Mexico

General Economic Background - Mexico has the second largest economy in Latin America and according to a study conducted by Goldman & Sachs, may become the 5th largest economy in the world by 2040. The current macroeconomic condition in the country is positive, as the GDP grew 4% in 2012. Peña, the new Mexican president elected in December 2012, is looking to allow private investment in natural gas, deep-water oil, and refining. Wealth distribution and poverty are also high on the new administration’s list. Rising wages in China are impacting Mexico’s manufacturing sector – companies that once found lower wages in China are returning to Mexico. Because of this, Mexico’s GDP is expected to increase substantially in 2013.    

Trade DataThe North American Free Trade Agreement (NAFTA) and current political and economic stability in Mexico have resulted in little to no market access problems. This does not provide the US with much of an advantage over its competitors, however, as both Chile and Canada have free trade agreements with Mexico as well.

In 2012, the United States was the largest exporter of softwood lumber to Mexico (value and volume). The U.S.’s market share went from 48.8% in 2011 to 58.1% in 2012. After the U.S., Chile holds the largest market share with 31.4% of the market in 2012. U.S. builder’s carpentry exports to Mexico decreased 9% from 2011 to 2012, with a value of $7.7 million.

 

SWOT Analysis

Strengths: NAFTA; US softwood lumber’s quality, durability, availability (location), consistency, and sustainability (forest management).

Weaknesses: Price volatility; US mills/wholesalers’ tendency to ignore export markets when US market is strong.

Opportunities: Educate Mexican consumers further regarding softwood lumber grades, species, and uses; NAFTA (very valuable for easy/cheap trade but is often overlooked); close proximity to US sawmills for less expensive freight costs.

Threats: Cheap Chilean lumber with aggressive mills focused on export markets.

 

SEC maintains an office through American Softwoods in Mexico (http://americansoftwoodsmexico.com/) to assist members with language and in-country market connections.