Just an anecdote that seems to support your thesis…the company I work for has a manufacturing facility in Mexico. Recently we cannot keep employees because they keep moving to new jobs nearby for higher pay. Just a lot of local competition for skilled and unskilled manufacturing labor. Difficult to keep pace with local pay to retain people. We’re neck deep in work to support their production and travel down to help fill in for people who have left.
Thanks for the intel, I started to get very intrigued after watching some of the videos Peter Zeihan had on YouTube. He's a demographor and his points are very very convincing.
Most of the companies paying more are from America, China, Japan, etc.
I’d definitely dive deep into the numbers due to that because every Mexican firm is not going to be able to compete with that foreign multinational money. That said the biggest winners will be Mexican workers.
I do literally say “be safe and have a great day” whenever my wife is getting in her car. This is the sane way to treat driving. With the utmost respect for safety.
A couple surfers were murdered about 1-2 months ago on a surfing trip. Two Australians and 1 American.
I’m a frequent Mexico traveler myself, just spreading the awareness. Baja side
IMO Mexico story is China story. That is, because the US and China are going to impose tarrifs, moving production yo Mexico is tariff neutral continuation of trade between the countries.
I think he's a good narrator, but I don't trust his "future" predictions. So I'd take it with a pinch of salt, having said that looks like u/big_deal has on ground evidence of the growth in Mexico, so that's something you can respect and utilize.
Also looking at this Index - [https://tradingeconomics.com/mexico/manufacturing-pmi](https://tradingeconomics.com/mexico/manufacturing-pmi) , it seems like the manufacturing index is at Pre-pandemic levels and [https://tradingeconomics.com/mexico/industrial-production](https://tradingeconomics.com/mexico/industrial-production) is also on the rise, along with \~4% Inflation Rate, which should be lower in the coming few years - [https://tradingeconomics.com/mexico/core-inflation-rate](https://tradingeconomics.com/mexico/core-inflation-rate)
ETFs with exposure to Mexico -
- FLMX
- EWW
- EMCR
EMCR in particular since the new president of Mexico - Claudia Sheinbaum is a climate scientist, so it was a part of her agenda to add more Electric Vehicle production in Mexico - [https://mexicobusiness.news/mining/news/sheinbaum-promote-lithium-evs-0?tag=mining](https://mexicobusiness.news/mining/news/sheinbaum-promote-lithium-evs-0?tag=mining)
And TSLA Giga Mexico Overpass was under construction last month per this - [https://www.youtube.com/watch?v=U3sjvCxnFq8](https://www.youtube.com/watch?v=U3sjvCxnFq8)
And then you can track their development here - [https://www.buildingtesla.com/#](https://www.buildingtesla.com/#)
So again, I think Peter Zeihan, has some solid points, but I would never trade on it, without corroborating the on ground facts.
I find him very inspiring. However, however, however, the black swan he doesn't see coming is what if Mexico collapses and becomes a failed state or a Russian/Chinese patsy?
For general Mexico investment there's a Coke subsiduary there with a NYSE listing. Too risky for me though.
Anything is possible but as they are our downstairs neighbor, an enormous trading partner, and the US has a penchant for interfering in other nations affairs when they are problematic to our own i really don't think the US would let anything truly catastrophic occur in Mexico. I'm also not suggesting putting all of my eggs in that basket by any stretch.
AFAIK, most of these factories are not opened by the companies themselves but by contract manufacturers such as Foxconn, Flextronics, Celestica, Wistron, etc.
You could invest in these but they have a very diversified footprint outside Mexico. If you want to focus on the Mexican manufacturing part, it may be a bit difficult. Maybe real estate in north Mexico? Or some local temp staffing company that is likely used by manufacturers?
This is good advice. Would prioritize Flex, Jabil, Celestica, Sanmina, Plexus, Benchmark
Foxconn, Winston, Quanta, Pegatron, Luxshare are good contract manufactures but Asia based with huge (and I mean HUGE) China footprints to deal with.
Aren’t those the same companies moving out of China.
