Getting over the crisis

In the last blog entry, we talked about the clear signals of business recovery in the Mexican Silicon Valley ( Guadalajara). Now we will put numbers to those signals.

In Jalisco, the EMS industry is commonly called “Electronics Industry” regardless of the diversification and it includes all the services provided by the EMS in the state.

NUMBERS

- $300 million is the expectation for investment in 2009
- $274 million in investments was the number in 2008.
- 2k new jobs in the sector is the goal for this year.
- 17,800 billion exportations reported in 2008.

ELECTRONICS INDUSTRY PROJECTS 2% GROWTH VS 2008

Market diversification, the ability to adapt to customer demands and quality of labor are the main factors that allowed the electronics industry in Jalisco to successfully get through the economic crisis.

Although even the first half of the year the numbers in terms of generating jobs, investment and exports were negative; the industry expects to recuperate and increase the trend at the end of 2009.

In 2008 this sector attracted investments throughout the year by $ 274 million, and this year, the expectation is for about $ 300 million.

Ricardo Gomez, president of the National Chamber of Electronic Industry, Telecommunications and Information Technology (Canieti), projected a growth of 2 percent.

Jacobo González, director of Investment of the Ministry of Economic Development, noted that sector investment could be recovered faster than in other years.

“The global economic crisis definitely affected businesses in all sectors, not just electronics. The sector has experienced a crisis but it has not been as strong as 2001 where, proportionally, we had a higher impact.

“I see the electronics sector in a pretty solid, they have diversified their business and now their customers are not only in computing sector” he said.

The industry is now well diversified and besides pure electronics, there are now major companies in other areas such as aerospace, medical and services.

Julio Acevedo, director of HP Guadalajara, explained that the electronics industry transformation to a more diversified model, focused on low volume, high technology and services has resulted in positive results.

“I see a good horizon in the future. Industry teamwork will allow the sector to keep growing,” he said.

However, he acknowledged that the electronics industry in Jalisco, as the global economy was affected by the economic crisis.

“The pay maybe shrank by 20 percent, but is a bit small, and I think we can go back for that piece of the market,” he added.

Another competitive advantage of the industry, according to the director of HP, is that in the last months wages and inflation in countries like China have been declining, which represents an opportunity for businesses based in Mexico.

“We have stayed with inflation at 4 to 5 percent and I’m sure once the consumer market in the U.S. recovers, all the sector exports will recover as well” he said.

He believes that new market niches gained lately such as aerospace, medical and services still have lots of potential to grow.

Cesar Castro, president of the National Council of the Maquiladora and Manufacturing Industry Exports (CNIMME) estimated that recovery of the sector could be strengthened in the early months of 2010.

“Unfortunately we had a crisis that was not internal, but external and that made us experienced a significant reduction in purchase orders, our biggest customers and corporate partners are US based. If they decrease orders, shipments will be impacted for sure”

“The export numbers are increasing and that’s positive. I definitely expect a steady recover of the sector in calendar Q1 of 2010″

He noted that the electronics industry in the West Mexico remains competitive and the proof is that every time they are winning more projects.

“We foresee a recovery in Japan, European Union and the United States, then I do see good alternatives for next year where we will have more foreign direct investment and more jobs,” said chairman of the National Council of the Manufacturing Industry.

Jabil

- Opened positions in Sept 09 for 1,000 jobs in its plant located in Zapopan and they prepare an investment of $ 20 million, in addition to the 60 million dollars announced last July to expand its facilities. The firm that produces the BlackBerry smart phones expects to end 2009 with more than 9 thousand employees at its plant in Zapopan, a 136 percent increase over the 3 thousand 800 workers it had in October last year.

Sanmina SCI

- Projects to close calendar Q4-09 with a growth of between 10 and 20 percent in both investment and foreign sales compared to last year. They plans to invest between 7 and 10 million dollars in machinery. The firm has 35 clients for which manufactures satellite receivers, mobile stations and industrial equipment, among others.

IBM

- Exported $ 50 million in services. The foreign sales last year in the state, according to company estimations, will be surpassed at the end of this year. In the sector of small and medium businesses, IBM, has an annual growth of 7 percent.

Intel

Last June announced an investment of $ 10 million for the expansion of its design center located in the Technological Park of Tlaquepaque. In August 2008, invested 15 million dollars to create a validation laboratory that allows 95 percent of this global process is conducted in the City. Provides 360 jobs, and expects close the year with 400.

HP

He made an investment of 5.3 million for its Financial Excellence Center, where financial strategies are made for countries where the company operates throughout the Americas. Currently generate 4 thousand direct jobs and estimates to recruit between 300 and 400 more.

Out of the services provided by the company, 80 percent are global, including Business Process Outsourcing, and software support and development.