State, Provincial, & International Reviews
Tuesday, November 20 2018
The most successful countries in Latin America have created investment laws that encourage foreign direct investment and have assembled professional teams that can facilitate the establishment of operations inside their borders. As you consider Latin America for potential operations, it is important to conduct in-depth analysis on the labor force, infrastructure and the legal/regulatory environment in each country. You must also assess the risk environment in real time—looking comprehensively at the political environment, and any current or emerging issues that may directly impact the security of your people, facilities and supply chain. Be assured, however, there are a number of places in Latin America that will grade out favorably in all these measures.
The Site Selection Group has facilitated both manufacturing operations and white collar operations (such as BPO and call centers) across the region, particularly in Mexico, Costa Rica and Brazil. To find the right location for our clients, we utilize a mixture of purchased data, open source information and primary research conducted by our team of consultants. Purchased data and open source information is typically used to filter down to a narrow list of potentially desirable cities for a given operation.
Friday, March 23 2018
By René Buck, Founder and CEO, Buck Consultants International
The Chinese economy now returns to a ‘new normal’ of six percent growth per year. At the same time, the traditional position as low cost manufacturing base is eroding and other Asian location alternatives are now on the radar of C-level executives of international corporations. What is the future of China for production expansions by U.S., European and Asian companies?
For nearly two decades, China was the low-cost location in Asia for companies with their home base in developed countries. With labor costs in the U.S., Europe and Japan being five to ten times higher than in China, it looked like an easy case from an offshoring perspective. Hundreds of foreign firms have established production facilities in China, where five coastal provinces (Guangdong, Jiangsu, Shadong, Zhejiang and Henan) have showed the fastest growth, the highest regional output and the largest number of foreign firms.
Wednesday, January 10 2018
By James H. Renzas, Principal, The RSH Group, Inc.
Companies based in the U.S. frequently consider locating manufacturing operations in Mexico. At the RSH Group, we often consider Mexican locations in our site selection studies along with domestic and Canadian locations. We subject Mexican locations to the same criteria we use to evaluate U.S. manufacturing locations in order to determine the optimal location for new or relocated operations.
Major advantages of a Mexican location for manufacturing are in the area of labor cost, labor availability, reduced regulatory costs, taxes, real estate and support infrastructure. The average manufacturing wage in the United States is nearly $21 per hour. In Mexico, the average manufacturing wage is just over $2 per hour -- an historic low. The result is a continued trend of companies moving or establishing manufacturing activities in Mexico.
Thursday, November 30 2017
As I have been writing this article, I found myself continually circling back to an issue that is fundamentally impacting site locations for Latin America and the rest of the world—the future of U.S. trade policy. The reality is that it is somewhat difficult to discuss location trends (particularly as we look forward) because of the general uncertainty about the direction that US trade policy will take. The good news is that the administration and Congressional leadership have backed off protectionist policies such as a blanket 35 percent import tariff for companies that leave the U.S. and establish facilities elsewhere, as well as 20 percent border adjustment tax -- similar to a value added tax (VAT). It also seems clear now that the administration will not follow through on an earlier threat to completely withdraw from NAFTA.
The results which will emerge from the renegotiation of NAFTA may signal how the rest of Latin America and the world will be impacted. In July, the United States Trade Representative issued an 18-page document, titled “Summary of Objectives for the NAFTA Renegotiation”. The report set forth more than 100 objectives covering 22 different issue areas related to trade, giving us some insight into what the administration seeks to achieve. I have written about this in other articles—but I suspect that issues surrounding “rules of origin” may have the most significant impact on location decisions as we go forward.
Tuesday, July 25 2017
Canada is getting a lot of positive attention these days in business circles and popular media. And while a telegenic and media savvy Prime Minister is helpful in raising the country’s profile, he alone is insufficient reason for The Economist magazine to feature Canada on its cover in October 2016 and declare Canada an “example to the world.” And socio-political decisions, like Canada ambitiously and magnanimously accepting and resettling over 40,000 Syrian refugees in less than 24 months, have certainly bolstered worldwide opinion of Canadians, who were already considered a friendly bunch. It is in the realm of business and foreign direct investment, and Canada has also been receiving high praise, posting strong results in global rankings, and announcing exciting new investment in a wide variety of industries. Though not without challenges, Canada is working diligently at supporting, promoting, and attracting high-value, innovation-oriented economic sectors and achieving some remarkable success.
Thursday, June 01 2017
By Dr. Reza Moridi, Minister of Research, Innovation and Science, Province of Ontario
Realizing great ideas in the fields of regenerative medicine and life sciences, then presenting them to market is a challenge. It requires the precise combination of talent, support from private and public partners, and a competitive intellectual property regime. Furthermore, breakthroughs often require an interdisciplinary team of biologists, chemists, engineers and even physicists, along with a company ready to shoulder significant risks and capital to achieve results. Few places in the world are as concentrated with these necessary components such as Ontario, Canada.