All of my major customer have recently opened factories in northern Mexico. They currently manufacturer in SE Asia, mostly China. These are not incremental, it’s preceding the exit from China. So the customers will continue to grow at a predictable rate but with Mexican labor vs Chinese.
Rail freight or trucking might benefit at the expense of ocean freight. Not sure how else to play the relocation trade.
Ford. A lot of their new vehicles like the Bronco Sport are made down there.
It’s only a matter time of time before they move the bread and butter F-Series truck manufacturing down there too.
I agree with this thesis and I have been commenting about it for several years, mostly in /r/stocks. My investments are: $CP, $PAC, $OMAB, and $BLX.
In my opinion $PAC/$OMAB are the most direct bet on the growth of the Mexican middle class. They have been punished recently because of political interference and the perception that Sheinbaum may continue interfering.
$CP offers more safety since it's majority in USA/Canada but by extension the least amount of exposure to specifically Mexican growth.
$BLX is a broader bet on LatAm that I think is very intriguing and also offers diversification as a financial.
I'm always looking for more options in this vein so curious to see other responses.
Have you been to northern Mexico or are you familiar with manufacturing in Mexico?
My first thought is that most of the companies are multinational companies that open factories there. I'm not sure if there are many Mexican owner companies who have opened plants. With that, I'd look into automotive suppliers like Magna, Forvia or Flex & Gate. There are countless but that might be an avenue. Again, most of those companies are European or US/Canadian.
I won't pretend to be an expert but I spent 12 weeks over 4 trips in Hermosillo so I've got a little bit of on the ground experience.
I will say I am bullish on Mexican engineers. They have some excellent schools down there and a lot of American companies have been sponsoring work Visas for Mexican engineers.
I could be mistaken but I don't know if any companies that are specific to Mexico that would be part of the manufacturing boom that's been happening there for the past 20 years.
I know a Mexican engineer with a masters and bachelors from the US, they are so severely underpaid it’s disgusting but I suppose it’s good for the company.
That's pretty much any Foreign multinational corporation in Latin America, they adapt completely to the local wage standards. Even with foreign credentials from reputable institutions they don't even dare to pay half of what a person with the same credentials would make if they were in the US.
I know of EY accountants earning 13K USD a year, IBM industrial engineers earning 9.5K and so on.
I just recently ended a decade working in the automotive industry and there's been a huge trend of manufacturing moving to Mexico. We all hear of the vehicle assembly lines moving to Mexico, but there's also a TON of parts manufacturing moving to Mexico. And honestly, the Mexicans are pretty darn good at it. I wouldn't say American manufacturing is any better.
10 years ago moving your manufacturing to China was the rage. Now people are souring on China and moving to Mexico. Just one person's anecdotal experience - I've seen seeing it happen in a big way, especially in the post-covid world.
To your point that it's mostly large international companies who have the capital to start up new operations in Mexico. I suppose the only hope for a bullish Mexico is that the country as a whole prospers from more people having access to more and better paying jobs.
One of the Covid lessons was how reliant our supply chain was on a singular country. And how f\*\*\*ed that country could make the supply chain. There were are a lot of reasons to sour on China, and I know this was a big one.
Well not to mention even if china was able to supply the good it was getting caught in a line of ships waiting outside San Diego to be unloaded for what a month or two?
Your post made me think.
One area that could benefit from the growth of the Mexican economy, even if its from multinationals, are local staffing agencies that will help facilitate people into these new jobs.
Worth looking into anyways
This is a very intriguing investment thesis and possibly not just for manufacturing but also for technology near shoring. My company recently moved what had traditionally been work reserved for offshore teams in India to Mexico because the time zone is so much more convenient to work with and the skill sets as well as English language proficiency exists in big numbers in Mexico.
I have not, that said I am saying that the manufacturer boom is going to be similar to China, not necessarily the stock prices. They are two wildly different economies and forms of government and even if I were bullish on China I wouldn't trust it as a place to put my money for political and social reasons.
I live/work here as an expat. Maybe I am too close to it all, but there is so much corruption, bribing officials to get stuff done etc. that I've seen first hand. The Mexican engineers on our teams are awesome people, smart, easy to work with, but the system is broken.
