Italy in México

MEXICONOW Staff Report

In recent years the bilateral bonds between Mexico and Italy have been characterized by an exciting new dynamism. This is reflected by the new terms of cooperation in diverse fields of action, and it is certainly reinforced by the Free Trade Agreement signed between Mexico and the European Union in 2000.

Today, the expectations are very high regarding the collaboration between both countries in their respective political, economic, commercial, and scientific, as well as their technological, academic and cultural agendas. The two countries play a significant role in seeking solutions to global challenges, including their work in United Nations reform within the framework of international stages such as the UN, FAO, the G20 and the OECD.

Mexican President Enrique Peña Nieto and Enrico Letta, Italy’s President of the Council of Ministers, held a meeting in January of this year to exchange views on major issues related to bilateral relations. They also went to work analyzing some of the most significant global challenges facing us today. 

The two leaders expressed their determination to revive the strategic relationship between Mexico and Italy and stated that the two nations, united by historical and cultural ties, share common democratic values, while at the same time having a strong mutual interest in strengthening the political dialogue and developing trade. The presence of the Italian President certainly boosted bilateral relations, because it has been over two decades since the last official visit to Mexico by an Italian head of state or government. 

Enrico Letta, the Italian Prime Minister, said he sees opportunities for Italian firms to invest in Mexico’s energy sector thanks to the government’s opening of the ailing, long-shuttered industry.

Exhibit 1 summarizes the Trade Balance between Mexico and Italy. It shows that commerce between the two countries reached its maximum level in the year 2012. This bilateral commerce has experienced many up and downs, mostly reflected by the global recession in the years 2008 and 2009, but more recently have again recovered in a satisfactory way following a path of continuous growth since 2010. 

Several important factors in the trade balance between Mexico and Italy are revealing. Take for instance, the fact that during the 13 year time span from January 1999 to December 2012, total exports from Mexico to Italy rose from US$170 million to US$1.3 billion (+664%). And at the same time, imports from Italy to Mexico also showed a 231% growth. 

Total commerce between the two countries and reciprocal action brought in US$6.8 billion during 2012 in trade between the two partners and showed important improvements. This has been especially true of the period since 2011. This was when, for the first time, that the total commerce “stats” were available identifying the US$6 billion. In fact, the period 1999 to 2012 represents a 271% growth rate in total commerce between the two nations. And another interesting detail is that in 2012 there was a 3.39% increase in commerce (US$6.8 billion) in comparison with (US$6.5 billion) 2011. 

Italy represents the 3rd largest commercial partner with Mexico among all the members of the European Union.

Exhibit 2 shows Italian Investment in Mexico. Italy is the 8th largest investor in Mexico among the European Union members. During the period from January 2000 through June 2013, companies with capital from Italy invested US$958.3 million in Mexico. 

There are over 1,400 companies with Italian investment in Mexico. The main sectors with private Italian capital in Mexico are manufacture and services. 

The main Italian companies investing in Mexico are Fiat, Ferrero, Pirelli, Enel, Techint-Tenaris, Barilla, La Perla and Hermenegildo Zegna. There are also Armani, Assicurazioni Generali, Finmeccanica-Agusta-Westland, and Calzedonia. Add to the list Danieli, Fata, Ferragamo and Luxottica. Also included are Max Mara, Maccaferri, Metecno, Merloni, Saipem and Zoppas. They all have an important presence in Mexican territory. 

In 2012 Pirelli inaugurated a factory in Silao, in the state of Guanajuato. At the inauguration former President Calderon joined the Chairman and CEO of Pirelli, Marco Tronchetti Provera. 

Pirelli’s first plant in Mexico and its 22nd tire plant worldwide are mainly focused on the premium segment. They produce High Performance and Ultra-High Performance tires for cars and SUVs for local and all NAFTA area markets. The factory covers an area of 135,000 square meters and its capacity will reach 3.5 million units in the first phase of development which will span through 2015. When fully operational in 2017, production is expected to be 5.5 million units.

Pirelli’s investment, already included in the industrial plan, will be around US$300 million from 2011 to 2015. By 2017 a further US$100 million will be invested for an estimated total of around US$400 million. The Pirelli plant, which is equipped with the group’s most advanced technology and production processes, created 1,000 new jobs in 2013. This includes 700 direct positions with the group and 300 external positions. When fully operational, the plant will add 700 direct employees and another 100 indirect. The projected total will be 1,800 jobs.

According to Marco Tronchetti Provera, Pirelli Chairman and CEO: “Our factory in Mexico represents an important step in our international development plan. This is a country that offers excellent opportunities both because of the positive dynamism of local demand and its strategic position. This makes it an ideal industrial base to serve the entire NAFTA area, which we think is one of the most promising factors for the success of our strategy.”

Enel of Italy has signed the first energy deal with Mexico since landmark reform last month opened-up the country’s hydrocarbon resources and power sectors.

Last year Enel Green Power said it would invest about $160 million to build a 102 MW wind farm in Mexico. The project is to be completed and put into service in the second half of 2014. Enel describes its presence in Mexico as “…still small but interested in growing.” Fulvio Conti, the Enel Chief Executive, said Mexico’s energy reform was–“an important step forward for Mexico towards modernity. This is because it introduces more efficiency in the use of energy and envisages a better use of the country’s resources.”