Thursday, January 12 2017
By Ralph Biedermann, Managing Director of Mexico Consulting Associates
Looking back at the fifty-year history of the industry which started with many names and eventually settled on “maquiladora,” it has had a similar track to a “product life cycle”. The beginnings were somewhat rugged with concentration on the border. Then heavy growth took place in the 1980s and 90s. For many years in that period, growth was “double digit” – in terms of number of plants, numbers of employees, and production output. Following the 2001-2003 recession, growth was in the single digits. With substantial growth recently, let's look at the industry's current conditions and what factors might affect it going forward.
Thursday, September 15 2016
By Marie-Christine Bernard, Associate Director, Provincial Forecast, The Conference Board of Canada
Economic conditions remain difficult in some parts of Canada and the outlook remains clouded. The Canadian economy got off to a great start, with strong growth in January. The gains were driven by robust household spending, a surge in exports, and a double-digit increase in residential construction. Unfortunately, that momentum quickly dissipated. A number of external factors, such as the wildfires that damaged much of Fort McMurray and the surrounding areas, slowing global economic growth and the Brexit vote, have dimmed the growth outlook for Canada and will weigh on economic prospects and business sector decisions. The Canadian economy is expected to pick up some momentum in the latter part of the year -- as the federal government rolls out its infrastructure spending program and tax measures aimed at helping to lift growth across Canada -- start to have an impact. The slump in commodity prices is by no means over, but a recent price rally for some metals (such as nickel, zinc, and silver) will be the starting point to a gradual recovery.
Only three provinces—Quebec, Ontario, and British Columbia—are expected to see job creation this year. The other provinces are expected to shed jobs, led by large declines in oil-producing regions. Similarly, housing starts will post significant declines in most parts of Canada, with the exception of British Columbia and Ontario.
Thursday, January 14 2016
By Ralph Biedermann, Managing Director of Mexico Consulting Associates
Although our memories often do not serve us well, this year marks the 50th birthday of what is still called today “Mexico’s Maquiladora Industry.” Established in 1965, the program known then as the Border Industrialization Program, was designed to bring economic development to the border region following the cancellation of the Bracero Program between the U.S. and Mexico. The Bracero Program came into being through Executive Order and interim agreements in July-August of 1942 and sought to allow Mexican laborers to legally enter the U.S. on a temporary basis to work in agriculture and the railroads. The final agreement between the countries went into effect on April 26, 1943 and lasted until December of 1964, when the program’s renewal failed to pass Congress. In its 22-year lifespan, over 4.5 million Mexican citizens legally worked in the U.S., primarily in Texas and California.
With the collapse of the Bracero Program, Mexico had a dilemma. The unemployed labor in the border cities, primarily men, that had resided in those cities temporarily while waiting for employment in the U.S. The government had attempted to develop the border area economically as early as the 1930s. And, in 1933 the government had developed a “Free Zone Law” in order to increase trade which began with Tijuana and moved east. In 1960 the government asked Jaime Bermudez of Cd. Juarez to head a new program, called the National Border Program (PRONAF), to transform the border region. When Bracero ended, the government decided to roll the basics of the National Border Program into a broader effort - the Border Industrialization Program (BIP). That was announced in May of 1965, became effective in August of 1966, and was fully implemented in 1967.
Friday, December 04 2015
By Christian Canales, Public Relations and Communications Manager, JLL Mexico
While industrial warehouses don´t have the glamour associated with a prime office tower or a five-star hotel, they play a fundamental role in a company´s logistics – and are the backbone of a country´s economy.
Foreign companies continue to be attracted to the Mexico real estate market, specifically in the Bajio region (which includes Queretaro, Guanajuato, Aguascalientes, San Luis Potosi, and Guadalajara). This region – particularly attractive to the automotive, aerospace, and food industries – continues to create new industrial parks and buildings. Rents shown in Jones Lang LaSalle's (JLL's) Mexico´s latest report Mexico Industrial Report Q2 2015 for industrial properties located in this area are on average at 3.81 dollars per square meter per month. The 13 percent rate decrease from 4.39 dollars (at the end of 2014) reflects stock in lower priced industrial parks added to this report.
“Warehouse construction costs are the same in the whole country, but this has to do with the price of the land,” said Gerardo Ramirez Barba, National Director of JLL´s Corporate Industrial Solutions based in Mexico City. “In the Bajio lease prices are found to be lower than in other regions of the country.”
Friday, March 20 2015
Malaysia today is one of the world's top locations for offshore manufacturing and service-based operations as reflected in the presence of companies such as Agilent, General Electric, Intel, Baker Hughes, The Hershey Company and IBM. The presence of multinational corporations (MNCs) has stimulated the development of local supporting industries. With the rise of local vendors, more foreign companies are attracted to Malaysia to avail themselves to the supply chain and ecosystem that have been created over the years. Many of the existing foreign companies have also continued to show their confidence in the country's potentials as an investment location by expanding and diversifying, particularly in high technology projects.
Malaysia is a vibrant investment destination. Other than manufacturing, the Malaysian government is also strengthening the services industries as a part of its strategy to diversify and improve the competitiveness and resilience of the economy of the country. The global operations hub, and regional establishments, which include Operational Headquarters (OHQs), International Procurement Centres (IPCs) and Regional Distribution Centres (RDCs), as well as business and professional services, distributive trade, construction services, education and training services, tourism services, health services, ICT services and logistic services are among those activities promoted.