How has the commerce between the members of NAFTA evolved in the past 5 years, more specifically between Mexico and Canada?
I believe that in the course of the 17 years that NAFTA has been in force, Canada and Mexico have been able to exploit things, from my point of view, in a spectacular way. I say this in the sense that today our bilateral commerce exceeds US$30 billion and the fact that 2,600 Canadian companies are located in Mexico providing excellent employment for the Mexican people.
Another thing is that the total amount of the Canadian investment is close to US$10.5 billion and more recently there has been a sudden acceleration in the fields of Aerospace, IT, Automotive and mining.
This is the reason why, as the Ambassador of Canada in Mexico, I am pleased that we are taking advantage of the benefits that the Free Trade Agreement has brought in terms of a higher economic integration in a partnership that can be characterized as strategic in every way. This includes, in terms of the reinforcement of these economic bonds, that honestly I must comment on...in the times before the entrance of NAFTA in 1994 existed, but they were of much less importance and at this moment in time our economies are very important for each other.
What is the future of NAFTA regarding the commercial integration of Mexico and Canada?
I see a picture of a higher integration over the mid and long term. I believe that the reality of the global economy, when considering the actual costs of transportation and energy, this region of North American that we share with Mexico, Canada and the United States...will become even more important in terms of competition in our respective economies and also for our region in the global economy.
I look at the future with great optimism and assume that the growth phenomenon we have experienced in recent years will accelerate even more in the future.
How has the Canadian investment in Mexico evolved along with the consolidation of NAFTA?
The proximity is a determining factor in terms of the entrepreneurial productivity of both Mexico and Canada. Each of us has the good fortune of sharing borders with what is still the largest consumer market globally speaking, anywhere. I think that this position will continue for the U.S. for many years to come.
This fact gives us a good base from which to restructure production between the three countries taking into account the competitive advantages of each. What we need today is a strategy that takes into consideration the terms of the companies operating inside a global economy and at the same time using all the existing tools in the North American Market to raise competitiveness, reduce the costs of production and to raise the technical levels of production.
And personally, I believe that this is what any company that wants to compete in the global economy has to do. Canadian and Mexican Companies, for instance, are now sharing efforts to improve the competitiveness of their products and technologies.
What is the level of satisfaction of Canadian companies with their operations in Mexico?
According to the Canadian Chamber of Commerce in Mexico their surveys indicate that for their members the level of satisfaction is very high. Canadian Companies are extremely happy with the performance of their investments in Mexico and that's the reason why many companies are exploring the possibility of expanding their plants in Mexico, specifically in the manufacturing industry.
I can tell that the productivity of the labor force is very competitive in Mexico in terms of their commitment and technical capacity to facilitate change along with the resources of the State Governments to support things like Industrial Parks and other important aspects related to infrastructure. This positions Mexico as a priority destination for Canadians who are looking for a place to locate their production platforms abroad.
What is your outlook for Canadian trade and investment in Mexico?
I see that many companies are continuing expansion of their current investments in Mexico. From what we have seen, there is Bombardier in Queretaro and in the automotive sector along the Saltillo-Monterrey corridor there have been many important announcements this year. Magna has also announced the construction of a new plant for the automotive industry in San Luis Potosi. Intertek of Quebec in the aerospace industry has also announced the establishment of a new plant for the fabrication of components in Queretaro.
In the Mining sector there are new mines that will be opening in states like Chihuahua and Sonora. I feel that all this points to an accelerated growth in the presence of Canadian investors in the Mexican economy.
Is there any additional Canadian investment to be expected in Mexico in the near future?
There are the ones that have already been announced and already announced in the public media. We respect the fact that the companies have to be the first to announce what they are going to do. But the prospect of new announcements to be done during this and the next year is very positive. This translates into congratulations for everyone at the Embassy and in the four Chamber of Commerce chapters located in Mexico City, Saltillo, Monterrey and Guadalajara.
Are there specific sectors targeted by Canadian companies?
The sectors that we previously mentioned in the course of this conversation, I believe, will keep growing, thus giving an important focus on Canadian companies with operations in Mexico in the aerospace, automotive, mining, and IT. Also, this means companies operating services in Mexico, both engineering or financial services and I feel that all of this will continue growing. It is certainly the direction for Canadian investment here in Mexico.
Another field of interest is tourism. With more than 1.6 million Canadian visitors in Mexico yearly and we have heard suggestions that this number of visitors will grow. Along with this we can logically expect new investments in the tourism industry by Canadian companies in Mexico.
What is your opinion about the Mexican Aerospace Industry?
I have had the opportunity to visit Queretaro, Chihuahua and Tijuana which are the places where this industry is really focused.
