Foreign Direct Investment continues to flow into the border states Baja California, Chihuahua, Sonora, Coahuila, Tamaulipas and Nuevo León, but there are some surprises on the list of top states for doing business in Mexico.

      Aguascalientes, for the second year in a row was named the state with the best business climate by the World Bank. The state was also named first in growth expectations for 2007 by KPMG and is a favored destination for Japanese investment. Nearly 70 percent of all the Japanese FDI in Mexico is in the state of Aguascalientes.

      While any survey of Mexico’s top states includes the northern border states, as well as Jalisco, states such as Guanajuato, Campeche and Zacatecas are also mentioned as top destinations.

      Foreign investment in Mexico has largely been concentrated in the northern states close to the U.S. border where most maquiladoras are located, and in Mexico City. The Yucatán peninsula, historically an area for tourism investment, has seen industry in other sectors grow due in part to the ability to quickly send goods from its ports to the United States. Most of the FDI is in the financial services, automotive and electronic sectors and the United States has been the largest source of FDI in Mexico. As of September, U.S. investors had provided 61.5 percent of 2006 FDI.

Aguascalientes

      Aguascalientes is the top state for Japanese FDI, mainly because Nissan employs more than 6,000 workers at an automotive assembly plant and a neighboring components plant. The Nissan Mexicana Components plant earlier this year marked production of its six millionth engine.

      The Aguascalientes plant, which began operations in 1982 solely as Components, will celebrate its silver anniversary in November 2007. During these 24 years it has received many awards, both national and international, that acknowledge its high productivity rate and also the high level of quality with which its assemblies and machined parts are manufactured.

      The plant currently has a workforce of more than 2,000 people (added to the 4,000 in the neighboring vehicles plant) and produces the following five engine models: a) the 1.6L GA for the Tsuru; b) the 2.4L KA for the D21 pick up; c) the 1.8L MR for the Tiida/Versa; d) the 2.0L MR for the Sentra and e) the 2.5L QR for the Sentra SE-R.

      For optimum operation, the components plant is divided into four areas: 1) gray iron foundry, with a capacity of eight tons a day; 2) aluminum foundry with a capacity of 66 tons a day; 3) machining, which as well as supplying parts locally, also exports to subsidiaries in the United States and Japan; and 4) engine assembly, which has two production lines.

      Currently, the daily production turns out 1,738 units, which means that 67 engines come off the line every hour - one every 53 seconds.

      “These excellent production results and the success of the engines we produce in Aguascalientes, the land of good people, are just a reflection of the excellent quality of our personnel, not just professionally speaking but as people with values who seek continuous improvement day by day”, said Plant Director Francisco Carbajal.

Baja California

  Baja California is known for its electronics industry, which employs about 65,000 people. According to the Baja California economic development office, maquiladoras in the state produced 17.5 million television sets and computer monitors in 2006.

      The seven largest electronic maquiladoras are Hitachi, JVC, Matsushita, Sanyo, Samsung, Sony, and Sharp. While some of these plants continue to produce conventional television and computer monitor sets, they switched to the manufacture of the latest technologies including flat screen sets: Liquid Crystal Diode (LCD), Digital Light Processing (DLP) and plasma.

      Nevertheless, conventional televisions still make up approximately 18 percent of all production and destined for the Latin American, African and Asian markets. Most of these companies have the same requirements for suppliers: 9000 ISO certification, Just-In-Time delivery, production capacity and competitive prices.

      Baja California is also known for its ability to diversify its industry. There are major truck assemblers in Tecate and Mexicali and the plastics industry is also taking root.

      UPG, a full service contract manufacturer in the medical, consumer, automotive and electronics market segments, recently opened its newest custom manufacturing and assembly facility, UPG Tijuana.

      “UPG Tijuana, our third plant in Mexico, brings advanced manufacturing capabilities to this region,” says Chuck Hoar, UPG vice president, sales and marketing. UPG manufacturing solutions range from molding components to semi-finished subassemblies to multi-faceted fully-finished final products. Services include application design, tooling engineering, program and supply chain management.

Jalisco

      Manufacturing in Guadalajara is focused on computer related hardware and telecommunications products. Guadalajara’s electronic manufacturing is mainly based in contract manufacturing (CMs) operations, including CMs such as Flextronics, Solectron, SCI Sanmina and Jabil Circuit that work for OEMs such as IBM, HP or Cisco to mention some of them. Local companies in the electronics industry are switching from manufacturing PCs to niche products that require more advance technology, such as rackable servers, and by offering more customized business solutions services to a variety of industries.

      In Tijuana and Guadalajara, distribution channels to manufacturers are controlled by numerous distribution/representation companies - some of them located in San Diego, across the border from Tijuana that serve the Baja California region. These firms usually have an electronic components portfolio that includes different product lines. In most cases, U.S. firms interested in entering this market will need to hire one of these distribution/representation companies to serve as contract manufacturers. In addition, inclusion in the approved material list determined by the original equipment manufacturers is often a requirement to sell any critical electronic component to the contract manufacturer.

Zacatecas

      Community, social and personal services play an important economic role, contributing 24.2 percent of the state’s GDP, followed by forestry and fishing (17 percent) and trade, restaurants and hotels (13.6 percent).

      In the primary sector, bean, corn, sorghum and wheat farming as well as carp and aquaculture stand out. The main items in industrial production are food and beverages, non- metallic minerals and wood.

      The chief industry of Zacatecas, however, is mining for silver, gold, mercury, copper, iron, zinc, lead, bismuth, antimony and salt. One of the most productive of its silver mines, the Alvarado, has records which show a production of nearly $800 million in silver between 1548 and 1867. Thanks to Zacatecas and its mines, Mexico has been the largest producer of silver in the world.

