The government of Nuevo León, one of Mexico’s wealthiest and most industrialised states, is determined that the reAAgion will become a major player in the global aerospace industry.
The state, whose capital is the cosmopolitan city of Monterrey, is strategically located in the corridor of goods and services of the North American Free Trade Area, which stretches from northern Mexico, though the middle of the US and up to Canada. It has important road and rail connections with major US cities and with the principal ports of Mexico.
Historically, Nuevo León – led by governor José Natividad González Parás since October 2003 – has had the best educational standards in Mexico and enjoysA an important industrial tradition, stretching back to the development of the brewing industry in the early 20th century and its embracing of the car-making and metal-mechanics sectors during the past 20 years. The state’s authorities are keen to ensure that Nuevo León is at the forefront of the industrial development of the country and want to create a knowledge-based economy, including turning Monterrey into an ‘international city of knowledge’.
As part of this effort, the state government – which completes its six-year term in October – has been spearheading the development of an aerospace cluster under the ‘triple helix’ concept, bringing together industry, municipal and state institutions, along with academia. The long-term goal is for Monterrey – whose metropolitan area has a population of 3.8 million, out of the entire state’s 4.2 million – to become the most important location for aerospace manufacturing in the country and home to an original equipment manufacturer.
Alejandro Páez, the secretary of economic development of Nuevo León, tells fDi: “The state has a great number of advantages; its geographical location is close to what is still the biggest market in the world, the US. The challenge is how we can optimise this proximity.” He adds: “We have the best universities in Latin America in the form of Monterrey Tech [ITESM]; our state university, the Autonomous University of Nuevo León [UANL], is one of the most prestigious state universities in the country, at least if not better than Mexico City’s National Autonomous University of Mexico [UNAM], it is at the same level.”
He says that the state is promoting the development of eight high-value-added economic clusters: aerospace, IT, biotechnology, nanotechnology, specialised medical services, software, car manufacturing and electrical goods production.
“This differentiates us from the rest of the country; we have consciously pursued these eight fields and have developed clusters,” he adds. “We have brought together various companies so that they can work together more productively. In Mexico City, no such integrated effort has been made.”
Pedro Pablo Treviño, director of Codefront, the state organisation for the development of the border zone between Nuevo León and Texas, including Colombia International Bridge, says: “Our border is the second most important frontier between Mexico and the US in terms of trade, following the border crossing at Laredo. Our organisation helps the industry of Nuevo León to develop crossborder trade.”
The state’s economy has been one of the fastest growing in Mexico, with economic growth of more than 5% in 2006 and 2007. GDP growth slowed to 2% last year, against a national average of 1.4%. The economy has a total size of $82bn and makes up 7.6% of national GDP, despite Nuevo León accounting for only 4.1% of the country’s population. The state attracted more than $1bn in FDI last year compared with $3.3bn in 2007. Between 1999 and 2008, it captured 10% of all FDI destined for Mexico.
Nuevo León has an open economy and about 24% of its production is exported. Total exports from the state amounted to $16.6bn in 2007, some 6% more than in 2006.
More recently, the state has felt the effects of the collapse of the US economy: since October, exports have fallen by 15.1% against a national drop of 8% (the car manufacturing sector has been one of the hardest hit in Nuevo León, with exports dropping by almost 20%).
However, the state is one of the most dynamic and entrepreneurial regions of Mexico and is expected to weather the economic downturn better than most parts of the country.
It is said that the people of Monterrey enjoy an almost American attitude to business. San Pedro, an exclusive district of the city with 122,000 inhabitants, has one of the highest incomes per head in the Americas at more than $35,000 a year.
Esteban Báez Villarreal, director of the Faculty of Mechanical and Electrical Engineering at the UANL, says: “Nuevo León is positioning itself well at a national and international level as a centre of knowledge. In the north of the country, people are much more industrious. I feel that every day we must become more and more knowledge workers. This is essential. We must become more expert and develop new capabilities.”
One of the biggest challenges for Nuevo León is the fight against narco-trafficking. However, state authorities stress that this problem is largely restricted to other parts of Mexico and that it is a temporary difficulty that should be overcome by greater co-ordination between the national and state governments of the country, and also between Mexico and the US.
The state government’s drive to turn Monterrey into an international city of knowledge is centred around a number of pillars, including a re-configuring of the educational strategy of the state; attracting new centres for R&D and innovative companies, as well as promoting existing centres; encouraging innovation by existing companies, especially small and medium-sized enterprises; creating new innovative businesses; and putting in place the right urban and cultural environment to spur the growth of knowledge parks and foster creativity.
One of the most important aspects of the drive to become an international city of knowledge is the establishment of Latin America’s first research and innovation technology park. This is a 700,000-square metre area, close to the Mariano Escobedo International Airport of the City of Monterrey, in which 30 research centres are being constructed to specialise in nanotechnology, biotechnology, mechatronics, IT, communications and health.
The park’s main objectives include creating high-value jobs for Nuevo León, incubating businesses that focus on new technologies, and acting as a link between R&D in academia and the development of technology in the productive sector of the economy. Several universities will be setting up R&D centres at the park, including UANL, ITESM, Texas A&M, the University of Arizona, Arizona State University, the University of Monterrey and UNAM.
Public research centres that will have a presence in the park include the Water Institute; the Centre for Research and Advanced Studies of the National Polytechnical Institute; the Centre for Research in Advanced Materials; the Institute for Electrical Research; and the National Laboratory for Advanced Information Technology.
Companies that have agreed to have research centres there include Motorola, Pepsico, Sigma Foods, Johnson Controls and Prolec-GE. Viakon and Ternium are also expected to set up centres. Furthermore, 42 IT companies have come together to set up an IT cluster within the park, dedicated to R&D in software.
Reynold Gonzalez Lozano, director of development and technology transfer at the Institute for Innovation and Technological Transfer, the state organisation spearheading the development of the international city of knowledge programme, says: “The goal of the international city of knowledge is to insert Nuevo León fully into the knowledge economy. This involves a transformation of the economy, not the elimination of traditional manufacturing but, as the governor of the state says, focusing more on mentefactura, or high-value-added manufacturing; harnessing all the talent that the state has to offer.
“There are very good universities and qualified people here. It is about the stimulation of development in all its aspects,” he adds.
Nuevo León is the industrial heartland of Mexico and has been the motor behind the growth of the national economy for the past five years. Its authorities are determined that the state’s enterprises are at the cutting-edge of technological development and play a central role in the most important industries of the future, including aerospace.
Lenovo’s largest investment
In February, Lenovo inaugurated a plant in Monterrey that will produce five million PCs a year, employing 1300 staff directly and 1000 indirectly. The $40m investment is the largest made by Lenovo in a factory outside of China.
Enrique Fernández, managing director of Lenovo for Mexico, says: “There are a number of factors that attracted us to Nuevo León: first, its geographical advantage beside the world’s largest market; its highly qualified labour force which means that the company does not have to look for staff from other parts of the country; third, all of the services available in this industrial city; and fourth, support from the government.”