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Japanese Firms Expand Investment in Mexico

Jan. 18, 2023.

Inward foreign direct investment into Mexico, which had been slowed by the new coronavirus scourge, is picking up, thanks to Mexico's geographical advantage of "near-shoring" conditions, targeting the U.S. market. In fact, Mexican manufacturing production has increased in response. It is likely that foreign direct investment in Mexico by foreign companies that see the "near-shoring" conditions as an opportunity will increase in the future.

Carlos Mortella, Latin American representative of the Mexican Association of Manufacturing Technology (ATM), said, "The Mexican manufacturing sector will have an output value of approximately $240 billion in 2022, a 12% increase compared to 2021. This represents more than 40% of total production value in Latin America. The U.S. market is experiencing growing demand for production as supply chains are relocated, and the utilization rate of equipment in small and medium-sized enterprises is over 90%. There are opportunities in Mexico in this regard. In Mexico, which is an advantageous near-shoring destination for the U.S. market, manufacturing production is increasing, which is very favorable," he said.

According to a study by Barclays Bank in the U.K., inward FDI into Mexico is expected to exceed $40 billion in 2022. Against this backdrop, an increasing number of Japanese companies have announced investments in Mexico in anticipation of business expansion in the North American region. In particular, Japanese companies' investment projects in the manufacturing industry in Mexico are seen from the second half of 2022 and are expected to increase in the future.

According to the December 16 press release PDF file (opens in new window), Fujitec has acquired 85% of the outstanding shares of Elevadores EV International (EEVI). EEVI has a factory in Tijuana, a northwestern border city, and has an extensive export record to North American elevator and escalator manufacturers. Fujitec has stated that it acquired the shares in order to expand its business in North America by strengthening its cost competitiveness in the region while utilizing the equipment manufactured by EEVI.

On January 13, Suminoe Textile announced that it acquired a site in Irapuato, Guanajuato, to build a new synthetic leather production line for automobile interior materials for its Mexican subsidiary, Suminoe Textile de Mexico, and began construction of a new building with factory and warehouse functions. The total investment of approximately 3 billion yen is intended to improve productivity and efficiency in order to respond to the expansion of the synthetic leather market in North and Central America. The new building is scheduled for completion in November 2023, with mass production to begin in June 2024.


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