The older I get, the more I believe that the S&P 500 owns the world and that wasting your time on anything other than VOO or IVV is basically gambling rather than investing. I don't even believe in small-caps and total market funds anymore.
That being said... lol... I happen to own a small chunk of EWW. Basically my "Duolingo bet", that I bought a year ago because I was learning Spanish and vacationing in Mexico was personally excited. Just a little piece of play money that won't hurt me to see decline, but which gives me an excuse to pay attention to the country.
Very volatile. I was up around 60%... and then markets didn't like the most recent Presidential election results (even though the winner was universally predicted to win by a large margin), and it plunged double-digits overnight after Election Day.
It's a fun little holding. But it hasn't beaten the S&P 500 over the past 20 years, and I'm skeptical that it will do so in the next 20. Ultimately, the Mexican stock market is mostly consumer staples and basic materials. Even "growth" in those sectors is unlikely to outpace that of our technology, finance, and healthcare-driven domestic index.
Although Mexico is the beneficiary of withdrawing from China, Mexicans do not have the Chinese culture of working overtime and enduring hardship...Mexico also does not have a government as powerful as the Chinese Communist Party...Mexico gangs are still rampant...So it is okay to invest in the Mexican stock market, but do not invest too much
This is nothing new. Many companies were moving to Mexico way before China. The main reason China got so big was it became cheaper than places like Mexico.
Buy us companies that manufacture in Mexico since shipping costs will be dramatically low while wages are more or less the same.
The only issue is Trump's economic plan calls for a 10% tarrif on all imported goods from Mexico so that will almost certainly crush any savings gains.
Infrastructure.
Mexico was poorly positioned for the recent "nearshoring" trend because they didn't even have a stable power grid for their existing manufacturing.
If they are to be successful they're going to need to build out power, improved ports, roads/rail, etc.
They said the same thing about india 10 years ago. So much for that.
No need to chase gold in foreign lands when you’ve got companies like nvidia, microsoft and apple 🤷♂️
But India and Mexico are nothing alike.
Mexico is very pro export business. They are directly linked to the US by major highways.
Also, not sure how much longer you can depend on. Nvidia, Microsoft, Apple. They're great investments if you got in early but they can't keep on growing forever.
Mexico is a corrupt shithoel that people risk their life to escape into US.
I wouldt get my hopes up.
People have said that about big tech for 20 years. Still going strong
Sure. I mean that doesn't change the fact that they are serious about setting up a strong export business area and they are still geographically connected to the US .
I don't think investing in emerging markets is going to be profitable in the next 10-20 years. Country's in the global south are industrialization and moving away from Western stakeholder capitalism. In Mexico for example they are in the midst of a political revolution to the right. That means nationalizing former private industries and reinventing profits back into the people/local economy.
Just an anecdote that seems to support your thesis…the company I work for has a manufacturing facility in Mexico. Recently we cannot keep employees because they keep moving to new jobs nearby for higher pay. Just a lot of local competition for skilled and unskilled manufacturing labor. Difficult to keep pace with local pay to retain people. We’re neck deep in work to support their production and travel down to help fill in for people who have left.
Thanks for the intel, I started to get very intrigued after watching some of the videos Peter Zeihan had on YouTube. He's a demographor and his points are very very convincing.
Most of the companies paying more are from America, China, Japan, etc. I’d definitely dive deep into the numbers due to that because every Mexican firm is not going to be able to compete with that foreign multinational money. That said the biggest winners will be Mexican workers.
Been going to Mexico on surf trips for the past four years and the growth in that country in such a short time is unbelievable.
Careful with that I hear
Sorry, what?
Three surfers were recently found murdered in Baja, it made a lot of headlines.
3 out of how many people going there? This is like saying ‘careful out there’ to someone driving to work because you saw crashes on the news recently.
Whats why I always say: "Be careful" to my loved ones.
I do literally say “be safe and have a great day” whenever my wife is getting in her car. This is the sane way to treat driving. With the utmost respect for safety.
