How Nuevo León became the heartland for Industry 4.0 in Mexico
The state of Nuevo León in northern Mexico contributes eight per cent of the nation’s GDP with only four per cent of its population, according to the state government. It is also on the receiving end of the most foreign direct investment (FDI) of any region in Mexico, securing $51.4 billion since 1994. A thriving industrial centre, it has become the country’s de facto Industry 4.0 headquarters.
Mexico’s is a fertile manufacturing economy that is ripe for automation, and primed for inward industrial investment. The country has enjoyed an unprecedented period of macro-economic stability, with trade and foreign investment booming. In 2017, nearly 16 per cent of its GDP ($1.14 trillion) came from manufacturing. The country is the third largest exporter of computers in the world; it shifted high-tech goods, including computers, telecoms gear and healthcare equipment, worth $409 billion last year.
Its economy is closely linked to its northern neighbours. Nuevo León, just 14 kilometres across the border from the US, represents an industrial heartland and a link hub. Monterrey, the state capital, is only 200 kilometres away, working as the urban base of the industrial spine of the North America Free Trade Agreement (NAFTA) market, running between Mexico, the US and Canada.
The local economy is reliant upon manufacturing, notably of home appliances and automotive parts. Of Mexico’s total income from manufacturing, of $180.5 billion, Nuevo León contributes about 10 per cent and has seen more GDP growth than the whole of Mexico on average, with 3.2 per cent growth, compared to 1.9 per cent in the country overall.
“Our automotive cluster is our main hub of innovation,” comments Américo García Almaguer, under secretary for industry for the State of Nuevo León. “We are considered the first place the companies turn to for automotive.”
US car makers like Ford and Chrysler have homes in the state; it serves as a natural stopping point for companies seeking to extend their presence south of the border. The appeal crosses the Atlantic and Pacific oceans, as well. The state received FDI for 135 automotive and 95 advanced manufacturing projects in 2016, mainly from the US and South Korea.
German manufacturing giant Siemens serves as a “trusted advisor” to the state government, and contributes to its Nuevo León 4.0 industrial initiative, promoting economic development in the region. Bosch recently announced it will invest €100 million (US$120m) in a smart factory for automotive parts in Celaya, creating 1,200 additional jobs by 2020. The state also provides a home for car brand Kia, which has drawn further attention from other Asian investors and labourers.
A spokesperson for Siemens sums up its strategic importance as a manufacturing centre for the whole continent. “At Siemens, we consider Nuevo León as one of the most prosperous and developed states in the country. It hosts one of the most important industrial clusters in Mexico and Latin America, and has a strategic geographical location, as well as highly qualified human capital.”
Nuevo León has the highest number of ‘industrial parks’ in the country, with 150 across the state. It is also home to 12 ‘clusters’, civil associations that work under the state’s triple model for public, private and academic collaboration. Sectors include aerospace, agriculture, electronics, biotechnology, and nano-technology.
García Almaguer sees the the quickest growth in biotechnology and nano-technology, he says. “We are focused on research and development, especially within our nano and biotechnology clusters. However, while these clusters are still small, we see them as being just as important as larger ones as there is so much future FDI opportunity.”
The state’s emerging workforce also props the region up as a leader for Industry 4.0. Nuevo León is home to 300,000 students across at least four universities, including the Autonomous University of Nuevo León (UANL), the Monterrey Institute of Technology and Higher Education (ITESM), the University of Monterrey (UDEM) and the Universidad Regiomontana (U-ERRE).
Around 11,000 technicians graduate from these universities each year, as well as 7,500 engineers and 1,000 students with masters degrees and doctorates. The region is top-ranked for MBAs in Latin America, with a high percentage of bilingual students. Its highly skilled workforce contributes to its productivity, which is 80 per cent higher than the national average.
The state is also pushing its own Nuevo León 4.0 industrial programme, combining government, academia and private enterprise to drive digital technologies through the state’s business ecosystem. “Nuevo León 4.0 is just but one of many vestiges of our state’s entrepreneurial and innovation culture,” says Fernando Turner Davila, minister for the economy and labour for the state.
“But it is one that we’re sure will give us competitive advantages in every business sector. It will also contribute to our state remaining as a highly attractive FDI destination globally and leading destination in Mexico.”