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Items imported for the electronic industry are essentially
classified under Harmonized Tariff System Chapter 85 and account
for more than 40 percent of all imports for the maquiladora
industry in Mexico.
The total import market size for Mexico’s
electronic maquiladora industry in 2004 was approximately $29
billion, and according to Mexico’s Chamber of Electronics and
Telecommunications (CANIETI) at least 70 percent was destined
for the border region. The largest concentration of these
electronic plants is in Baja California, which has more than 100
plants.
Until the year 2000, the electronics
maquiladora industry in the border region was the economic
sector that had experienced the strongest annual growth,
approximately 12 percent. During the 2001-2004 period, however,
several factors negatively impacted the industry, causing the
closure and relocation of plants to countries with lower
operating costs. Nevertheless, in 2005, the trend reversed and
cities such as Mexicali, Tijuana and Tecate in Baja California
and Ciudad Juárez in Chihuahua received investment in new
plants.
The large concentration of electronic
manufacturing plants along Mexico’s border region offers
significant opportunities for U.S. suppliers, not only directly
related to the manufacturing of the products, which are mostly
included in HTS 85 for electric machinery, equipment and parts,
and HTS 39, for plastic and articles of plastic, which is on
average 40 percent of the content in the electronic products
manufactured, but also in products related to the operation of
their plants, packaging of the products, and most recently,
security systems for the facilities.
Mexico’s border region is home to about 76
percent of the country’s electronic maquiladoras. Mexico’s
Chamber of Electronics in Baja California estimates that the
total market size for this sector in the border region reached
more than $20 billion in 2004, an 18 percent increase over 2003.
While the United States is the leading
supplier to the electronic maquiladora industry in Mexico’s
border region, it has, nevertheless, lost market share of almost
47 percent from 2000 to 2004. The market has largely gone to
Asian countries, including Japan, China, South Korea, Taiwan and
Malaysia, among others. Imports from the United States continued
to drop during the first two months of 2005, reflecting a 19.2
percent decrease from the same period last year. China and
Japan, on the other hand, reflect a 38.9 and 25.6 percent
increase, respectively, in exports to this sector during this
same period.
The major components and parts imported by
the electronics manufacturing industry under HTS 85 during 2004
were: digital monolithic integrated circuits; parts/antenna for
transmission for radio and television; monolithic integrated
circuits, other than digital; printed circuits, cathode-ray,
television picture tubes for color monitors; electrical
apparatus; hybrid integrated circuits; insulated electric
conductors; electric motor parts, generators; static converters
and power supplies; ceramic dielectric, multiplayer fixed
capacitors; insulated electric conductors; electric switches for
voltage not over 1000 volts; parts and accessories for sound and
video reproducing apparatus; light-emitting diodes; electrical
inductors; electrical conductors; indicator panels incorporating
LCD’s and cards electrically integrated.
Under HTS 39, main products imported were
polymers and resins, plastic container bags, plastic tubes,
pipes, hoses and their fittings, plastic plates, sheets, films,
foils, self-adhesive plates and sheets and polymers of styrene
in primary forms. Major factors that will shape the demand for
products and services over the next three years include:
•Full recovery and growth of U.S. economy.
More than 80 percent of all electronics maquila production is
destined for the U.S. market and an increase in demand of
products would result in: 1) Foreign (European and Asian)
manufacturers opting to relocate their production to Mexico’s
border region, to take advantage of NAFTA content rules; 2)
Expansion of existing plants and consequently, an increased
demand for raw material, parts and services.
•Full recovery and growth of the Mexican
economy. This would open a market for plants to sell part of
their production in the domestic market.
Baja California
Baja California is the Mexican border state
with the greatest number of electronics plants employing
approximately 65,000 people. According to Baja California’s
Economic Development Office, in 2004, maquiladoras in the state
produced 17.7 million television sets and computer monitors.
Generating that level of production were the seven largest
electronic maquiladoras: Hitachi, JVC, Matsushita, Sanyo,
Samsung, Sony, and Sharp. While some of these plants continue to
produce conventional television and computer monitor sets, they
are switching to the manufacture of technologies including flat
screen sets.
