JALISCO – Competitiveness and Innovation in Progress

Jalisco is a dynamic State with a diversified economy. It has a high tech sector that accomplished a profound industrial reconversion while maintaining international competitiveness in the high-tech industry. They did it with 35 international design centers for semi-conductors, telecommunications, automotive electronics and the Aerospace Industry.

It has also become the perfect example of the profound drive towards innovation and value-added activities characteristic of modern knowledge-based societies.

The Guadalajara Metropolitan Area has been well ranked by the media as a potential site for investment attraction, as well as being listed as one of the major Cities of the Future. The Area is also recognized for being one of the “Best Economic Potential Cities of North America”.

Logistically, Jalisco is the best place in Mexico to do business. It features easy and fast access from the Pacific Seaport of Manzanillo. The State has two international airports located in Guadalajara and Puerto Vallarta. The International Airport of Guadalajara is the second most important cargo and passenger airport in Mexico. More than 2 million international and more than 4 million national passengers land and take-off there each year.

In Mexico Jalisco is in first place in road infrastructure being connected through the railway network. Jalisco offers access to 50% of the Mexican population (50 million inhabitants) within a 560 km radius. Internationally, Jalisco is connected to the main cities in the U.S.A. and through strategic hubs to Central and South America. All are within a 6-hour flight range.

Regarding infrastructure, this well-developed State has industrial Parks coordinated by the Industrial Park Association of the State of Jalisco. This Association offers certainty in land ownership and feasibility in electricity, water, telecommunications and natural gas supply. In the Metropolitan Area there are 47 industrial Parks. Forty two are private and the other five are public parks. Based on the success with the Automotive and Electronics industries, Jalisco has a young, well- educated workforce that is rapidly achieving high technology seniority. The emergence of small, high-tech companies is continuing to strengthen the supplier base.

Jacobo Gonzalez is the General Director for Investment and Business Development at the Secretary of Economic Promotion for the State of Jalisco. He explained it this way: “Our main resource is our talented labor pool. Workers are drawn from technical schools and universities with solid backgrounds in diverse fields. Recommendations and referrals come with the strong support of the Semi-Conductors Technology Centre, part of the Advanced Research Centre (CINVESTAV) of the National Polytechnic Institute, ITESO and ITESM among others. It is Mexico’s premier research and post-graduate studies institution.”

Mr. Gonzalez told us, “...The State of Jalisco offers an excellent environment for business due to the fact that we are a natural place for commercial and logistics activities. We have one the most important economy in Mexico. Our total trade and commerce in 2009 was approximately US$50 billion.”

Jalisco Is the Location of Choice for Competitiveness

In 2009 Jalisco registered 91 new investment projects and there was follow-up in the State on 79 projects from previous years. According to the Secretariat of the Economy, from the months of January through September of last year (2009), Jalisco was ranked 5th in Foreign Direct Investment (FDI) nationwide.

According to Jacobo Gonzalez, many new investments were consolidated. To mention a few, companies such as Best Buy, Kyoto Energy, HP, Freescale, Jabil, Sanmina SCI, Flextronics, Westin among others have generated more than 4000 new jobs with investments totaling more than US$2 billion.

“The challenge for Jalisco,” Jacobo Gonzalez said, “is to achieve a greater participation in sectors such as Aerospace, alternative energy, medical and biotechnology and consolidate the automotive cluster. By doing this we are becoming one of the States with the highest attraction of foreign direct investment in Mexico.” Mr. Gonzalez explained that currently the State is developing 142 new investment projects. This represents an opportunity of US$4.5 billion and comes with the generation of 39,100 new jobs. “In the Automotive sector,” he continued, “we are working on 8 new projects which together add up to the sum of US$600 million.”

In 2008 Draexlmaeir established operations in Lagos de Moreno to manufacture harnesses for BMW, VW and other automotive companies in Mexico. During the same year HONDA made a conversion. The Company changed the Accord manufacture to CRV manufacture. Also in 2009 Companies increasing their operations in Jalisco included firms like: Engine System; Henniges Automotive Sealing Systems Mexico; Aluminio Conesa. Increases in operations also came from Aluminum & Zinc Die Casting de México; Continental Automotive Guadalajara; PETOSA, S.A. DE C.V.; ZF Sachs Suspension México, and the Corporación de Occidente. Others expanding operations were Birlos Automotrices; Sunningdale Technologies; as well as EMERSON CLIMATE TECHNOLOGIES MÉXICO, S.A. DE C.V.