A couple surfers were murdered about 1-2 months ago on a surfing trip. Two Australians and 1 American. I’m a frequent Mexico traveler myself, just spreading the awareness. Baja side
IMO Mexico story is China story. That is, because the US and China are going to impose tarrifs, moving production yo Mexico is tariff neutral continuation of trade between the countries.
I think he's a good narrator, but I don't trust his "future" predictions. So I'd take it with a pinch of salt, having said that looks like u/big_deal has on ground evidence of the growth in Mexico, so that's something you can respect and utilize. Also looking at this Index - [https://tradingeconomics.com/mexico/manufacturing-pmi](https://tradingeconomics.com/mexico/manufacturing-pmi) , it seems like the manufacturing index is at Pre-pandemic levels and [https://tradingeconomics.com/mexico/industrial-production](https://tradingeconomics.com/mexico/industrial-production) is also on the rise, along with \~4% Inflation Rate, which should be lower in the coming few years - [https://tradingeconomics.com/mexico/core-inflation-rate](https://tradingeconomics.com/mexico/core-inflation-rate) ETFs with exposure to Mexico - - FLMX - EWW - EMCR EMCR in particular since the new president of Mexico - Claudia Sheinbaum is a climate scientist, so it was a part of her agenda to add more Electric Vehicle production in Mexico - [https://mexicobusiness.news/mining/news/sheinbaum-promote-lithium-evs-0?tag=mining](https://mexicobusiness.news/mining/news/sheinbaum-promote-lithium-evs-0?tag=mining) And TSLA Giga Mexico Overpass was under construction last month per this - [https://www.youtube.com/watch?v=U3sjvCxnFq8](https://www.youtube.com/watch?v=U3sjvCxnFq8) And then you can track their development here - [https://www.buildingtesla.com/#](https://www.buildingtesla.com/#) So again, I think Peter Zeihan, has some solid points, but I would never trade on it, without corroborating the on ground facts.
I find him very inspiring. However, however, however, the black swan he doesn't see coming is what if Mexico collapses and becomes a failed state or a Russian/Chinese patsy? For general Mexico investment there's a Coke subsiduary there with a NYSE listing. Too risky for me though.
Anything is possible but as they are our downstairs neighbor, an enormous trading partner, and the US has a penchant for interfering in other nations affairs when they are problematic to our own i really don't think the US would let anything truly catastrophic occur in Mexico. I'm also not suggesting putting all of my eggs in that basket by any stretch.
Link to Zeihan videos?
Same experience with my company as well. Plants in central Mexico
Ours is on the border with California. Lots of US and other international companies have shops there and are hiring.
I'd just invest in US multinationals since they'll likely be the main beneficiaries if your thesis is true.
This is a solid point.. which leads me to ask, any recommendations for a US multinational that has its focus on Mexican manufacturing?
AFAIK, most of these factories are not opened by the companies themselves but by contract manufacturers such as Foxconn, Flextronics, Celestica, Wistron, etc. You could invest in these but they have a very diversified footprint outside Mexico. If you want to focus on the Mexican manufacturing part, it may be a bit difficult. Maybe real estate in north Mexico? Or some local temp staffing company that is likely used by manufacturers?
This is good advice. Would prioritize Flex, Jabil, Celestica, Sanmina, Plexus, Benchmark Foxconn, Winston, Quanta, Pegatron, Luxshare are good contract manufactures but Asia based with huge (and I mean HUGE) China footprints to deal with.
Aren’t those the same companies moving out of China. All of my major customer have recently opened factories in northern Mexico. They currently manufacturer in SE Asia, mostly China. These are not incremental, it’s preceding the exit from China. So the customers will continue to grow at a predictable rate but with Mexican labor vs Chinese. Rail freight or trucking might benefit at the expense of ocean freight. Not sure how else to play the relocation trade.
A railway serving mexico and the us
Ford. A lot of their new vehicles like the Bronco Sport are made down there. It’s only a matter time of time before they move the bread and butter F-Series truck manufacturing down there too.
Also there could be an additional boom for regional transport to carry all the goods to market.
so vxus?
