United Kingdom in Mexico

United Kingdom in Mexico

MEXICONOW Staff Report

The United Kingdom and Mexico are closer today than they have been for many years. More and more people are choosing to live, study, work in or visit each other’s’ countries. To celebrate this exciting new era in UK-Mexico relations, the two governments agreed to designate 2015 as The Year of the UK in Mexico and The Year of Mexico in the UK, which brings British and Mexican societies even closer together in the years ahead.

The two countries have been allies at international meetings (G20, UN and others), where the two countries share in important topics like climate change and the fight against financial corruption worldwide. Mexico represents a full area of opportunities for investment for British Companies in many fields of interest, and more recently after the Energy Reform implemented in Mexico, this sector has been attracted a lot of attention from British companies, who are among the most competitive in the world.

In 2011, British company Petrofac won two of the first three contracts offered by PEMEX to the private sector for performance improvement of the Magallanes and Santuario mature onshore fields located in the state of Tabasco. Petrofac will invest US$430 million and become the first foreign company to operate state oil fields in Mexico for more than 70 years when it was awarded two integrated services contracts by Petróleos Mexicanos (PEMEX).

Major UK companies can bid for PEMEX contracts or might explore the possibility of establishing partnerships with current PEMEX contractors where efficient and affordable technology will be the key. Most opportunities will appeal to innovative and experienced companies in areas such as: productivity, redesign and maintenance of wells, seismic surveys, environmental restoration studies and infrastructure works. UK companies can sell services to the winning contractors or negotiate a consortium.

Since 2010, Aggreko, world leader in the supply of temporary power and temperature control solutions has been very successful in selling its temporary power solutions to contractors of the local oil and gas sector. Aggreko currently has offices and depots in Mexico City, Monterrey, Villahermosa, Guadalajara and Poza Rica. 

Advisory, consultancy and financial services are other areas where British Companies have very important operations at Mexico. Earnest & Young (Today known as EY), is a multinational professional services firm headquarted in London and is one of the biggest audit firms and is the third largest services firm in the world. The firm has offices in 21 Cities across Mexico. 

HSBC is one of the largest banking and financial services institutions in the world, serves millions of customers through its four Global Businesses. It is one of the four largest companies in banking and financial services in Mexico with 1,400 branches and 6,330 ATMs, and serves over 8 million customers throughout Mexico. HSBC Mexico offers a wide range of financial services, including insurance, investment and banking services to private and commercial customers.

Mexico is the seventh largest automotive producer in the world, currently producing just over three million vehicles annually. Mexico has also become the auto parts hub for North America. KN Driveline has grown continuously since it started production of CVJ Systems in Mexico in 1979. A state-of-the-art technology center opened in 1997. In addition a precision forge was established in 2000, producing a wide variety of extrusions. To support the growing market for CVJ Systems in Mexico and the USA an assembly facility opened in 2006.

Shell is a global group of energy companies that has presence in Mexico since 1954, when the Company started the distribution and commerce of petrochemicals and lubricants. Today, Mexico Shell divides its activities into areas including the import and commerce of Liquefied Natural Gas (LNG); and consulting services through Shell Global Solutions, commercialization of catalysts by Criterion and the presence of “Mexico Sourcing Office” whose purpose is to provide goods and services to the operation of Shell in the region, using a world-class certified cluster of Mexican suppliers.

According to the UK Trade and Investment and the IOE Institute, Mexico is the fourth most active country in the Clean Development Mechanism scheme (CDM), accounting for 125 projects out of 2,732 CDM projects worldwide. The UK is currently participating in 100 of the 125 CDM projects in Mexico, the majority of these projects with British participation relate to GHG mitigation and Methane recovery.

Environmental Resources Management Ltd is the biggest all environmental consulting company in the world with a global team of 3,300 staff based in 140 offices in 40 countries. Their resources are designed to match local skills and global know how to client requirements in any country in the world. This widespread presence means they can meet local customer’s objectives through global solutions. Since its establishment in 1991, ERM Mexico has successfully executed more than 1,600 complex and challenging environment projects for national and multinational companies, serving the United States, Mexico , Guatemala, Honduras, Panama, and other Central America Countries, as well as Argentina, Chile and Venezuela.

BioEden, the first company in the world to offer dental stem cells preservation, started business in Mexico in 2008. So far, BioEden Mexico has partnered with more than 500 renowned dentists and today stands as the market leader with operations in the entire country. In addition to offering dental stemcells preservation, BioEden Mexico is promoting research programs to find clinical and therapeutic applications for dental stem cells in various medical applications.

In addition are Hacked London, Lush, Fuller, Strongbow, Whittard of Chelsea, Lovis, Burberry, Pepe Jeans, Thomas Pink, Jaguar, Hamleys and Twinnings. They all have important operations in Mexico. UK is third largest investor at Mexico from the European Union and in Exhibit 1 we can see British Investment in Mexico. 

Mexico was also the first Latin American country to sign a partnership agreement with the EU (1997). This agreement, called the EU-Mexico Economic Partnership, Political Coordination and Cooperation Agreement, entered into force in 2000 and has considerably strengthened bilateral relations between the EU and Mexico.

On 19 June 2013 UK Export Finance signed a cooperation agreement with Bancomext, the Mexican export credit agency and national foreign trade bank. The cooperation agreement sets out how the two agencies will cooperate in the field of export credits. It was signed by Steve Dodgson, on behalf of UK Export Finance, and Enrique de la Madrid Cordero, the Chief Executive of Bancomext. It was witnessed by the President of Mexico, Enrique Peña Nieto, who was visiting the UK for talks during the G8 summit in Northern Ireland. Mr. Dodgson also welcomed the agreement and said it would help facilitate collaboration between the two organizations on export credit practices and to support projects in third countries that involve exports from both the UK and Mexico, as well as exports between the two countries.

This agreement between Mexico’s National Bank of Foreign Trade known as Bancomext and the UK’s Export Credit Guarantee Department (ECGD) which acts under the operating name ‘Export Finance’ is intended to stimulate and increase trade between the two countries.

Exhibit 2 summarizes the Trade Balance between Mexico and United Kingdom. It shows that commerce between the two countries reached its maximum level in the year 2012 (US$4.99 billion). The bilateral commerce historically has been negative from Mexico, with the exception of the years 2011 and 2012.

Important factors in the trade balance between Mexico and UK 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 the United Kingdom increased from US$747 million to US$1.8 billion. And at the same time, imports from the UK to Mexico also showed an impressive growth from US$1.1 billion (1999) to US$2.5 billion (2014). 

Total commerce between the two countries and reciprocal action brought in US$4 billion during 2015 in trade between the two partners. And another interesting detail is that in 2014 commerce stats increased 9.46% over the data of 2013.