Monterrey Solidifies its Position as Mexico’s Nearshoring Hub

Q: What makes Monterrey an attractive investment destination for foreign companies seeking to establish a presence in Mexico?

A: In the past 25 years, Nuevo Leon has stood out as the most attractive destination for foreign investment in Mexico and from 2021 the state has witnessed a significant surge in the arrival of new companies. Over 70% of the total foreign direct investment related to nearshoring in Mexico has headed to Nuevo Leon, specifically to the capital Monterrey, which can be observed in the occupancy rates of industrial spaces. Monterrey boasts a privileged geographical location just 200km from the US border, which is extremely appealing from a logistical perspective.

Human talent is a fundamental aspect. Monterrey’s workforce is known for its high productivity and capacity. With an average age of about 29 years, the city's demographic bonus is a great draw for multinational companies. Monterrey's universities also play a crucial role as talent incubators. Infrastructure is another key factor. The metropolitan area of Monterrey boasts over 160 industrial parks, surpassing any other location in Mexico.

Q: What are some key sectors that allow Monterrey to excel and play a critical role in the country's economic landscape?

A: The automotive industry has a strong presence in Nuevo Leon, employing over 120,000 people. We have six OEMs: Kia Motors for light vehicles, Navistar International for heavy trucks, Mercedes-Benz Group for buses and Polaris, CF Moto, and Kawasaki for all-terrain vehicles. Soon, Tesla will also arrive to the state to produce electric vehicles.

Monterrey’s home appliances manufacturing industry also stands out, as it has developed a robust supplier base for the manufacturing of refrigerators, stoves, washing machines, and other appliances. Global players like LG, Whirlpool, Carrier, and Hisense are present in the state. Bosch is building its first appliance manufacturing plant in Monterrey.

Finally, the region’s IT sector is growing, attracting companies mainly from India and the US. This sector requires more technology-focused skills and english proficiency. Universities and proximity to the US have contributed to having a population with strong skills, enabling technology companies to provide global services.

Q: How does Invest in Monterrey facilitate and support foreign direct investment in the region?

A: Invest in Monterrey is a nonprofit association that works with the local ecosystem to support multinational companies interested in establishing operations in Nuevo Leon. This ecosystem includes state and municipal governments, private companies, industrial parks, universities, legal firms, logistics firms, accounting firms and HR service providers. Invest in Monterrey performs two fundamental activities. First, we promote Nuevo Leon both nationally and internationally, as an attractive destination to do business.  Second, we offer direct support to multinational companies, working closely with them to develop strong business plans.

Companies should seek advice especially if it is their first time in Mexico or if they are expanding operations outside of their home country, as is the case for many Chinese companies. It is crucial for these companies to approach local experts to leverage their experience and regional knowledge. This will allow them to have a solid network spanning from the government to the private sector and universities, ensuring they have all the necessary information to make informed decisions.

Q: What are the main challenges hindering the arrival of new companies in Nuevo Leon?

A: One of the main challenges is the growing influx of companies and the corresponding demand for more infrastructure and services. This situation presents a significant challenge but  the state government is making substantial investments in infrastructure, including roads and mobility systems. Projects, such as a suburban train and the expansion of metro lines, have been announced, as well as road extensions and other key projects. These efforts will be important to improving mobility and alleviating traffic. 

Another crucial challenge is energy supply. With the arrival of many companies, energy demand has significantly increased. This problem is not exclusive to Nuevo Leon; it is a nationwide challenge. The federal government has adopted several approaches to energy policy, which have influenced the speed at which permits are granted for the construction of electrical infrastructure. Locally, larger-than-usual electrical substations are being planned to meet the growing demand. These higher-capacity substations will enable the transformation and supply of more electricity for companies, contributing to addressing the energy challenges.

Q: What is your outlook on the investments Nuevo Leon will receive over the next couple of years?

A: Industrial growth in the region is advancing rapidly. Between 2015 and 2019, Monterrey’s metropolitan area had an average industrial absorption of 8 million ft2 per year. In 2021, this figure rose to 16 million ft2 and in 2022, to 20 million ft2. This represents a significant increase, doubling the annual occupied industrial space in the state. This expansion is a clear indicator of the robust growth the state is experiencing. A similar phenomenon is expected in 2023 and it is projected to continue in the coming years, motivated by the ‘nearshoring’ phenomenon. The US is having difficulty finding sufficient labor for manufacturing and industrial operations, leading many companies to seek other locations to expand. Mexico, and particularly Monterrey, has become an attractive destination for many of these companies.

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