Mexican FDI is surging this year, building on a growth trend from the prior year. Due to various factors, Mexico looks more and more promising for manufacturers and companies from the United States and around the world.
Mexico currently is ranked as the top US trading partner. And global exports are on the rise, as the country focuses on production and free trade. As such, leading companies have made the decision to open new facilities or expand existing facilities in Mexico.
Substantial foreign investments into Mexico have been unveiled in 2023, representing billions of dollars. Touching multiple industries and regions throughout the country, these commitments spell a bright future for the pro-business country.
According to Bloomberg, Mexico’s foreign direct investment (FDI) has experienced a remarkable surge of 48% in 2023. The article credits much of this increase in Mexican FDI to the rising trend of nearshoring. As the world’s major economies seek to diversify supply chains and reduce dependence on distant manufacturing hubs like China, Mexico has emerged as a favored nearshoring destination. This shift in global manufacturing dynamics has resulted in a significant rise in Mexican FDI.
It is impressive to note that in the first quarter of the 2023, foreign companies have invested well over $12 billion in Mexico. This is just the first quarter. The manufacturing sector has been the primary beneficiary of this investment, attracting over half of that, as companies continue to relocate their production facilities closer to the United States.
But it’s not just the manufacturing sector. The automotive industry has also witnessed a surge in investments, with major automakers such as General Motors and Volkswagen channeling substantial funds into their Mexican operations. This not only bolsters Mexico’s position as a key player in the automotive sector but also stimulates job creation and growth in the Latin American country’s economy.
And it extends to other industries. Electronics and medical devices, for example, have also experienced significant investment influx, further diversifying the country’s industrial landscape. The Mexican government’s efforts to create a favorable investment climate, along with its geographical proximity to the US market and competitive labor costs, have been major drivers of this surge in foreign investment. And 2023 has been characterized by several substantial announcements of new FDI.
Below is a roundup of some of the more notable investments this year.
Ternium, a leading steel company, is set to make a substantial investment in Mexico this year. The company reportedly will be injecting a total of $1.9 billion USD into constructing a new state-of-the-art steel plant in the Pesqueria municipality, located in the northeastern Mexican state of Nuevo Leon. This will greatly expand their existing steel complex.
This investment aims to enhance Ternium’s production capacity significantly, with the new plant projected to generate around 3.7 million tons of high-quality steel annually. In addition to bolstering Mexican FDI overall, the move will specifically bolster Mexico’s steel manufacturing capabilities and economic growth in the region. The investment represents a significant commitment from Ternium to strengthen its foothold in the Mexican market and meet the growing demand for steel in various industries.
Jonah Greenberger, the founder of climate tech company, Bright, has announced a new investment of $31 million USD in Mexico. The investment is aimed at supporting solar energy projects in the country.
Bright is partnering with SDG Investimentos, a Brazilian impact investment fund, to create SDG IFU Solar Mexico. This venture intends to promote sustainable development by fostering renewable energy infrastructure. The funding will enable the construction of solar energy facilities and contribute to Mexico’s clean energy transition. Furthermore, this collaboration between Bright and SDG Investimentos is intended to address environmental challenges while driving economic and social progress in Mexico.
Apex Clean Energy, a renewable energy company, is making a substantial investment in Mexico. According to the report, the company has secured a financing commitment of $302 million USD for the construction of a wind energy project in the country. The investment will go towards the development of the “Mesquite Sky Wind” project, which is expected to have a total capacity of 288 megawatts.
The wind farm will be located in Callahan County, Texas, but the electricity generated will be exported to Mexico through a cross-border transmission line. This initiative aims to enhance Mexico’s renewable energy infrastructure and contribute to its clean energy goals. Apex Clean Energy’s investment represents a significant step towards promoting sustainable energy solutions in the region and fostering international cooperation in the renewable energy sector.
The Mexican government’s efforts to establish Special Economic Zones (SEZs) and improve the investment climate have resulted in the creation of an industrial corridor in the southern region. The Interoceanic Corridor will include round 10 new industrial parks throughout the region known as the Isthmus of Tehuantepec. Impressively, this corridor agreement already has garnered at least $600 million USD in investments from various foreign companies.
One notable foreign investor is Walmart, which has committed to investing $861 million to expand its operations in Mexico, aiming to create more than 4,000 new jobs. Another prominent commitment comes from Canada’s Bombardier Recreational Products (BRP), which plans to invest $185 million to establish a new manufacturing facility in the state of Queretaro, generating around 1,000 direct jobs.
2023 has been a good year for Mexico so far. And current trends indicate even more Mexican FDI will be announced before the year ends. This surge is no doubt partially driven by the growing trend of nearshoring as well as Mexico’s proximity to the US consumer market. And the industries that are benefiting from this increased investment span a wide range, from automotive to medical devices and more. Mexico’s continued commitment to developing infrastructure and resources will likely continue to attract additional foreign commitments and economic growth.
