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International News From the Field: Mexico, Brazil, and Latin America

December: Our reporting countries in the Americas south of the U.S. continue to surprise with strong growth and major investments. Mexico’s consumer confidence and manufacturing output are growing at double-digit rates as Volkswagen, Fagor, and Metal...
Dec 07, 2020

December 7, 2020

Our reporting countries in the Americas south of the U.S. continue to surprise with strong growth and major investments. Mexico’s consumer confidence and manufacturing output are growing at double-digit rates as Volkswagen, Fagor, and Metal Technologies announce major expansions. Brazil’s manufacturing PMI is above 66 as Scania, Tibernia, and Taurus invest to keep up with demand. For details and other tidbits, read on.

Mexico

For more information, contact Carlos Mortera (cmortera@AMTonline.org).

  • Flight operation capacity has reached 95% compared to 2019.

  • During September, the income of retail companies for the supply of goods and services increased 2.67%, the fourth consecutive month with a positive value.

  • In October, consumer confidence grew to 37.6, the highest since April and likely driven by a better perspective of the current and future economic situation. 

  • Manufacturing output increased 31.5% in Q3 compared to Q2. With this sudden spike, the manufacturing industry´s GDP is only 2.7% below the pre-pandemic level.

  • During October, the IMEF manufacturing indicator, one of the most reliable indicators for measuring the business climate, increased 3.2 to a total value of 50.1. It is the first time it has been above 50 in the last 16 months.

  • During the last four months, Mexico has had a positive trade balance. The main driver was the reopening of production activities in June due to the strong U.S. demand. 80% of Mexico´s exports go to the U.S.

  • A second phase of investments in the infrastructure was announced to be implemented between the government and the private sector with an approximate value of $10 billion.

  • Metal Technologies, a manufacturer of gray and nodular iron parts for the automotive, tractor-trailer, and agricultural markets, will invest $28 million in the construction of the second phase expansion of their San Luis Potosí plant. The expansion will more than double the plant’s present capacity of 30,000 metric tons per year.

  • Fagor Electrónica, a Spanish electronic component manufacturer, inaugurated a plant in Querétaro with an investment of more than $2.4 million. The intention of the company is to address the technological change with the development of electromobility in the American automotive market. The new factory, with an area of 21,000 square feet, will develop components and parts, such as electronic boards, to control and manage car functions.

  • Volkswagen invested $234 million in a new assembly line in its plant in Guanajuato. This will increase the plant’s production capacity by 70%. Volkswagen has invested $700 million in Mexico in 2020 alone.

  • Sales in convenience and department stores increased 2.8% in October. This is the first increase since the pandemic started in March. 

  • Light vehicle auto production had a monthly growth of 5.71% in October. Mexico produced 307,688 units from January to October 2020.    

Colombia

For more information, contact Carlos Mortera (cmortera@AMTonline.org).

  • Automundial SA, a local industrial, agricultural, and mining tire manufacturer, will inaugurate their new plant in Galapa. This will be their 6th plant in the country. This new plant will reduce the usage of petroleum by 68%, water by 82%, and emissions by 60%

  • The London-based investment firm Novator Partners, who launched a mobile telephone brand in Colombia named WOM, will invest $1 billion in telecom infrastructure projects in the country over the next five years.

Brazil

For more information, contact Achilles Arbex (aarbex@AMTonline.org).

  • 70% of companies surveyed by National Federation of Industries reported production and revenue levels were back to normal. 62% of companies expect to grow revenue in 2021.

  • The manufacturing PMI for October was 66.7, increasing even more from the 64.9 in September. The industrial output grew 2.6% in October.

  • The National Federation of Industries, through a survey, reported a fifth month of growth in installed capacity utilization, reaching 79.4% against the 66% reported in the month before. This is the highest level recorded since 2015.

  • The Brazilian National Bank for Economic and Social Development, BNDES, announced additional funds for those interested in purchasing agriculture equipment. Total amount is over $2 billion and will only be offered to Brazil-based companies and individuals.

  • Randon, Brazil’s largest trailer manufacturer, reported its best quarter ever, not only in terms of revenue, but EBITDA and net profit margin. The main drivers for the achievement were sales of dumpers, with growth of 24%, and trailers, with growth of 17%. Randon is also the owner of the Randon Tech Solutions, Brazil’s newest player in the automation segment.

  • Tiberina Group, the Italian supplier of chassis and suspension components to the major auto companies, is investing $30 million in its facilities in Minas Gerais. $15 million of this will be used to purchase machinery and equipment.

  • Group CAOA, a Brazilian auto producer and distributor, announced a $300 million investment to produce 10 new platforms. Mitsubishi followed CAOA and announced investments of around $130 million to expand capacity of its production facilities.

  • The construction equipment segment recorded accumulated growth of 22% in 2020, producing 31,000 units. Machinery like excavators, wheel loaders, backhoe loaders were the main drivers of the growth, whose consumption was boosted by investments in sanitation.

  • Scania confirmed plans to invest more than $280 million in Brazil in 2021. This investment is part of the major long-term plan announced two years ago, valued at $1 billion, to modernize facilities and adjust assembly lines to the latest technologies in terms of connectivity, additive, and automation.

  • Brazilian gun manufacturer Taurus confirmed investments to expand its São Leopoldo facilities. Taurus Brazil exports parts and products worldwide, besides supplying parts to its subsidiary in Georgia.

  • Brazilian CBC announced investment of more than $8 million in new machinery to produce firearm cartridges in its Ribeirao Pires facilities. CBC has invested over $300 million in its facilities in Brazil over the last 5 years.

  • Metalex, part of the Brazilian CBA group, announced a $15 million investment to produce aluminum rods.

  • As per CNI, 68% of a large pool of industries consulted are having problems with their supply chain, while 56% are having to look for suppliers abroad to keep up with production levels.

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Author
Edward Christopher
Vice President, Global Services
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