It was raw and I had heard murmurings of innovation stirring south of the border. My interest was piqued when I was invited by Angel Ventures Mexico to participate in the Tijuana Tech Tour. Admittedly, I was skeptical about this emerging tech scene in a border town perhaps better known for discos, mezcal and strip clubs.
Uber had just launched in Tijuana. An abandoned bus station on the Tijuana strip, Avenida Revolucion, had been converted into the Hub Stn, a co-working facility for tech companies. And one of the biggest drone companies, 3D Robotics, had set up shop to take advantage of the inexpensive labor and operating costs.
I had to see for myself.
My decision to travel to Tijuana with 19 other investors, leaders and entrepreneurs from Mexico and the United States on the #TJTechTour was met by my friends and family with bewilderment and concern. "Tijuana? Be careful!" was just one of the many comments posted on Facebook by a friend looking out for my safety.
As the cost of outsourcing manufacturing to China levels out with the United States, companies are looking for new places to set up shop—locations with competitive labor costs
, optimal transport options and an open trading environment—and finding them much closer to home in sunny Mexico. There's a lot that's attractive about America's neighbor to the south that may drive American manufacturing from China to just next door: A stable economy protected by government policy, a robust telecomm infrastructure and abundant natural resources. Regulation and macro-economics aside, part of what's attracting foreign trading to Mexico manufacturing
is a combination of where it is, who lives there and who they trade with.
Remember in the 1990s when some Cassandras feared the North American Free Trade Agreement (NAFTA) would someday help Mexico eclipse car production of its higher-cost rivals north of the border? Two decades later, Mexico is making its move, but against another competitor: Brazil.
The country is poised to overtake South America's largest nation as the top Latin American automotive industry producer for the first time in more than a decade. Mexico's ascent is fueled in part by auto sales running at the fastest pace in almost eight years in the U.S., its largest market. The boom coincides with a slump in Brazilian production through June as its domestic demand cools
People talk about the energy and telecom industries in Mexico, but the auto industry is going to continue as the icon of this country, says Luis Lozano, lead automotive partner at Price Water House Coopers in Mexico City.
Passing Brazil, where output has fallen 17 percent this year, would vault Mexico to No. 7 among the world's auto producers. China is No. 1, followed by the U.S.
The diverging fortunes of Mexican and Brazilian auto production reflect the state of their biggest markets. Because of high labor costs and taxes, Brazil-made cars and trucks are too expensive to send abroad and go mostly to local buyers. Mexican factories export 8 out of every 10 cars they produce, with more than half bound for the U.S.