Voices OE April 2014

OE Staff Apr 1, 2014

Down Mexico way. With reform underway, OE asked: What are the supply chain opportunities in Mexico?

Manufacturing in Mexico has a 40% foreign component. This indicates in part that Mexico has not been able to deepen its own supply chain. This percentage is likely to be just as high or go even higher in the energy sector as reform is implemented, particularly in higher technology supplies. Over the next years, Mexico will require solid flow of foreign goods and services as well as investment in its own supply chain building, to aid in opening the energy sector. American companies are ideally positioned to take advantage of this important business opportunity.

Tony Payan, Director, Mexico Center at Rice University's Baker Institute

Mexico is the third-largest trading partner for the USA, and ranks 53rd in the World Bank’s Ease of Doing Business Index, which focuses on supply chain and logistics concerns. This year we expect to see the value of systems, including NAFTA information flow, in enabling movement across the borders. There will be a need to develop efficient bases for servicing the growing offshore market. Movement into and from these bases will require new, appropriate road infrastructure linked to the US. Reliable ocean movement of bulk goods from the US to Mexican ports will become attractive as volume increases.

John Vogt, Halliburton

With ongoing energy reform in Mexico, there is a wide number of supply chain opportunities - especially with the development of new fields, and the redevelopment of mature fields in the southern Gulf of Mexico. The ultra-deepwater Perdido Foldbelt is home to several recent major light crude discoveries that Mexico would like to exploit with the help of international experience. Opportunities are also upcoming in the gas fields of the shallow waters of the Bay of Campeche. Pemex is also continuing to increase its number of offshore drilling rigs and while many of the planned new wells will be developmental, there is also interest in vertical and sidetrack drilling.

Aimee Marsh, Executive Director, Energy Industries Council (EIC) North & Central America

The supply chain’s ever-evolving landscape is currently undergoing continuous changes and creating new intricacies. Mexico’s knowledge on manufacturing and export of large volumes of sophisticated goods, its positive outlook in terms of growth, and its openness to external investment–particularly with the structural reforms lining up–makes an imperative to maximize both its manufacturing presence and its increase in value through engineering and predictability services. Through our 17 manufacturing plants and our Center for Advanced Engineering (GEIQ) with a workforce of 1700 engineers already operating in Mexico, we can provide innovative solutions to the Mexican market in the fields of aviation, energy and oil and gas. When we do projects for PEMEX for instance, we leverage the expertise of our engineers to get a preliminary analysis to successfully provide the best technology and through our capabilities in Industrial Internet we are able to provide predictability services which enhance the value of our solutions. The strategy for a successful supply chain must include several factors: be predictive, ask the right questions, have a great understanding of the needs and a true partnership between customers and providers. New manufacturing volume is indeed a felt need in Mexico, but manufacturing with a high value offering is a must if our Country intends to increase its economic potential.

Gabriel Cerdio, Executive Director of Global Accounts in GE Mexico

Rapidly aging fields and new opportunities associated with the potential for direct foreign investment—under consideration by Mexico’s government—present significant opportunities for automation solution providers like Emerson. More technology will be needed to reduce the impact of declines in production at legacy fields, which Mexico has depended on for the majority of their oil production. Greater visibility to the dynamic flow of oil in the reservoir coupled with real-time process control will help improve the recovery rate. As the market opens to new producers, new technology and investment will come to Mexico. This will help bring oil and gas to market sooner and more efficiently.