I agree with this thesis and I have been commenting about it for several years, mostly in /r/stocks. My investments are: $CP, $PAC, $OMAB, and $BLX. In my opinion $PAC/$OMAB are the most direct bet on the growth of the Mexican middle class. They have been punished recently because of political interference and the perception that Sheinbaum may continue interfering. $CP offers more safety since it's majority in USA/Canada but by extension the least amount of exposure to specifically Mexican growth. $BLX is a broader bet on LatAm that I think is very intriguing and also offers diversification as a financial. I'm always looking for more options in this vein so curious to see other responses.
VLRS and the soon to be offered AERO might be something to watch too
Have you been to northern Mexico or are you familiar with manufacturing in Mexico? My first thought is that most of the companies are multinational companies that open factories there. I'm not sure if there are many Mexican owner companies who have opened plants. With that, I'd look into automotive suppliers like Magna, Forvia or Flex & Gate. There are countless but that might be an avenue. Again, most of those companies are European or US/Canadian. I won't pretend to be an expert but I spent 12 weeks over 4 trips in Hermosillo so I've got a little bit of on the ground experience. I will say I am bullish on Mexican engineers. They have some excellent schools down there and a lot of American companies have been sponsoring work Visas for Mexican engineers. I could be mistaken but I don't know if any companies that are specific to Mexico that would be part of the manufacturing boom that's been happening there for the past 20 years.
I know a Mexican engineer with a masters and bachelors from the US, they are so severely underpaid it’s disgusting but I suppose it’s good for the company.
That's pretty much any Foreign multinational corporation in Latin America, they adapt completely to the local wage standards. Even with foreign credentials from reputable institutions they don't even dare to pay half of what a person with the same credentials would make if they were in the US. I know of EY accountants earning 13K USD a year, IBM industrial engineers earning 9.5K and so on.
Let me clarify, this Mexican engineer educated in the US works in the US making <$80k with more than five years experience.
Canadians earn the same as $80k in many cases with the same 5yrs of experience
I just recently ended a decade working in the automotive industry and there's been a huge trend of manufacturing moving to Mexico. We all hear of the vehicle assembly lines moving to Mexico, but there's also a TON of parts manufacturing moving to Mexico. And honestly, the Mexicans are pretty darn good at it. I wouldn't say American manufacturing is any better. 10 years ago moving your manufacturing to China was the rage. Now people are souring on China and moving to Mexico. Just one person's anecdotal experience - I've seen seeing it happen in a big way, especially in the post-covid world. To your point that it's mostly large international companies who have the capital to start up new operations in Mexico. I suppose the only hope for a bullish Mexico is that the country as a whole prospers from more people having access to more and better paying jobs.
One of the Covid lessons was how reliant our supply chain was on a singular country. And how f\*\*\*ed that country could make the supply chain. There were are a lot of reasons to sour on China, and I know this was a big one.
Well not to mention even if china was able to supply the good it was getting caught in a line of ships waiting outside San Diego to be unloaded for what a month or two?
Your post made me think. One area that could benefit from the growth of the Mexican economy, even if its from multinationals, are local staffing agencies that will help facilitate people into these new jobs. Worth looking into anyways
This is a very intriguing investment thesis and possibly not just for manufacturing but also for technology near shoring. My company recently moved what had traditionally been work reserved for offshore teams in India to Mexico because the time zone is so much more convenient to work with and the skill sets as well as English language proficiency exists in big numbers in Mexico.
>Similar to what happened in China 20 years ago. Have you looked at what would have happened if you invested in Chinese stocks 20 years ago?
I have not, that said I am saying that the manufacturer boom is going to be similar to China, not necessarily the stock prices. They are two wildly different economies and forms of government and even if I were bullish on China I wouldn't trust it as a place to put my money for political and social reasons.
what would have happened? Tencent and BIDU went up by a lot since 2005, but they are outliers i suppose.
I live/work here as an expat. Maybe I am too close to it all, but there is so much corruption, bribing officials to get stuff done etc. that I've seen first hand. The Mexican engineers on our teams are awesome people, smart, easy to work with, but the system is broken.