Conventional television still makes up
approximately 30 percent of all production and destined for the
Latin American, African and Asian markets.
Most of these companies have the same
requirements for suppliers: ISO 9000 certification, Just-In-Time
delivering, production capacity and competitive prices.
Sonora
One of Sonora’s most important sectors is the
maquiladora industry with about 200 maquiladoras, making this
sector the leading employer with 80,000 employees. Within the
maquiladora industry, electronics is the second largest
employer, after the automotive sector. The state has more than
20 electronics plants, most of them located in Nogales and San
Luis Río Colorado.
As it is with most manufacturing plants along
the border, these companies have the same requirements for
suppliers: ISO 9000 certification, Just-In-Time delivery, ample
production capacity and competitive prices.
Chihuahua
Chihuahua is Mexico’s largest state and has
the second largest concentration of manufacturing plants in the
country, after Baja California, with 440 plants; of which 50
manufacture electronic products. Electronics account for 32
percent of the state employment, or approximately 35,000 jobs.
Among those companies are Toshiba, Philips, RCA Components,
Scientific Atlanta, Tyco Electronics, Siemens Energy, Honeywell,
and Keytronics. Some of the products manufactured include vacuum
cleaners, television sets and computer hard drives, cellular
telephones and DVD players.
Among the products that offer the best
opportunities for U.S. companies in Chihuahua are: electronic
components, plastic products, packaging materials and steel
wiring. As is with most manufacturing plants along the border,
these companies require of suppliers: ISO 9000 certification,
Just-In-Time delivery, ample production capacity and competitive
prices.
Coahuila
Coahuila borders Texas, and manufacturing is
one of its main industries. According to the office of the
State’s Secretary of Planning and Development, in 2004
investment exceeded $4.45 billion, as a result of the
installation of 211 new plants, creating more than 77,000 jobs.
The main sector is the automotive, with major investments by
DaimlerChrysler and General Motors. In second place is
metal-mechanical sector, as Coahuila is considered the most
important steel producer in Mexico, and in third place is the
electric-electronics sector with 14 plants. Among the main
products manufactured are household appliances, including
refrigerators, washing and drying machines and microwaves.
Tamaulipas
Tamaulipas is the only Mexican border state
adjacent to the Gulf of Mexico. Its strategic geographic
location helps it export to the United States, Latin America and
Europe. Tamaulipas’ electronic industry includes more than 100
plants, creating approximately 69,000 jobs. Some of the
best-known manufacturers of consumer electronics in the state
include Panasonic-Matsushita, Emerson Electric, Sony, LG, Nokia,
Black and Decker, Whirlpool and Sunbeam Oster. The products
assembled in this industry include stereos, cellular telephones,
radio equipment, television sets, portable electronic tools,
computer hard discs, refrigeration accessories and household
appliances.
Competitive analysis
For many years, the United States has been
the primary supplier to the electronics maquiladora industry in
Mexico’s border region, followed by Japan and China. While the
United States still dominates the market for most products,
suppliers from Japan, China and South Korea are significantly
increasing their shares of the market. U.S. market share of
imported components and materials to the maquiladora industry
decreased from 90.51 percent in 2000, to 58.95 percent in 2004.
During 2005, the import statistics from
January to February indicate a further decrease by 19 percent of
market share. Generally speaking, imports from Japan, China,
South Korea, Malaysia, Taiwan and other Asian countries have
increased as the result of several factors, including aggressive
competitive pricing and quality.
Moreover, these countries have benefited from
the approval by the Mexican government of PROSECS (Sectoral
Programs) that allow the import of non-NAFTA products with
favored import duties of 0 to 5 percent.
The end-users are electronic maquiladora
plants that primarily manufacture finished products, including
television sets, computer monitors, vacuum cleaners,
refrigerators, etc. The most important factors affecting their
purchasing decisions appear to be pricing and product quality.
Despite the great distance and related high transportation
costs, several plants still chose to import products from Asia
given their good quality and comparatively low price. That being
said, purchasing decisions tend to vary, depending on the
company’s affiliations. Further, the parent company
traditionally wields considerable influence on what to buy and
from whom to buy it.
Information provided by U.S. Commercial Services,
a division of the U.S. Department of Commerce.
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