Naples, Fla. — Understanding the Mexican market goes well beyond NAFTA.
"NAFTA isn't the No. 1 concern you should have," Doug Donahue of Entrada Group said at the 2018 Plastics News Executive Forum, held March 6-7 in Naples. "Mexico's openness and adaptiveness will outlast the U.S. administration."
U.S. President Donald Trump has been highly critical of the 24-year-old NAFTA trade agreement covering the U.S., Mexico and Canada, leading many to expect changes in the deal. But Donahue, who has more than 30 years of experience in Mexico, said that NAFTA "was just the start" of Mexico's free market outlook.
"Since 1985, Mexico has had a more open economy than almost any other in the world," he said. "And it's now the 13th-largest exporter in the world."
Donahue is vice president and principal with San Antonio, Texas-based Entrada, which helps firms enter the Mexican manufacturing space. The firm operates two manufacturing campuses in Mexico.
Companies operating in Mexico also need to pay attention to the Mexican presidential election, which takes place July 1. Left-leaning candidate Andrés Manuel López Obrador is currently leading in the polls. Donahue said Obrador likely would redirect federal spending to infrastructure and social programs.
Like the U.S. and many other regions, Mexico is also dealing with a labor shortage for both skilled and unskilled work, Donahue added.
"There's a labor shortage in Mexico now, and that's nudging labor costs up as the market is maturing," he said. "Workers want to learn more advanced process technologies."
Changes in the requirements of local content in cars and other vehicles could impact the automotive sector, according to Donahue. Trump wants to increase the amount of auto parts made in the United States.
Donahue said he's most concerned about possible appreciation of the Mexican peso, which had fallen since Trump was elected but has started to rise recently.