2020, a strong year for the industry in Chihuahua

2020 will be a strong and growing year in the maquiladora sector within the state of Chihuahua, according to figures from the public and private sector industry.

In an exclusive interview for Mexico Industry, Luis Villavicencio, director of the Cluster of Automation and Advanced Manufacturing (MACH) and Fabián Santana, director of Industry Promoter of the Secretariat of Innovation and Economic Development (SIDE), shared the details of why the 2020 will be a beneficial year for the industry.

2019: a year of growth

For both specialists, 2019 was a year of growth for the industry. Villavicencio considered that it was good, even better than they would have thought. This is because at the beginning of 2019 there were factors that generated some fear, mainly due to the change of administration and fiscal issues, the closing of border bridges and uncertainties with the United States government. However, the year was good, since it had a stable closure in companies participating in the Cluster and with opportunities to generate new projects.

On the other hand, Fabián Santana, director of Industry Promoter, 2019 had a stronger closure than 2018. This is because in 2018 Chihuahua had more than 900 million dollars of foreign investment, mainly of manufacturing, while in the third quarter of 2019 Chihuahua had already exceeded that amount of investment, not only in comparison with its performance the previous year, but at the national level, with 1,117 million dollars of investment, even surpassing the Bajío. For Santana, this growth is remarkable in a year in which economic growth at the national level has not, in turn, had a notable rise.

The main driver of growth for the director was Ciudad Juarez: until October, there had been 27 investments in the city, including expansions, new operations and remodeling, in the following sectors:

• Electronic

• Packaging

• Automotive

•Home appliances

• Plastics

•Logistics

It is important to mention that several of these investments come from China, which indicates the positive results of the trade missions that the Secretariat of Innovation and Economic Development (SIDE) has carried out in that Asian country.

These investments are not only found in Ciudad Juárez, but also in the city of Chihuahua, and other populations traditionally not associated with the maquiladora sector, such as Cuauhtémoc, Jiménez, Saucito and other smaller communities.

2020 perspectives: a year of challenges

For Villavicencio, an issue to improve is the part of public investment. He pointed out that considerable investments are coming from the private initiative, but the public sector must also invest in infrastructure in order to generate an appropriate ecosystem for the north of the country.

"You have good prospects, but at the national level we know that you can improve."

Regarding the fiscal aspect, he said that it is not possible to compensate VAT with ISR is an issue that hinders the flow of capital. “In terms of SMEs, concentrated in knowledge or technology processes, it limits the operation, because it cuts off the ability to invest in new projects. The ability of SMEs to invest implies large amounts of capital, which is not available, and now with a cut flow, it is even more difficult, ”he shared.

He mentioned that SMEs have always managed to overcome these difficulties, but this fiscal situation does not encourage growth. However, he considered that similar business stability is expected for the following year, in addition to investments, so he estimates there is growth.

On the other hand, Fabian Santana pointed out that 2020 is a year of many challenges for the industry, mainly due to the approval of the T-MEC between the Mexican and US governments, which forces the automotive sector to seek local supply. “Chihuahua provides all the shipowners in the country in question in the automotive industry. This will boost the growth of local SMEs, but at the same time it does not remove the shadow of industrial dynamics with the United States, “he said.

Santana agreed with Villavicencio that, despite the particular situation in the country and market concerns, he believes that the good results of 2019 can be maintained. "We will work to maintain the positive dynamics above the national average", said.

The director of Promotora shared that AMPIP recognized Ciudad Juárez as the most dynamic market in industrial real estate. “We continue to see building construction in Juárez and Chihuahua. In total, we have more than one million square feet of industrial building construction. They don't have customers yet, but the developers see a positive environment, so they invest in these constructions, ”he said.

Suggestions for 2020

Luis Villavicencio, director of the MACH, indicated that a preponderant suggestion for industrialists in the following year is collaborative work. The importance of working together lies in the possibility of facing the challenges of industry 4.0, using the tools that all contribute. “If we don't work together, this challenge of industrial transformation will be complicated, because nobody has all the tools to do it alone. A region becomes competitive as long as there are strong and intense networks of interaction between its different actors, ”he concluded.

Finally, Fabián Santana, director of Industry Promotion of SIDE, suggested diversification to take advantage of industrial growth, such as Ciudad Juarez. “El Bajío tends to tend to the automotive industry, so the current situation can be complicated, but in Ciudad Juárez, in addition to this industry, we have appliances, medical devices, among others. Therefore, we must look for clients in emerging industries, which have growth, such as automation service, software development, more technological aspects, conversion of production plants of industry 4.0 ”, he concluded.

More information

Investment 2019 (until the third quarter): 1,117.8 million dollars

Investments in 2020: 27 (statewide)

Nationwide place in foreign direct investment: 7th