA CHIHUAHUA
map
KENWORTH
(CAMIONES)
COAHUILA RAMOS
ARIZPE G.M.
(AUTOS & UV)
GARCIA
INTERNATIONAL (CAMIONES)
NUEVO
LEON
DURANGO DAIMLERCHRYSLER (AUTOBUSES)
FORD HERMOSILLO TAMPS.
G.M.
(AUTOS) (AUTOS)
ZACATECAS S.L.P.
SCANIA
SALTILLO S.L.P.
(CAMIONES)
(MOTORES & UV) AGS.
CD. SAHAGUN DINA
GTO. (CAMIONES)
NISSAN QRO.
YUCATAN
(AUTOS & MOTORES) HIDALGO CUAUTITLAN FORD
AGS. JALISCO (AUTOS& UV)
MEX.
HONDA TLAX.
COLIMA
MICHOACAN
CAMPECHE
GUADALAJARA MOR.
PUEBLA
GM (UV) SILAO TABASCO
GM MICHOACAN GUERRERO
(PRUEBAS) G.M. (MOTORES) TOLUCA OAXACA
CHIAPAS
DAIMLERCHRYSLER (AUTOS & UV) TOLUCA
DAIMLERCHRYSLER (CAMIONES)
TOLUCA PUEBLA V.W.
BMW (AUTOS)
MASA (CAMIONES) TULTITLAN NISSAN CIVAC (AUTOS & MOTORES)
TOLUCA (AUTOS & UV)
VOLVO (CAMIONES)

12. Geographic LocaWon of Electronics
Industry
TIJUANA MEXICALI SONORA JUÁREZ CHIHUAHUA
Sanyo Sony  Alcatel Toshiba Foxconn TORREÓN
Sony  Mitsubishi Motorola Philips Honeywell
Hitachi LG Volex Thomson  Altec  Thomson
Matsushita Thomson  Molex Kenwood  Jabil
JVC  King Cord Mex  AMP Asus  SMTC
Samsung  BenQ  Amphenol Keytronics
Pionner Tatung
Mitsubishi Lite on Enlight REYNOSA
Sharp Elamex
Delta Plexus  Philips
Ichia ECMM Sony
MONTERREY Jabil
Merry Tech Elcoteq
Wistron  Delphi Celestica
 Pionner  Nokia
Display Orion
 Kodak  Lucent Technologies
Amphenol
 SCI – Sanmina  Fujitsu
ADI Systems
 Celestica  Condura
Philips  Elcoteq
Kyocera  Delnosa
 AFL  Delco
Rectificadores Intern.
 Nippon Denso  Matsushita
Vigobyte GUADALAJARA  Axa Yazaki  Delphi
Bourns
Bose  IBM  Keytronics
Skyworks  HP  Tyco
Panasonic  Nec
Kodak  Lucent Technologies
 Delphi  Kodak
 Siemens
AGUASCALIENTES CANCÚN
 MTI Electronics
 Solectron Méx.  White Westinghouse  Vitelcom
 Flextronics  Texas Inst. CUERNAVACA
 Jabil Circuit  Xerox
 Audio & video  SCI Sanmina  Siemens  Nec
 ECMM EDO. MÉXICO
 Home Appliance  Flextronics
 Benchmark  Volex
 Computer  Ericsson
 Telecommmunications  Technicolor  Alcatel
 Pantech
 Automotive  Universal Scientific
 Motorola  AMP
 CEM  Sony
 Cumex QUERÉTARO
 Foto & impresion  Scientific Atlanta
 Others Clarion  Olimpia
Siemens

13. Renewable sources of energy are one of the greatest goals of the
energy sector in Mexico.
The use of renewable sources of energy in 7071 PJ = 1155.4 Mbp
Mexico represents 10% of the total
primary energy consump9on. Oil
The greatest poten9als for the country
come from hydro, biomass, geothermal
and wind.
Coal Nuclear
The PNI sets the target to have 25% of our
total power capacity on renewable
sources of energy.
Geothermal
Hydro Bagasse Wood
Source: PNI, and Sener: “Balance nacional de energía 2006” PJ: Petajoules; Mbp: million barrels of oil

14. Aerospace industry

15. Contact
Boston
711 Atlantic Av.
Boston, MA 02111
T. 617.275.8960
F. 617.292.2300