And I realize that every time that there is more and more of Mexico growing as a priority destination. If I heard it correctly, Minister Ferrari announced that in the year 2010 Mexico received the largest aeronautic investment anywhere worldwide.
I believe that this remark underscores several important and related factors: the capacity of the Mexican labor force, for example, and the prudence of companies to look to Mexico in terms of what the country can contribute to the Aerospace industry supply chain. And another thing, I feel that we are experiencing just the beginning of an era that in 5, 10 or 15 years will bring enormous benefits to Mexico in terms of employment, high tech opportunities for a very qualified labor force. This translates into an excellent future for young engineers graduating from large universities, like the new Aeronautics University recently established in Queretaro.
So, the picture of the Aerospace industry can be seen in a very positive way and I know that this will be something very important for Mexico over the mid and long term.
What benefits do you consider have been made because of the integration of Mexico and Canada in the Aerospace Industry?
If we look at the case of Bombardier we can assume that the aircraft queues for the Global Express, which is the most important corporative jet for Bombardier, are made in Mexico and transported to Canada for final assembly. This is a good example of the high level of integration.
Today more components for Bombardier aircraft are being fabricated here in Mexico. All the wired systems for Bombardier aircrafts are made in Mexico, so I believe this is a strong showing of our high level of integration and of the outstanding quality in terms of production that is being done in Mexico. All this can be seen within the scope of productivity of a world class company like Bombardier having a strong presence not only in Canada, but in the U.S. and Mexico, as well as Europe.
At this time, with the new business Lear Jet 85 whose fuselage is mostly made in Mexico, we have yet another example of our high level of integration with Bombardier. Mexico has been a key element for the international operations of Bombardier because of its excellent supply chain and impressive capacity to improve its competitive position in an industry where we all know that high tech and cost control are indispensable to capture new markets.
How has the leadership of Canada evolved in the Mexican mining industry in the past two years?
This is something extremely positive, I believe, in the last few years. With the current prices for minerals and metals, Mexico has become a priority destination for Canadian investment. If I am not wrong, in regard to foreign investment in the mining industry, Canada represents 75% of the total amount invested in Mexico.
In 2010, Gold Corp was the largest investor in Mexico because of their huge projects in Zacatecas and other incountry sites. With the gold price over the US$1,700 per ounce and silver over US$30 per ounce, I think the geological potential of Mexico is going to be something that will capture the attention of the Canadian enterprise for the entire Toronto Stock Exchange. This is because it represents a combination of most of the capital for exploration worldwide.
There are over 40 mining operations in Mexico at this time resulting from Canadian investment. And the projects for exploration exceed the 500 mark for those already underway. I think this trend will grow because it is a sector where Canada shows a world class capacity in every sense.
When the Canadians come to Mexico to work the mines, we always do it with the highest standards of social and corporative responsibility. We do it with full respect for the protection of the environment and with constant consultations with the communities carrying-out the mining activity.
As Ambassador, I feel very proud of how our companies work here and bring economic opportunities to areas where the mines are located. For the most part, these may well be locales where the options would be minimal in the absence of this economic activity. I believe, and others would agree, that this is something that brings many positive contributions for Mexico and its respective mining communities.
What is your opinion of the Mexican economy?
The Mexican economy, it can be concluded, shows a level of growth extremely positive. This year it is around 4% to 5% when compared to global economic performance and it is very positive for Mexico.
Mexico has several comparative advantages that are very important. In terms of the strength of its financial institutions, as a case in point, it is very important for foreign investors because of access to fi- nancing opportunities inside the country. I think that it is also important to emphasize the consistency and depth of the labor force.
The work force features highly trained and disciplined people who come to work every day with energy and commitment.
I hear very positive comments from Canadian executives about the labor force productivity here in Mexico and this is also another important point of attraction.
At the economic level, as Canadians we consider Mexico like a strategic partner in this context. Mexico provides a solid basis for the economy of the country because of the performance of the Bank of Mexico along with the Ministry of the Treasury and there are other important players in the macroeconomic politics of the country.
This is something looked at with good eyes because it has brought economic stability to Mexico and this is essential for investors who bring their capital and put it to work outside their own country's borders.
Any last comment for the subscribers of MexicoNOW?
Only to express this...for Canada this bilateral relationship with Mexico represents over US$30 billion of commerce and over US$10.5 billion in investment. I firmly believe we both have established the conditions for a win / win relationship in this economic partnership that has been accelerating during the past 15 years since the entrance of NAFTA.
This has brought prosperity for both Mexicans and Canadians. But it doesn't solve all the challenges that we both have as societies that remain pending. But if we see it objectively, we are in a mutually very positive moment in our economic and commercial relationship between the two countries. In summary, my hope is that both countries will be able to take great advantage of all the opportunities now and in the future.