Germany in Mexico

MEXICONOW Staff Report

The Governments of Mexico and Germany maintain a firm commitment to work in the consolidation of a dynamic political relationship, based on the EU-Mexico Global Agreement. Mexico and Germany share interest in strengthening the multilateral system and maintain close cooperation in international themes on issues of common interest such as democracy, respect for human rights, environmental protection, the codification of law and federalism.

In commercial terms, the economies of Mexico and Germany have the closest relationship of the framework of the European Union, given the wide complementarity of them. The successful experiences of investment and establishment of German companies in Mexico and Mexican in Germany are proof of the strength of this relationship where currently over 1,750 companies have German capital in Mexico and have so far invested about 25 billion EURO in Mexico creating over 150,000 jobs.

Mexico’s Ministry of Foreign Affairs Jose Antonio Meade, recently culminated on June a working visit to Germany, where he participated with his counterpart Frank-Walter Steinmeier, in the establishment of the Binational Commission Mexico-Germany.

The foreign ministries of Mexico and Germany agreed to divide the newly established Binational Commission in five subcommittees: Political Affairs; Cooperation for Sustainable Development, Environment and Climate Change; Science, Research and Innovation; Economy, Energy, Trade, Investment and Tourism and lastly, Culture and Education.

The two countries also signed a memorandum of understanding on digital infrastructure that with the cooperation and joint projects will be strengthened in the fields of transport infrastructure, telecommunications and public works.

Germany is Mexico’s largest trading partner from the European Union.Exhibit 1 summarizes the Trade Balance between Mexico and Germany. It shows that commerce between the two countries reached its maximum level in the year 2012 (US$18 billion). This certainly reflects the excellent moment that the bilateral relation is now having. The bilateral commerce historically has been negative from Mexico.

Several important factors in the trade balance between Mexico and Germany are revealing. Take, for instance, the fact that during the 14 year time span from January 1999 to December 2014, total exports from Mexico to Germany increased from US$2.09 billion to US$3.50 billion (67%). And at the same time, imports from Germany to Mexico also showed an impressive growth from US$5.03 billion (1999) to US$13.76 billion (2014), a remarkable 173% of growth.

Total commerce between the two countries and reciprocal action brought in US$17.26 billion during 2014 in trade between the two partners and has consistently been with sustained growth or similar figures, especially from the period since 2010. This was when, for the first time, that total commerce “stats” were available identifying double digits. And another interesting detail is that in 2014 commerce stats remained the same than in 2013, with total commerce of US$17.26 billion in both years.

Exhibit 2 shows German Investment in Mexico. During the period from January 2000 through March 2014, companies with capital from Germany invested US$7.73 billion.

Currently Mexico features hundreds of enterprises with participation of German capital. Some German companies settled in Mexico include: Adidas, Allianz, Audi, BASF, Bayer, Braun, BMW, Bosch, Carl Zeiss, Ccommerzbank, DaimlerChrysler, Deutsche Bank AG, Dresdner Bank AG, Festo Pneumatic, Henkel, Lufthansa, MAN, Mercedes Benz, Osram, Siemens, STAEDTLER ThyssenKrupp, TÜV, Volkswagen.

Mexico has always played an important role for the development of the German automotive industry, but lately the Country has received the announcement of historic investments by Volkswagen, Audi, BMW and Mercedes Benz.

German carmaker Volkswagen AG announced an investment of more than US$4 billion in Mexico over the period 2014-2018, under a plan for the North American region that amounts to a total of US$7 billion. At the celebration of the 50th anniversary of the presence of the manufacturer in Mexico, Martin Winterkorn, Chairman of the Executive Board of Volkswagen AG, endorsed the federal government for the ambitious reforms adopted and expressed support for Mexico “strongly” as an automotive producer.

AUDI started the construction of its assembly plant in the municipality of San José Chiapa, Puebla, which will have an initial investment of US$1.3 billion and will create 3,800 new direct jobs in its first phase. Matthias Müller, director of the new Audi plant in Mexico, said that this plant is proof that Mexico remains a center of attraction for German investment. “Audi reflects confidence in Mexico as an investment destination,” he said. Also, Rupert Stadler, Chairman of the Board of Audi, said the choice was conscious by the geographical advantages and the network of trade agreements that Mexico has. Also, he said that other companies will come as there are over 100 suppliers that wish to settle near the plant.

The German Mercedes-Benz is making an alliance with Nissan to produce 300,000 cars a year in the Mexican state of Aguascalientes and the investment fluctuates between US$850 and US$1,200 million dollars.

The German manufacturer BMW will invest US$1 billion to build a plant in San Luis Potosi, to produce up to 150,000 units annually of its model 3.28, said Harald Krüger, member of the board of BMW Group for production and manufacturing. The new complex will create 1,500 direct jobs once starts operations in 2019, said Krüger.

Volkswagen plant in Puebla