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Supply Chain Management

February 2011 - Posts

  • Mexico: a Prime Partner in Trade

    When you see the label Hecho en Mexico on an item of clothing or a can of coffee, you will know that what you buy is genuinely North American, even though it is not produced in the United States. While some people associate Mexico with their ancient culture and heritage - indeed, as a popular tourist destination, Mexico takes pride in their preservation of Aztec ruins and contributions to art, music, and sports - society is quite modern and the economy enjoys great health. It is estimated that in less than ten years the total economy will triple its current worth.



    Despite the country's frequent seismic activity - the nation's capital of Mexico City is especially vulnerable to quakes - Mexico maintains the eleventh largest economy in the world, due in part perhaps to the North American Free Trade Agreement (NAFTA), which is the largest trade bloc in the world. NAFTA was created during the Clinton Administration in the early 1990s for the purpose of eliminating trade barriers between the three countries that comprise North America - this included the dissolution of tariffs on Mexican exports into the United States, which has made it easier for Mexican businesses and manufacturers to thrive when dealing with their primary trade partner. While nearly fifty percent of Mexico's trade is with the US, the country also works to a lesser extent with Japan, Germany, South Korea, and China.


    Main Exports of Mexico


    Mexico offers rich natural resources in addition to assembled products from supplies imported from the United States. Some of the more popular exports include:


    Silver - Stroll the plazas and touristy areas of coastal towns and central cities, and you'll find beautiful silver jewelry among the woven blankets and other curiosities. Mexican silver is popular import into the US, often arriving in the form of elegant jewelry and cutlery.


    Automobiles - The top automakers in the world have plants in Mexico - Asian, American, and European brands are all represented. It is estimated that one of every seven cars sold in the world is assembled in Mexico.


    Oil and byproducts - Mexico produces close to four million barrels of oil daily, putting the country among the top ten world's producers. Crude, oil, and natural gas exports account for a large percentage of the nation's overall foreign income.


    Food - Fruits and vegetables, coffee, and livestock are some of the more popular exports cultivated here. Especially in the southern United States, one can find a myriad of ethnic grocery shops featuring known Mexican brands like Bimbo for bread and pastry, Carlos V for chocolate, and Goya. Mexico is also the second largest bottler of Coca-Cola soft drinks.


    Electronics - You may be surprised to know that Mexico, not China, is the largest manufacturer of smart phones in the industry. The amazing growth of the country's electronics sector in the last decade prompted the development of Mexico's own telecom companies, creating a shift away from manufacturing products for foreign brands with headquarters in Mexico. Zonda, a domestic telecom company, is a healthy competitor of Sony and Samsung.


    Main Imports of Mexico


    Much of what is brought into Mexico is used to assemble the end products that are exported, most often to the United States. These include electrical supplies, plastics, and other parts used to manufacture phones and automobiles. Growing interest in developing an aerospace program has the country interested in negotiating with foreign firms for the applicable technology and hardware as well. Of the non-industrial imports, tobacco is one of the fastest-growing in terms of demand.


    As our immediate neighbor, Mexico remains an important trade partner. As their own domestic economy improves, one will note the eventual reach to other countries for goods and services, and eventually a rise to greater importance in global trade.