Latin America & the Caribbean

Advanced Engineering and Automotive

Mexican manufacturing is fully integrated into industrial supply chains in the US and Canada. The new US-Mexico-Canada Agreement (USMCA) will continue to drive growth in manufacturing development across the country. 

In 2016, Brazil’s manufacturing sector was the 9th largest in the world in terms of world share of Manufacturing Value Add (MVA)^[1]. Both countries have attracted sizeable foreign direct investment from leading multinational companies in recent decades, with large manufacturing plants established and extensive supply chains based in market.

Experienced Brazilian and Mexican engineering companies also operate as part of these supply chains and there is potential to supply them with UK technology, components and expertise.

Market Detail

Mexico´s proximity to the United States, the world's largest car importer^[2], make the country a great manufacturing location for the automotive industry. 

As a part of Mercosur, Brazil is a gateway for exporters that intend to access other South American countries. Industrial manufacturing is critical for the economy since the sector represents around 20% of the formal jobs .    

Advanced Engineering

Mexico’s major manufacturing industries include automotive, aerospace, domestic appliances, medical devices and electronics. Cars is one of the UK’s biggest categories of exports to Mexico^[3]
 
The Covid-19 pandemic has represented a wake-up call for the Industry 4.0^[4] to generate more flexible production systems and a more digital mindset.  Mexico will offer new opportunities in many sub-sectors including the digitalisation of industrial processes, robotics, smart technologies^[5].

Mexico is a manufacturing country with the need to transition into the digital manufacturing processes to compete with other countries.

Mechanical power generators were the UK’s top export to Brazil in the four quarters to the end of Q3 2020, representing 15.9% of all UK goods exported to Brazil^[6].

Automotive  

Mexico is currently one of the leading producer of heavy/ light vehicles and auto-parts and the main supplier to the US.

Out of the production, 64% are SUVs, minivans, and pick-ups, while the remaining 36% are vehicles. Automakers established in Mexico include Audi, Baic Group, BMW, FCA Group, Ford, General Motors, Honda, Kia, Mazda, Nissan, Toyota and Volkswagen. Mercedes Benz is in partnership with Nissan–Daimler and Hyundai produces through its partners Kia and Toyota. The industry, responsible for over one million jobs and 300 R&D centres, produces more than 50 brands and  more than 500 models through a network of 2,361 car dealerships nationwide^[7].

Brazil accounts with the physical presence of most OEMs in the Automotive sector. In 2019, the production was mainly destined to the internal market, but exports also represented a meaningful part of the automotive revenue (total of US$ 61 billion, being U$ 15 billion to exports). The industry produced approximately 3 million vehicles, trucks, light commercial and passenger cars. Despite the pandemic crisis, the industry was still able to produce approximately 2 million vehicles^[8] in 2020.

Brazil Market          

As it is present in all the productive chains of an economy, the capital goods sector stands out for its diffusing role of technological progress. Despite the pandemic, the capital goods industry recovered well and achieved the same levels it did in 2019 by the end of 2020^[9].

In Brazil, investment across the Industrial Internet of Things (IoT) concepts, and the automation technology in multiple industries, are also becoming more intense. The Brazilian government came up with a national IoT plan that seeks to advance the country’s IoT ambitions across manufacturing and various other industry verticals. The implementation of this plan is deemed to act as the primary driver for industrial IoT.

Where there is demand for new technology, the cost of doing business in Brazil and Mexico can be reduced by incentive packages. Advanced Manufacturing is well established and is growing exponentially in the Latin American and Caribbean region.  Mercosur has a special taxation regime for capital goods and technologies that have no local producers, being more open to imports in these areas. In the Automotive side, Brazil has a significant potential, having developed the Rota 2030 regime, that promotes the reduction of taxation on automotive components and vehicles according to their level of energy efficiency, showing that the Brazilian automotive sector is aware of the world sustainability trends.

UK companies offering solutions in integrated logistics, low carbon technologies, lightweight components, connected car solutions, advanced materials, additive manufacturing and engineering consultancy have particular potential in LATAC.

Opportunities for UK companies in Mexico:  Supply chains at Tier 1, 2 and 3.

• Machine tools, industrial equipment and manufacturing technology, including clean-tech and robotics for Industry 4.0.
• Surface finishing, assembly and sub-assembly machinery.
• Special processes: Forgings, castings, stampings, machining, plastic injection moulding, heat treatments, electrical assembly, among others.
• Specialised steels and alloys.
• Electronic components.
• Components for Electric Vehicles (e-batteries, e-motors, skateboards, lightweight materials and structures, skateboards, low carbon propulsion, etc.)
• Partnership with Mexican Tiers 1/2 to develop new products and technologies locally.

Opportunities for UK companies in Brazil:

• Industrial Manufacturing: production monitoring, measuring and analysis solutions; monitoring and control of product quality and environmental impact of production; simulation tools, automation/automated manufacturing, robots, 3D printing of parts and tools; virtual and augmented reality applications.
• Logistics and Transport: real-time item location using RFID, GPS or other technologies; quality of shipment conditions using IoT; enhanced transport management system; automated guided vehicles; wearables.
• Smart Cities: digital communications, health, transport and security solutions; intelligent lighting systems.
• Smart Homes: solutions for home monitoring, surveillance, and intelligent lighting and energy.
• Automotive: connected cars; advanced robotics; especially collaborative mobile robots; 3D printing, exoskeletons, virtual and augmented reality applications.
• Low Carbon Technologies: Electric motors, electronics systems, batteries, fuel cells, lightweight and low-cost materials, inverters, embedded electronic system.

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