By Hugo A. Lara García, Cluster Council of Nuevo Leon, Mexico, presented at the 16th TCI Global Conference, Kolding 2013.

1. The reindustralization of North America and the
role of Mexico
Hugo A. Lara García
Societal Challenges and Clusters: the Scandinavian Model vs other
Models
6 September 2013

2. Hugo A. Lara García
September 6th, 2013
The Reindustrialization of North
America and the role of Mexico

3. What does reindustrialization
mean to North America?

4. - Developed countries had
long thrive as a result of
their ability to manufacture
goods and sell them to
global markets.
- For the past 100 years USA
has been the leading
producer of manufactured
goods, but…

5. - Manufacturing has decline as a share of US GDP and employments.
- This loss in not limited to low wage jobs in low tech industries, nor to the
status relative to low wage nations.

6. In addition:
- NA is lagging behind in innovation and manufacturing, relative to high wage
nations such as Germany and Japan.
- NA has lost leadership in some medium and high tech industries that employ a
large proportion of highly skilled workers.
Besides NA has been losing:
- Significant elements of research and development.
- The ability to compete in manufacturing many products that were
invented and innovated in NA.

7. Manufacturing and Creating Value

8. Manufacturing creates more Value

9. If manufacturing creates more value:
- NA has to go back to its manufacturing roots, but not simply by
manufacturing per se,
- NA needs to make sure its reindustrialization process moves in
to ADVANCED MANUFACTURING

10. The big question is:
- Is NA ready to compete in Advanced Manufacturing
against developed and developing countries?

11. How competitive is North America?

12. Industry Profitability
source: competitive alternatives-KPMG Guide to international business location costs

13. Industry Profitability
source: competitive alternatives-KPMG Guide to international business location costs

14. Industry Profitability
source: competitive alternatives-KPMG Guide to international business location costs

15. source: competitive alternatives-KPMG Guide to international business location costs

16. source: IMF

17. source: source: SAI Law & Economica based on information from Rubin, Jeff and
Benjamin Tal “ Will soaring transport costs reverse Globazitation”

18. source: The Interational Energy Agency

19. source: OANDA,INEGI,UN, Contrade, US Bureu of Economic Analysis and WB

20. 20
-15
-10
-5
0
5
06 07 08 09 10 11 12 13
Fiscal Deficit
(% of GDP)
Mexico
Germany
Spain
USA
Source: Monitor Fiscal FMI; SHCP

21. 79 82 83 83 85
90 89 87 89 88 85 84 82 81 81 79
83 82 80
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11
Mexico's Manufacturing Exports
As % of Total
21Source: INEGI

22. Mexico s Role in this Process

23. 23
5
10
15
20
25
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11
USA
Mexico
Manufacturing GDP as% of Total
(%)
Source: INEGI

24. 5%
10%
15%
20%
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11
U.S. Imports Participation
(%)
China
Mexico
Japan
24Source: Banxico
Ingreso China
a OMC

25. 25
Source: SAI: Can Mexico compete with China?
Total Population 2011
(millons)
China Mexico

26. 26
0
20
40
60
80
100
120
140
06 07 08 09 10 11 12 13
Source : Monitor Fiscal FMI; SHCP
Mexico
Germany
Spain
USA
Public Debt
(% of GDP)

27. Ajustado por productividad. Source: BCG. US Census Bureau, US Bureau of Economics, U.S. International Trade Comm.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
02 03 04 05 06 07 08 09 10 11 12
Labor Cost
(dollars/hour)
China
Mexico
27

28. Some Final Thoughts
- It would be very difficult for any of the three countries to
provide the competitive advantages for manufacturing
vis a vis with China and other developed and developing
countries.
- For Mexico it is a historical opportunity to be part of the
reindustrialization process of the US.

29. Some Final thoughts
- Countries don´t compete, companies do.
- Governments need to establish the right policies to
ensure the competitiveness of the companies
participating in their strategic sectors.
- Major reforms need to take place.
– Market access
– Energy
– Agriculture synergies
– Labor Mobility Vs. Migration