 |
|
|
 Technology News | May 2006 
Mexico Retunes Economy Toward High Technology
 Bob Keefe - Cox News Service
| | The people of Baja California are trying to nurture high-tech industries that would otherwise slip through their fingers and take root in Asian countries. (CNS Graphic/David Mollering) |
Tijuana, Mexico — When you think of high-tech countries, Mexico probably isn't the first to come to mind.
Mexican cities like this one are known more for their sweatshop-like maquiladoras that churn out cut-rate shoes and shirts, not state-of-the-art factories making semiconductors and software.
But in an effort to catch up with other parts of the world, Mexico is trying once again to beef up its technology sector.
In Mexicali, near the Arizona border, U.S. developers are building an industrial park to lure semiconductor makers and other high-tech companies that might otherwise end up in Taiwan or China.
At college campuses throughout the country, administrators are putting technology training at the top of the syllabus to compete with India and Israel.
Young Mexicans hoping for good wages are responding. About 400,000 students are currently enrolled in information technology-related programs in Mexican universities. The schools now produce about 60,000 new IT-trained graduates each year.
At the World Congress on Information Technology in Austin, Texas, this month, Economy Minister Sergio Garcia de Alba unveiled a $2 million (U.S.) marketing campaign that positions the country as a "near-shore" alternative to the Far East.
Mexico's pitch: Wages and other costs are as cheap as in the Far East. But sharing a hemisphere and time zones with the United States means cheaper and quicker transportation, among other advantages.
"Unfortunately we wasted (many) years," Garcia de Alba said in an interview. "But it's not too late. We want to get every year a bigger part of the cake."
While technology industry wages here are still low by U.S. standards — a starting electrical engineer can expect to earn about $15,000 a year — that's still twice the per-capita income in a country where 40 per cent of the population lives below the poverty level.
Mexican authorities, meanwhile, are beginning to realize that an economy based on agriculture and low-tech assembly work simply can't be sustained in the changing world market.
"The low(-skilled) services are now going to other markets like Asia or Africa," said Sergio Carrera, Mexico's director general of domestic commerce and digital economy. "It's very important that we move our economy toward more value-added industries and services."
It wasn't too long ago that Mexico actually was a rising star of high-tech. In the late 1980s and early 1990s, the country attracted scores of companies, ranging from computer and automotive electronics assembly operations to software and semiconductor firms.
Guadalajara, in the middle of the country, still calls itself the Silicon Valley of Mexico. Hewlett-Packard Co., IBM Corp. and Solectron Corp. are major employers there.
But like parts of the United States, Mexico was hurt badly by the outsourcing of high-tech jobs to Asia.
Tech companies soon learned that Asian countries had other advantages over Mexico. India, Taiwan and other countries all had invested heavily in education, offered better tax breaks and other incentives, and made a concerted effort to recruit and keep foreign companies — all things that Mexico didn't do very well, says Kevin Gallagher, a Boston University professor who studies economic development in Latin America.
"They had a maquiladora mindset," he said. Mexican government officials thought that "if you get companies here, they'll stay and everything will take care of itself."
What Mexico quickly learned, Gallagher said, "is that you can't just be the lowest-wage guy in town forever."
Mexican officials say they got the message.
About three years ago, the country launched a far-reaching program called Prosoft, designed to develop its high-tech economy. Working with 110 universities in 26 Mexican states, the government invested millions to create better IT training programs.
It also passed a series of incentive programs that can give qualified high-tech companies tax abatements, up to a 50 per cent match for employee training programs, and tax credits of up to 30 per cent for research and development expenses.
So far, the Mexican government has invested about $100 million in Prosoft programs and incentives, Carrera said, on top of another $300 million or so in matching grants from states, municipalities and companies.
Now, with an army of better educated workers and an arsenal of incentives, government officials say they're finally ready to start marketing Mexico as a good place for high-tech.
Last year, Austin, Texas-based Freescale Semiconductor picked Guadalajara over sites in the United States and India for new research and development centre that now employs about 90 engineers and support staff. It previously had a smaller design centre in the Mexican city of Puebla.
Along with government incentives and employee training grants, the company was lured to Guadalajara by its good local universities and quality of life, which the company hopes will help it retain engineers longer.
"We've found when we hire people in Mexico they stay put for quite a bit longer" than in Austin or other locations, said Freescale spokeswoman Ruth Ruiz.
Last October, electronics manufacturer Solectron announced a major expansion of its 9-year-old circuit board and assembly operation in Guadalajara.
Solectron chief technical officer Dave Purvis specifically cited Mexico's nearness to the United States as one of the reasons for the expansion. "The time zone and proximity to our American customers are ... advantages over Asian operations," he said in a statement.
Milpitas, Calif.-based Solectron now employs about 5,000 workers in Guadalajara.
And earlier this year, IBM Corp., which started making typewriters in Guadalajara in 1975, opened a new "customer solution centre" at its 500-employee storage drive and software development centre there.
Garcia de Alba, the economy secretary, said that while his country may be late to the game, there's still plenty of opportunity for growth.
Last year, he said, high-tech firms outsourced about $300 billion, or 8 per cent of their business, to other countries.
By 2015, that amount is expected to balloon to $1.1 trillion or about 15 per cent, giving Mexico plenty of room to get its share, the economy secretary said. |
| |
|
Vallarta Weddings
Tell a Friend
Site Map
Print this Page
Email Us