Diversification of industries: the way to competitiveness and growth

By Frontier Industrial

Mexico City

August 25, 2023

A robust industrial sector can significantly enhance a country's economic dynamism if effectively managed. This is why various developed economies prioritize their strengths in manufacturing and technological domains.

In the case of Mexico, the recent nearshoring trend and the automotive manufacturing dynamics of the past decades provide an opportunity to amplify the country’s industrial sector by leveraging the capabilities of these mentioned activities as a foundation.

The growth of the automotive industry, which has consistently ranked among the top 10 manufacturers globally for several years, owes its success to international corporations such as Nissan, Volkswagen, General Motors, and Ford, among others. These companies operate in regions including Puebla, the State of Mexico, and the automotive cluster in Bajio. This growth serves as a springboard for the Mexican industrial sector to venture into other activities.

An example of diversification is the industrial park in Guanajuato. Traditionally associated with footwear manufacturing, this region leveraged its workforce's availability and the potential for enterprises to attract skilled workers, making it an appealing hub for Tier 1 providers that distribute parts to various regions. The development of supply chains, facilitated by a railway network, enables the distribution of components to different states across the country.

According to the National Statistics Institute, automobile production grew 13.22% in July compared with 2022 data, reaching 294.350 units produced.

Mexico has nearly 30 OEMs and 1,100 Tier 1 providers, sending 79% of the automotive production to the United States market. This allows diversification for using the supply chain in other industries.

Guanajuato also functions as a hub for logistics enterprises, with its connectivity extending to areas like Guadalajara and Hidalgo, where food industries and commercial centers thrive. The improved workforce dynamics in Guanajuato have further benefited states like Queretaro, fostering growth in the aerospace industry. 


The significance of industrial diversification

Diversifying industrial activities by cultivating regions with diverse strengths broadens a country's scope of productive operations across multiple sectors. This diversification empowers Mexico to spread economic risks, adapt to market fluctuations, and tap into emerging market niches. By doing so, Mexico optimizes utilizing available resources and human capital, igniting innovation and technological advancement. The already mentioned industrial sectors can expand, while states like Baja California and Chihuahua, known for light manufacturing industries, and areas like Hidalgo and the State of Mexico, housing health and pharmaceutical companies, continue to contribute.
Simultaneously, Monterrey retains its stronghold in food industries and steel companies, creating an array of employment opportunities and attracting foreign investments, and strengthening the country's economic indicators.

Seizing a new position in the global order

Nearshoring allows Mexico to consolidate a range of industrial activities already poised for growth, positioning the country as a regional node capable of meeting the demands of diverse markets in Latin America and even the Western Hemisphere.


By providing industrial land for sale and buildings for lease in Mexico's key industrial zones, including the esteemed industrial park in Guanajuato—a leading economic development region—Frontier Industrial allows for Mexican and foreign industries to establish their presence within the country.

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