Until now, a sector whose importance is significant for a wide variety of industrial sectors has been far from being taken advantage of by Mexican manufacturers. We are talking about the broad spectrum of molds, dies and various tooling used for the manufacture of a large variety of components in automotive, packaging, food, medical products, electronics, etc. plants.
It is an opportunity that is generated thanks to certain geo-economic and political conditions that have occurred on the planet in recent years. This window is open for both small workshops and larger factories dedicated to manufacturing this type of parts and molds, according to Eduardo Medrano, president of the Mexican Association of Mold and Die Manufacturing (AMMMT).
According to the analysis of this business organization, the market is almost entirely dominated by imports coming mainly from the East, specifically from China. In a word, the market for molds, dies and tooling in Mexico is supplied by around 90% imports.
"This is an emerging sector and Mexican entrepreneurs are beginning to generate the dynamics to be able to scale production not only in quantity, but also in the levels of complexity required and, of course, in the competitive costs that the industry imposes," says Medrano.
There are several factors that determine the positive pressure that will be increasingly exerted on Mexican manufacturers to become key suppliers for a wide range of companies. One is the North American Free Trade Agreement under the T-MEC modality. Engineer Medrano points out that this agreement determines that, for example, in the automotive industry 75% of the components have local or regional content to be marketed without tariffs. "And because of the cost figure, part of that content can be manufactured in Mexico," says the trade association representative.
In auto parts alone, he points out, an estimated 35 billion dollars are expected to be generated, and for this purpose, molds and dies that adapt to the evolution of this sector must be produced. "That demand in the country today is around 5,000 million dollars but in the next two years it will increase between 30 and 35% given the location of all this supply, to comply with that regional content."
The second key element is the tariffs imposed by the United States on China and other Asian countries. This necessarily changes the acquisition cost of tooling in America, and that is where Mexico has an opportunity to position itself. However, this requires two very important factors: manufacturing capacity, not only in terms of volume –scaling and production development must be accelerated– but also in terms of the level of complexity of the tooling.
"Tooling, and particularly molds, because everything came from China became a commodity, the cost dropped a lot and that did not allow not only Mexico but also the United States, Canada and Europe to compete," explains Medrano, who describes that when the world began to pay attention to this sector, China was already a huge magnet that monopolized this type of products. "Today we have to reverse this globalization that tended to commoditize certain elements, we have to manufacture them in Mexico".
The conditions imposed by the pandemic force a limitation of goods and people, and with this, the international commercial exchange for tooling will have to be relocated. Thus, Mexico is repositioning itself as a strategic ally for the United States, Canada and also for Latin America, as it is the spearhead country in the continent.
Main axes to respond to demand
The president of the AMMMT distinguishes three main axes for this reconversion. One is to recognize what Mexico has and what we can build based on it. In this sense, the Association has dedicated itself to mapping productive capacities through different financing from the federal government and partners such as the Chain of Industrial Suppliers in Mexico (CAPIM).
“We have visited workshops and mold and die companies," says Medrano, "to change the paradigm that this type of product was not manufactured in Mexico. Today we know that there are at least 500 companies that have this vocation, of which we have already visited 215 that have the capacity to make molds”.
A second axis is that, once identified the companies, the Association promotes consortiums and the formation of clusters to be able to scale towards the potentialities that the market demands, without these links between companies it would be impossible given the financial and manufacturing capacity they have today. "We can greatly enhance the technological conversion and the complementarity of these productive capacities among all these companies to be more competitive as a sector."
The third axis, within a framework of constant development, is that of specialized education for businessmen and their personnel with respect to their productive capacities, for which we are looking for links with academic, technological and technical training entities that will allow us to create talent.
"Mexico has a deficit of approximately 1,500 technical experts in this sector, of which, thanks to the work we have done in recent years, we have already managed to generate some 300," explains Medrano. Although there is still a long way to go, the Association plans to generate initiatives, plans and structure so that more academic institutions join this initiative, but not only that, but it is also necessary to link up with large companies –such as automotive OEMs (Original Equipment Manufacturers)–, which, due to their demand for tooling, develop programs located in Mexico through AMMMT associates.
The valuable linkage with the federal government in its role as facilitator is not ruled out. In 2021 alone, Nacional Financiera launched a molds, dies and tooling program where more than 2.8 billion pesos were placed in small workshops to boost their technology, infrastructure and training and even finance working capital projects.
Why be at FABTECH MÉXICO 2022
An expo like FABTECH MÉXICO 2022 is important because, according to engineer Medrano, "they are a catalyst for all the efforts of entrepreneurs and companies to create sustainable, profitable products", as they bring together the entire economic ecosystem of the sector in one place, which generates an inertia to be more effective in generating value.
Mexico is no longer positioned as a country of cheap labor, but as one that generates a lot of value through its manufacturing," Medrano adds. "An expo like this puts companies at the technological forefront through contact with suppliers, those who bring machinery, and in person we can directly understand the needs, we can make plans and generate an effective working group, a dynamic of investment, technological innovation and creation of new production capacities”.