Mexico & Nafta - 6 April 2004

Monitoring the Mexican market

Industry 05 May 2011 Modified: 06 April 2004 260 views

This is a new feature for the Mexico & Nafta Report in which we try to monitor the main industrial arrivals and departures from the Mexican market. Bears of Mexico argue that the economy will continue to lose investment to Asia. Bulls of Mexico point out that the turnover in the companies operating from Mexico is healthy.

IN:

Among the arrivals was Johnson Controls, a US automotive supplier. It announced that it was shifting its production of convertible roofs for cars from the US to Mexico. Johnson makes the roofs for vehicles assembled by DaimlerChrysler, General Motors, Honda, Mitsubishi, Nissan and Toyota. The company reckons that it will now produce around 2m convertible roofs a year from its plant at Ramoz Arispe in the northern border state of Coahuila. The shift will mean that 885 people will lose their jobs at the Johnson plant in Michigan, in the US. The company expects to hire 500 people in Coahuila. The shift will start in July and take 18 months to complete, the company said.
Another company investing in Mexico is Henkel from Germany. The cleaning and household products company decided to expand and is buying Master Products and its subsidiary MAS. This will move Henkel into the liquid detergents market in Mexico: previously it had sold just soap powder in various forms. MAS has a 40% share of the liquid detergent market and had sales of US$33m in 2003. Henkel did not say how much it was paying for MAS.
Chubu Electric Power announced that it was investing in a US$270m gas-burning power station in Valladolid, eastern Mexico. Chubu and Mitsui will share a 55% stake in the project. The minority partner will be Calpine, from the US. The new power station is scheduled to come on stream in June 2006 and will produce 525MW. It will sell its electricity to the Comisión Federal de Electricidad for the next 25 years.

OUT:

One of the most significant withdrawals in the past month has been of Alfa Laval, a Swedish company which has market-leading technology for the management and separation of liquids used in industrial processes. On 30 March it announced that it was closing its Mexican operation and shifting production to China and India. The company's Mexican factory, which produces pumps and valves for Alfa Laval's main customers in the food, drink and pharmaceutical industries, employed about 100 people in its factory at Tlalnepantla in the industrial belt around Mexico City.
Marathon Oil cancelled its project to develop an energy centre in Baja California after the state government expropriated a quarter of the 800 hectares earmarked for the project. There are rumours that the state government will offer the land to Sempra, another US energy company, to develop a similar project. The state government denied that it would do any such thing. Marathon, which announced its decision on 3 March, was to have invested US$1.5bn in developing power stations to supply maquiladoras in and around Tijuana. Besides importing gas to generate electricity, the project would also have set up waste water facilities to treat industrial effluents. The state government, controlled by the Partido Acción Nacional, had said that it would offer Marathon alternative sites. Marathon said that it had made it clear that the project was only feasible on the site it has chosen, which has now been denied to it.