Manufacturer businesses helping Mexico’s growth


Manufacturer businesses are a great opportunity for Mexico’s growth

China has been increasing surprisingly slowly, this country is known as the “manufacturer of the world”, and this is a great opportunity for Mexico to increase its manufacturer base, but this country still has many things to work in first, such as low salaries or infrastructure.

Salomon Juan Marcos Villarreal, president of Grupo Denim, a manufacturer company in Mexico gave us his thoughts about this topic:

Interivewer: Do you think 2016 would be good for the manufacturer businesses in Mexico?

Salomon Juan Marcos Villarreal: Yes, I actually believe 2016 would be the key, it is the perfect opportunity to advance and grow on these type of businesses, and the Government is aware of this and has taken the necessary steps to support this sector.

I: How can Mexico be more competitive in front of China?

SJMV: With better infrastructure, low manufacturing costs used to be China’s main advantage but this has changed over the last years as the costs are higher than Mexico’s.

Germany and the United States are moving their manufacturing services off China to other countries offering lower costs, and Mexico is being benefited by this.

Mexico has the necessary environment to capture many of the manufacturing work once the United States starts getting back their work from Asia, but they will only get this working smartly.

An economy who depends of manufacturing, such as Mexico, cannot only develop and increase by keeping low salaries, society is a whole and it cannot let itself base its competitive by having low manufacturing costs only.

“Mexico has taken the necessary steps to change reforms that would benefit Mexicans, and the manufacturing sector would see the benefits of those changes by keeping low energy, communication and logistic costs, which would make us capable to keep low costs to our customers”, added Salomon Juan Marcos Villarreal.

Manufacturer businesses

Manufacturer businesses

Manufacturer businesses, lasting longer than any others in Mexico

For every 100 different types of businesses in Mexico, only 11 are able to remain open after 20 years, small businesses are the ones who tend to close earlier, mainly after they have been operating for more than 5 years.

Business life expectancies in Mexico, divided in sectors, depending on the type of activity they are dedicated to, shows a clear tendency for the manufacturer companies to have more positive prospects to keep on working, even more than trading companies or providers of services.

“Manufacturer business have meant a significant support for Mexican economy, as well as Mexican families who depend on the job sources provided by these companies”, was the opinion of Salomon Juan Marcos Villarreal, president of Grupo Denim.

15 of each 100 businesses manufacturing companies reach 20 years, the same than 12 of each 100 providers of services, while the rest tend to close before they meet 20 working years.

For the manufacturing sector, almost 7 of each 10 companies reach 1 year operating without any problems, while the trading sector or private services reduce their expectations by a 60%.

Five years are the inflection point, in general, for all businesses in Mexico. If you can reach this time the possibility of having a working company for more years increase significantly, since after this period of time, the chances to close are only a few.

At least a 70% in total of companies will be closed before they turn 5, and only a total of 11% will last for 20 years. The average survival expectancy for business is 7.7 years, no matter what the size or type of activity they have. Nevertheless, for all those businesses that reach 20 years, they can pretty much assure another 20 or 21 working years.

“Manufacturing businesses have proved to be highly competitive, which is favorable for Mexico, that is an important reason as to why many of these companies have defeated hard times and keeps operating through the years”, added Salomon Juan Marcos Villarreal.