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What are Canadian companies looking for in Mexico?

What are Canadian companies looking for in Mexico?

Posted by Ricardo Vázquez on January 12, 2015

Mexico and Canada are commercial partners. Their partnership has been growing exponentially for the past 20 years and, today, they expect to increase their investments in strategic fields such as the energy, mining, automobile, and aeronautic fields.

There is a huge partnership among both countries in commerce, investment, innovation, technological exchange, and practices in forestry and firefighting. They even have a housing committee and another committee in phyto-sanitary rules to promote agricultural trade. These two countries have a very integral relationship that also shows friendship among the two.

PanamericanWorld interviewed David Robillard, President of the Chamber of Commerce of Canada in Mexico (CanCham), who talked about their interests in Mexico. He highlighted the great environment that Canadian companies feel to expand their investments, although they admit this doesn’t mean they are free of challenges in the country.

What are Canadian companies looking for in Mexico?

(DR). Canada has had an investment relationship with Mexico for more than 100 years. The biggest fields for Canada in Mexico are mining and the automobile industry. Right after, the financial and pharmaceutical sectors follow, and very recently the aerospace field, which is very young and is growing very quickly.

You have to keep in mind that to Mexico, Canada is the main foreign investor in the mining field. Both countries share a history in their mining cultures.

It is of our interest to strengthen the commercial relation with Mexico as a partner in several aspects.

  1. A partner in the productive chain in aerospace and automobile industries, which are the activities where the productive chains are completely integrated with the US.
  2. Offer financial services to a young population, this is the case of Scotiabank, where Mexico has been the tip of the arrow in their participation and investment in Latin America.
  1. Also be technological partners with Mexico and have efficient operations in the opening of the energy sector. There are Canadian companies in fuel transport that are very distinguished, and that can offer their services and capital to the country that now needs important foreign investment. This is the case of TransCanada and ADCO; they are showing the commitment of a Canadian investor in Mexico.

What investment expectations do you have for the energy sector?

(DR). Canadian investment will grow considerably in the field of energy; we are very optimistic about this field. Mexico is going through a historical time, I don’t know of any other government that has achieved such structural change.

The mining and auto-parts fields have an important presence of Canadian companies in Mexico, but there are others that are also relevant, just like the energy field. The four others with biggest investment in the future coming from Canadian companies in Mexico will be mines, energy, automobiles, and aerospace.

Energy is very important. A good example of this is TransCanada, a company that three years ago had investments in Mexico worth 500 million dollars, and today they have investments in actives for more than 3,000 million dollars in the country, this growth happened because of the opening of this field. Another example is ADCO. They just entered the country and won two projects for 1,300 million dollars in electric generation and gas transportation.

Another important case is the one of DCS, which operates with the name of their Mexican partner DIAVAZ, where with Canadian technology and local experience they are exploiting wells abandoned by Pemex, these are usually known as Marginalized Production Wells; with the technology they have available they can keep extracting oil.

In general, what Canadians offer is investment and expertise in infrastructure for whichever field they want to work on. When you think about the exploitation of Shell Gas, which happens in uninhabited areas in the north of the country, but will soon need to take thousands of workers there to keep exploiting it; and the same happens in Tamaulipas and in Veracruz, to exploit more oil, workers will need to stay there, so places of quick accommodation have to be built efficiently, along with water treatment systems, light infrastructure, and health services. Here is where Canada has a considerable expertise, mainly in Alberta, where the development of the oil sector has required moving thousands and thousands of people.

Participation in the financial sector?

(DR). Mexico produces more engineers in absolute terms than Canada and Germany together. Canada and the US have demographic models that are growing old very fast, that is why investment in Centres of Investigation in Mexico, where the aerospace and automobile fields are an example, Mexico will get the most investment. Mexico has an opportunity of using its engineering capacity in development and in highly valued investigation.

Mexican engineers are world-class engineers, besides they are also young.

When you have a demographic bubble in Canada, where 30% of engineers will be retiring in the next five years, they have to balance out the model. Mexico doesn’t have this problem.

What do Canadian companies like about Mexico?

(DR). Productivity in Mexico is growing and this is a very important factor, but I would also say quality. These are the two main elements that attract investment.

In the field of manufacturing, companies come to be close to their customers. For example in the automobile industry, they come with all of their supply chain, most of it comes from Canada, and they have to be located next to the assemblers.

Mexico’s geographic location, next to the United States, the biggest consumer market in the world, is a blessing, and the same goes for Canada.

Canadians see Mexico in a very optimistic way and just like in any country they face challenges, but they know there are good opportunities and conditions to invest in this country.

What worries Canadians about Mexico?

(DR). What a Canadian is worried about when it comes to Mexico is actually under control because we have a solid currency with maybe some fluctuations, but not in the way it was 20 years ago. The cost of money has decreased and this is an important factor for any company.

They are also interested because they can apply the same logistic and security standards that they have in Canada and they are worried about the state of rights as they do anywhere else.

How many Canadian companies are there in Mexico?

(DR). There are around 3,000 Canadian companies of different sizes, from Pymes (Small and Mid-size companies, in Spanish) to the biggest company. However, we know that different Canadian companies generate more than 100,0000 direct jobs in Mexico and with at least twice of the indirect jobs.

The level of direct investment has grown from about 500 million dollars in 1992 to 12,600 million dollars in 2012, and this has happened in the fields mentioned earlier.

The chamber has 300 members around the country, most of them are in Mexico City, Coahuila and Monterrey, although the mines are in Chihuahua, Durango, San Luis Potosi and Guerrero. The same happens with the automobile industry that is in places such as Guanajuato, Aguascalientes, Mexico State, Puebla, Queretaro, etc.

Pioneer Canadian companies in Mexico?

(DR). The Canadian company The Mexican Light and Power Company Ltd, and that became Luz y Fuerza del Centro, was the first one to come to Mexico more than 110 years ago, they had the approval of the then president Porfirio Diaz.

Another example is the one of a company that people actually believe is Mexican. The shoes company Sandak, as part of the global firm Bata, was founded in the 40’s.

Magna is a company that produces car-parts, whose origins come from Austria but their international headquarters are in Canada, is another example.

Canadian Companies invest in the long term?

(DR) Canadian companies really analyze their strategies, they are not impulsive and they are not “swallow” investors. When they make a decision they have taken into account positive and negative sceneries.

An important factor behind those is that the majority of big Canadian companies have thousands of shareholders behind them and not reduced control groups; this is why their vision of investment is of very long term investment.

Lastly, David Robillard invited readers or Canadian companies that are not in Mexico to learn more about the Chamber of Commerce of Canada in Mexico, the Camcham. It can be the first door people can knock on if they are interested in coming to Mexico. “We can help them through our monthly events and our magno event, to get to know other companies, potential partners and suppliers”, he concluded.

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