By Adina Moloman
Sources: Mexico Today, WSJ
The privatization in the 1990s of the Mexican steel industry was an important step for industry consolidation by eliminating antiquated operations and investing in more efficient operations and thus becoming a more competitive industry in terms of cost and quality.
Mexico steel manufacturers had been facing foreign and domestic challenges in the past years: high-energy prices and foreign competition mostly in subsidies by their own governments.
Mexico has reached the 13th place worldwide as a manufacturer of steel.
Mexico’s biggest competitor is China, one of the world’s greatest consumers of steel, but at the same time one of its greatest producers (produced mainly by state companies that receive many subsidies and assistance from the Chinese government).
The Mexican steel industry is working on consolidation, where a huge advantage is the close connection with the Mexico’s automotive industry as a mature, dynamic and in continuous growth. The automotive sector in Mexico accounts for 6% of the national GDP, where around 50 car and light truck models are produced in Mexico.
Current production is less than 3 million units but the forecasts indicate production will reach 3.7 million units by 2015.
Mexican steel manufacturers are expected to invest almost $3 billion on new and improved manufacturing facilities to sustain the dynamic automotive sector.
Small and mid sized Mexico Manufacturers are still at a disadvantage, its production of automotive-grade metal that has been galvanized, or coated in zinc to prevent rust, remains low, basically because of the internal challenges they have to face.
Mexico Government made a challenging decision by supporting the steel industries by putting incentives into effect and working on energy reform.
The Chamber of Deputies of the Mexican Congress approved the 2012-2026 National Energy Strategy, making a commitment to the continue growth allowing the industry manufacturing in Mexico to plan strategically.