• AMT

International News From the Field: Mexico, Brazil, and Latin America

Updated: Oct 13

The industrial countries of the Americas south of the United States are rebounding at a surprising rate. Mexico is seeing major investments in the automotive supply chain, electronics, solar power, and more. Brazil’s industrial PMI is nearing 65, one of the strongest in the world. The global demand for copper has Chile planning for billions of dollars of investments, and Colombia is poised to become a major benefactor of nearshoring in the construction equipment, automotive, chemical, and metal working industries. For details and other tidbits, read on.

Mexico


For more information, contact Carlos Mortera (cmortera@AMTonline.org).

  • As a result of the trade disputes between China and the United States, Foxconn and Pegatron, Taiwanese manufacturers of electronics and primary suppliers to Apple, are evaluating potential plants in Mexico.

  • Investments in automation increased 72% between March and June in Latin America as a whole, mainly in the manufacturing and data-processing areas.

  • Daimay Automotive, an automotive interior technology company, invested $86 million in Coahuila.

  • This year, four of the main automotive OEMs in Mexico announced investments. Toyota announced an investment of $170 million to expand production of their Tacoma pickup truck in their Guanajuato plant. Ford invested $1 billion to modernize its Hermosillo plant and start producing the Bronco Sport SUV. Nissan invested $244 million to produce the eighth generation of its Sentra sedan. Volkswagen invested $600 million in its plant in Puebla for a new SUV.

  • The Chinese company Sunmetal announced a new plant in San Luis Potosí with an investment of $20 million. The company, a manufacturer of truck and trailer brakes, padlocks, and welded and pressed components, will generate 400 new jobs in the municipality of Zaragoza.

  • Enphase Energy, a California-based solar technology company, inaugurated a new production line in Guadalajara. During the Made in Mexico event held at the facilities of its business partner Flex, the company received a visit from the U.S. Ambassador to Mexico, Christopher Landau, who noted Enphase's investment in the country and celebrated the nearshoring of production from China to Mexico.

  • The value of Mexican exports increased 4.88% in August over July. This was the third consecutive month of increase. Imports increased as well by 7.01%. This was higher than the July increase of 4.07% and showed a strong upward trend according to the National Institute of Statistics and Geography.

  • July showed a 1.2% increase in auto parts exports to the United States. This was the first increase since the pandemic began. With total exports of $5.2 billion, Mexico was the main supplier to the United States, representing 45.2% of all auto part imports.

  • For the month of July, the Global Economic Activity Indicator (IGAE) posted a 5.69% increase from June. This was the second consecutive month with an increase and surpassed the production levels before the pandemic was declared in March.

  • Prime Wheel México announced a $70 million investment to expand their manufacturing facility in Tijuana, Baja California, where they produce aluminum wheels.

  • An undisclosed Chinese company plans to invest $150 million in Durango to assemble electric trucks

Brazil


For more information, contact Achilles Arbex (aarbex@AMTonline.org).

  • Brazilian industry is struggling due to a shortage of raw material such as iron and steel. The auto parts and automobile industries are pushing the steel industry to increase production levels so the recovery can be smooth and steady. Machine tool builders, given the low volumes, have been heavily affected. Automotive represents 24% of the total consumption of steel, while capital goods represents 20%.

  • Starrett, a Massachusetts-headquartered manufacturer with plants around the globe, confirmed a $10 million investment to expand production of hole saws and band saws. It is now making Brazil its sole manufacturing facility in the world for these two products. Hole and band saws represent 30% of Starrett’s total global revenue.

  • In 2018, Mercedes-Benz announced a $600 million investment to incorporate Industry 4.0 initiatives. Their resulting bus production line is now fully operational. Included was a $40 million investment in 3D-printing capabilities and major investments in automation and robots. With the improvements, the facility recorded a 12% increase in productivity, a 20% increase in logistics savings, and a 45% reduction of component inventory of components. They were also able to decrease delivery lead time from seven days to five days. Connectivity was a premise for the whole project. Brazil is the world’s third largest market for buses, and sixth largest for trucks.

  • Eaton is following Mercedes-Benz and getting its manufacturing facilities adjusted to the Industry 4.0 concept. Their target is to get all nine facilities updated by 2022. Investment numbers were not disclosed.

  • As per ABIMAQ, the Brazilian Machine Tool Builders Association, machinery and equipment produced in Brazil reached 49% of total consumption, higher than normal. The devaluation of the Brazilian real (approximately 37% in 2020) is the main reason for the trend. Imports dropped at least 5.5% in August. Reduction YOY is around 6.4%. However, total consumption has grown 6.6% in the first eight months of 2020.

  • Brazil’s industrial PMI is quite strong and keeps growing. It was 64.9 in September and 64.7 in August.

  • Production for 2020 in the equipment sector is expected to be around 247 million tons, which would set a record. OEMs like CNH and John Deere have been averaging a 10% increase in sales YOY.

  • Embraer announced a massive layoff of 2,500 jobs as a direct consequence of the aviation crisis sparked by the pandemic and the failure of their pending merger with Boeing.

  • The Central Bank published another improvement in GDP growth projection for 2020, from -5.46% to -5.28%.

  • British JCB is expanding its portfolio of products manufactured at its Sorocaba facilities. The OEM announced a $25 million investment to produce excavators and other equipment that will serve not only the domestic market but will also be exported.

  • Volvo Construction Equipment keeps doing well due to exports. In September, 50 heavy mining trucks will be delivered to countries like Germany, France, Norway, and Israel. They export approximately 50% of the products they produce in Brazil.

  • Motorcycle production was 98,000 units in July, a 25% increase over June and better than July 2019.

  • Companies continue to receive incentives from the government through the Rota 2030 program. Job shops have been benefitting from the program since early 2020, and a focus of the program is to move companies to invest in digitalization.

Peru


For more information, contact Carlos Mortera (cmortera@AMTonline.org).

  • Mining investment in Peru was reported at $2.6 million between January and August of 2020.

Chile


For more information, contact Carlos Mortera (cmortera@AMTonline.org).

  • Chile projects an investment of almost $75 billion in the mining industry in the next 10 years. There are 49 planned projects; of which, 89% involve copper mining. Copper represents half of the exports of the country and between 10% and 15% of Chile´s GDP.

Colombia


For more information, contact Carlos Mortera (cmortera@AMTonline.org).

  • Due to the nearshoring phenomena, there are over 50 companies investigating investments in Colombia in industries such as metalworking, construction, chemical, agro, and automotive. Of these companies, 18 are from North America, 14 from Asia, 12 from Europe, and six from Latin America.

  • Colombian exports to the United States of consumables for the electric equipment industry increased 30% between January and August 2020 compared to the same period in 2019.

  • Consumer confidence (ICC) in Colombia grew 3.6% between July and August, from 28.9% to 32.5%.

  • Colombia´s industrial confidence bounced back to 1.5% in August, the first positive number since February.