Guanajuato

      Guanajuato’s GDP is mainly contributed by community, social and personal services (20.4 percent) and manufacturing (19.4 percent), where food, beverage, tobacco, chemical, textile, apparel, leather and footwear production stand out.

      Trade, restaurants and hotels are the third major group of economic activities, with a 16.8 percent share in the state’s GDP.

      The automotive industry contributes 70.8 percent of Guanajuato’s total exports.

      Guanajuato’s major cities include San Miguel de Allende, León, Celaya, Irapuato and Guanajuato.

      San Miguel de Allende is an hour and a half from the Bajio International Airport and 30 minutes from Highway 57, Querétaro-Monterrey. San Miguel is a site of intense artistic activity, with annual musical events ranging from jazz festivals to chamber music in the central square, as well as the traditional annual fair for brass work and wool products, not forgetting the numerous buildings of architectural interest such as the famous Atotonilco Sanctuary.

      Celaya is strategically positioned on the so-called Bajío Industrial Corridor and provides an important link between such important cities as Querétaro, México City and Guadalajara.

      The city holds a position of importance in the state owing to its concentration of various industrial sectors, such as agriculture, machinery, and chemicals, among others. The region is also famous for the quality of its candies.

      The city of León is one of the most important centers of development in the state. It enjoys a worldwide reputation for the quality of its leather goods, which form the principal motor of its ongoing growth, with exports of more than 25 million pair of shoes annually.

      León is an important venue for events such as the SAPICA international fair for shoe manufacturers, with its more than 4,000 exhibitors. SAPICA is only one of many held in the imposing CONEXPO conference and exhibition center.

      Irapuato’s reputation for agriculture dates to the seventeenth century, when it became an important supply center to the mining industry. From there, it went on to specialize in fruit cultivation, particularly strawberries, for which it has earned the title Strawberry Capital of the World, and it now occupies an important position in the agricultural and textile industries.

      The city of Guanajuato has been the venue for numerous international congresses and important forums, such as the State of the World Forum. Renowned figures such as Lech Walesa, Armand Mattelart, Rigoberta Menchú and Oscar Arias, along with outstanding personalities from the worlds of finance, industry and art have all come to Guanajuato.

      The city’s expertise in mounting events of this kind is widely recognized, thanks to its organization of the annual Cervantes International Arts Festival, which regularly features artists of the stature of the Bolshoi Ballet, Leónard Bernstein and Rudolf Nureyev, to name a few.

Tamaulipas

      In manufacturing, food products, beverage, tobacco, metal products, machinery and equipment, and textile industrial sectors stand out after plastic products and electronic equipment production and/or assembly.

      Two major projects that are in store for 2007 will not only provide much needed industrial space in the sector but could completely change the face of Matamoros’ maquiladora industry, according to the Brownsville, Texas Economic Development Council.

      The city’s number of industrial parks will increase from its current five to seven by year’s end with the completion of La Ventana Industrial Park and Ridge Commerce Center. About 1.2 million square feet of space is planned for 2007 through the new company developers constructing speculative buildings and current maquiladoras expanding their facilities.

      “When new maquiladoras announce they will open or relocate to the Matamoros area, it means that they will bring an entourage of executives, plant managers, and office staff. All of these professional workers will in all likelihood live in Brownsville and contribute to our economy through such consumer-driven industries as restaurants, housing and retail,” said Orlando Campos, BEDC vice president of recruitment and development.

      The city’s first industrial park, CYLSA, was constructed in the 1960s. Finsa del Norte and CIMA followed in the next few years. And since then, Matamoros counted with only three industrial parks. In 2000, Alianza Industrial Park opened and was followed by Finsa Oriente in 2004. This year, La Ventana Industrial Park and Ridge Commerce Center of Matamoros will open.

      “We’re beginning to see our industrial community rebound from the closure of several textile companies in the early 2000s. Brownsville is exhibiting signs of strength in such industries as maquiladora, retail, and service related enterprises,” said Jason Hilts, president and CEO of BEDC.

Chihuahua

      Chihuahua maquila sectors include wire, cable and other insulated electric conductors; electrical devices and television sets parts; vehicles and tractors; automatic data processing machines and units; air conditioning machines; lamps and lighting fittings.

      Ciudad Juárez is a prime maquiladora location, providing about one-fifth of the nation’s overall maquila employment. More than 70 of the maquiladora plants in Juárez are owned by Fortune 500 corporations and among these facilities are telecommunications, electronic assembly plants, clean room manufacturing for medical supplies, consumer appliances, and automotive industry manufacturing. A growing percentage of employment generated by maquilas here has been in technical and administrative positions rather than direct labor.

      Juárez has excellent air, rail and truck transportation system. There are three commercial airports: Juárez International Airport, El Paso (Texas) International Airport and the Santa Teresa (New Mexico) Airport.

Nuevo León

      Manufacturing plays the leading role in Nuevo León economy, with a 25.5 percent share in the state’s GDP. Other major sectors are community, social and personal services (25.2 percent) and trade, restaurants and hotels (18.7 percent).

      Nuevo León ranks first in Mexico in the area of non-metallic minerals extraction and second in the areas of metal product, machinery and equipment and basic metal manufacturing.

      Approximately 37 percent of the 15 year old and older population has a middle-higher or higher education.

Campeche

      Extraction is the major industry in Campeche, representing 55.4 percent of the state’s GDP. In Mexico, 75 percent of the nation’s oil and 37 percent of natural gas come from this state.

      Community, social and personal services as a whole account for 17.4 percent of the state’s GDP; and trade, restaurants and hotels, for 9.7 percent.
      Regarding industry, there are important sugar, wheat flower and cookie producing companies as well as soft drink bottling enterprises.