“During the past 10 years,”the General Manager for Investment and Business Development at the Secretary of Economic Promotion explained to MexicoNOW, “the Automotive Sector has represented US$1.01 billion in investment and US$11.6 billion for export production.” The Secretary continued to explain. “Back in the year 2008,” he said, “we consolidated 12 investment projects and another 13 new projects in the year 2009. This was landed successfully with an investment of US$290 million.” These investments are mainly Tier One and Tier Two companies offering products such as Chassis Systems; Airbags; Harnesses; or ABS brakes and electrical motors. There are also transmission systems plus some electronic components.

In Jalisco one can find the complete automotive supply chain. Around 150 companies are OEM, TIER I, TIER II, TIER III and there are some other suppliers.

The Vehicle Electronics Technology Center, born of the agreement between the ITESO and Technology Solutions Company, includes the automotive, electronics and software to design, build and test electronic systems for cars.

The Center develops and integrates electronic systems for automotive applications, with the areas of: 
• Testing services and systems integration testing of modules and systems for automakers and their suppliers. 
• Engineering services, design and integration of electronic systems for automakers and their suppliers.
• Research and technological development in electronic systems. In 1995 the Company HONDA decided to start operations In Jalisco. Honda is one of the Original Equipment Manufacturers (OEM) in Mexico’s Automotive Cluster. Honda started with an investment of US$50 million for pilot automotive production and an installed capacity of 15,000 vehicles a year.

Currently, the activities of Honda in Jalisco are: 
• Assemble and marketing of cars and motorcycles. 
• Manufacture and marketing of auto-parts and components for motorcycles, defenses and mower decks.
• Marketing of spare-parts, power products and outboard motors.

A Success Story in Vehicle Electronics

Also located in Guadalajara is one of the Central Electronic Plants of Continental, with more than 150 engineers, as a global company and offers its services as an electronics development Center. Continental select this region to the development of hardware, software and mechanical designs; testing validation and introduction into the mass production for the automotive industry. Also Continental has Special Automotive programs in coordination with 6 major and prestigious Universities of Guadalajara.

The center was formally established since 2000 and the objective of the company, is also the research to the Nafta organization and to develop the highest competitive products for the global market. The metropolitan Zone of Guadalajara is considered Mexico’s high tech capital due to its leadership in software, electronics and informatics development.

Alejandro Sauter is the Director of Continental in Jalisco. He chatted with MexicoNOW. “At this time,” he observed, “we are employing about 3,000 people. They are busy producing all the electronic requirements needed by the Automotive Industry.”

According to Sauter, Continental in Guadalajara manufactures instrument panels for cars and/or trucks; airbag controllers; and chassis components. They also turn out body controllers and tire sensors among other items.

“Our customers for the Guadalajara Plant,” continued Sauter, “include all the American brands like GM; Chrysler and Ford; along with Volvo; Mercedes Benz; and Honda. Nissan, Toyota, Hyundai, Kia, Suzuki as well as other truck brands are included here.”

According to the Director of Continental, being established in Jalisco has generated many benefits. “The labor is very well qualified,” he points out, “and has the best mentality; they are really motivated to transcend into the world productive sphere. Also, the location and the timetable make operations with our customers easier.”

Sauter had this remark on the importance of the electronic cluster developed in Jalisco. “We have found the niche for complex products according to assembly technologies and sequenced products. We are prepared to support the Automotive, Aeronautic and many other industries-- anybody in fact who requires electronics.”

“We invite you to invest in Jalisco,” says Mr. Jacobo Gonzalez. “A leading state where companies have decided to establish operations,” the General Director for Investment and Business Development at the Secretary of Economic Promotion for the State of Jalisco adds, “due to our strategic location, diversified economy, skilled labor force, high technology, and specialized sectors. In addition we have an excellent quality of life, superior education levels and when needed plenty of government support. We want to promote economically sustainable development. Our hope is to generate a suitable context for each sector’s competitiveness and dynamic innovation. It is through an increase in investments and infrastructure as well as entrepreneurial culture,” Mr. Jacobo Gonzalez concludes, “...that we are able to enhance each region and in this way bring great benefits to the families of Jalisco.”