Producing Prosperity

Monterrey, Mexico’s Industrial Hub

Visitors to Monterrey, the capital of the northern Mexican state of Nuevo León, will immediately notice the Sierra Madre Oriental mountains that surround the city, as well as the hypermodern […]

Visitors to Monterrey, the capital of the northern Mexican state of Nuevo León, will immediately notice the Sierra Madre Oriental mountains that surround the city, as well as the hypermodern American-style shopping malls and housing estates that increasingly characterize the city’s development. Those who want to understand how the city, long-known as Mexico’s industrial hub, is embracing its past in order to move into the 21st century economy need look no further than Monterrey’s most iconic landmark and best-known tourist attraction, Horno3, or “Furnace 3,“ a 230ft-high blast furnace that now houses the Museum of Steel. Horno3 once formed part of the Monterrey Iron and Steel Foundry, which served as the backbone of Monterrey’s economic boom until its bankruptcy in the 1980s. The furnace and its surrounding area have now been converted into the massive Parque Fundidora, which includes high-tech museums, a cinema, a convention center, and a concert venue.

The park is part of a larger story, as Monterrey takes advantage of its long industrial history to move its economy forward into the 21st century with a new focus on technology, innovation, and service industries. Monterrey is home to some of Mexico’s most iconic national and multinational brands, such as Cemex, Banorte, Femsa, Grupo Alfa, and Cervecerí­a Cuauhtémoc-Moctezuma. One of the biggest changes for the city’s economy was the signing of the NAFTA agreement in 1994, which enabled Monterrey to take advantage of both its manufacturing past and its strategic location less than two and a half hours’ drive from the US border. As Mauricio Garza, Director of Interpuerto Monterrey, explained to TBY, “Twenty years ago, roughly 10% of Mexico’s export revenue was derived from manufacturing. Today, the figure is at a huge 85%.“ Monterrey has been at the epicenter of this boom, as Garza himself deems the city as “the heart of NAFTA’s market.“
Monterrey is also leading the way forward in the move from low-cost “maquiladora” production to the application of advanced technologies in the region’s manufacturing base. In an interview with TBY, Emilio Cadena, former President of the Mexican Maquiladora Association, INDEX, explained that companies in the region “are incorporating more complicated processes, adding additional value. We design and manufacture the pieces, transport and distribute them, and we also provide customer service. We provide a fully-integrated manufacturing process, which is why Mexico has evolved.“ One of Monterrey’s strengths in this regard has been the Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM). Often referred to as the MIT of Latin America, ITESM has been ranked as the best university in Mexico by the New York Times, the best university for employers by QS rankings, and places within most top 100 global university rankings and top 10 Latin American university rankings.

The city’s appeal is not limited to its industrial capacities; Monterrey has other valuable assets that place it as one the best places in Latin America to do business. The Mexican Institute of Competitiveness ranks Monterrey as the most competitive city in Mexico; the city’s GDP is one of the largest among Latin American cities and attracts more FDI than most places in the region, all in addition to having the highest GDP per capita in Mexico.

According to the state’s Secretary of Economic Development, FDI in Nuevo León rose from $3.605 billion to $5.709 billion in just one year. Companies such as Accenture established offices in the Monterrey area, creating 3,000 new jobs. Mondelez invested $600 billion in the establishment of its new facility in the city in 2015; Lego invested $6.89 million and created 1,000 jobs for its new plant near the Monterrey area. In 2014, Kia moved its new manufacturing plant to the nearby town of Pesquerí­a, with an initial investment of $1 billion and an estimated 1,000 jobs to be created in the region.

Another example of Monterrey’s advanced industry is the recently created Monterrey IT Cluster, dedicated to making the area not only one of advanced manufacturing production, but also to developing human talent in the state in order to better innovate, design, and produce. With a workforce of 2,000 highly qualified engineers divided across 30 different companies, the cluster has become a beacon of new opportunity for highly innovative projects never before seen in Nuevo León. In an interview with TBY, the director of the Cluster, Humberto Garcí­a, said, “The northern city has over 600 IT companies that compete for a market that moves about $600 million.“

In October 2015, a new administration took over the government of Nuevo León. For the first time in the history of Mexico, an independent candidate, Jaime Rodrí­guez Calderón, was elected governor. The new governor has expressed his interest in establishing a mutually beneficial relationship with local businesspeople in Monterrey and created the Executive Coordination of Government, aimed at easing investments and the settling of new companies in the state, as a demonstration of his investor-friendly agenda for the following years.