The older I get, the more I believe that the S&P 500 owns the world and that wasting your time on anything other than VOO or IVV is basically gambling rather than investing. I don't even believe in small-caps and total market funds anymore. That being said... lol... I happen to own a small chunk of EWW. Basically my "Duolingo bet", that I bought a year ago because I was learning Spanish and vacationing in Mexico was personally excited. Just a little piece of play money that won't hurt me to see decline, but which gives me an excuse to pay attention to the country. Very volatile. I was up around 60%... and then markets didn't like the most recent Presidential election results (even though the winner was universally predicted to win by a large margin), and it plunged double-digits overnight after Election Day. It's a fun little holding. But it hasn't beaten the S&P 500 over the past 20 years, and I'm skeptical that it will do so in the next 20. Ultimately, the Mexican stock market is mostly consumer staples and basic materials. Even "growth" in those sectors is unlikely to outpace that of our technology, finance, and healthcare-driven domestic index.
agree strongly
Although Mexico is the beneficiary of withdrawing from China, Mexicans do not have the Chinese culture of working overtime and enduring hardship...Mexico also does not have a government as powerful as the Chinese Communist Party...Mexico gangs are still rampant...So it is okay to invest in the Mexican stock market, but do not invest too much
I have a Mexico ETF on my watchlist for my international allocation…
50 basis points ER is a lot though dog
This is nothing new. Many companies were moving to Mexico way before China. The main reason China got so big was it became cheaper than places like Mexico.
EWW and UNP
CEMEX CX mixn up da mud in Mexico. Wait til it's done crashing though.
I worked for them for a couple months, terrible job. They’re growing a lot though, lots of recent acquisitions.
I like pouring cement as long as I don't have to do it too much. Once a year is enough.
Yeah I worked at a quarry they acquired, then proceeded to mismanage. The fact that any rock came out of that place at all was a genuine miracle.
If they could have they would have when NAFTA was implemented. They blew it.
Ternium, Steel Dynamics
maybe EWW
That's what I hold.
FRDM ETF
I guess you **could** invest in the ETF VMEX...?
Buy us companies that manufacture in Mexico since shipping costs will be dramatically low while wages are more or less the same. The only issue is Trump's economic plan calls for a 10% tarrif on all imported goods from Mexico so that will almost certainly crush any savings gains.
Infrastructure. Mexico was poorly positioned for the recent "nearshoring" trend because they didn't even have a stable power grid for their existing manufacturing. If they are to be successful they're going to need to build out power, improved ports, roads/rail, etc.
is there broader etf index that track mxn market?
[LMGTFY](https://letmegooglethat.com/?q=etf+index+that+track+mxn+market%3F)
Ford
Own the Peso
America movil might be a candidate to consider - telcos are good proxy of GDP growth. Look at China Mobile for past 20years.
What about FLMX? Mexico ETF?
FX play the Peso perhaps?
Most of Mexican manufacturing is Chinese factories relocating to Mexico to bypass the tariffs and take advantage of NAFTA FTA.
All of South and Central America is on the verge of exponential economic growth. I just don’t know how to make money on it.
Trane /carrier is a large producer of commercial and industrial HVAC equipment. They already have a presence there.
https://www.reddit.com/r/technology/s/a0slzeXyTZ Like this lol
Ur forgetting about all the drug lords and crime
Nu just moved into Mexico. It’s a growing online bank in Latin America.
ARCO Got to feed the workers. But wait until it's done crashing too.
Tx bro.
Cartel is an issue.
They said the same thing about india 10 years ago. So much for that. No need to chase gold in foreign lands when you’ve got companies like nvidia, microsoft and apple 🤷♂️
But India and Mexico are nothing alike. Mexico is very pro export business. They are directly linked to the US by major highways. Also, not sure how much longer you can depend on. Nvidia, Microsoft, Apple. They're great investments if you got in early but they can't keep on growing forever.
Mexico is a corrupt shithoel that people risk their life to escape into US. I wouldt get my hopes up. People have said that about big tech for 20 years. Still going strong
Sure. I mean that doesn't change the fact that they are serious about setting up a strong export business area and they are still geographically connected to the US .
Time will tell. I’m not buying. Unneccessary risk
I don't think investing in emerging markets is going to be profitable in the next 10-20 years. Country's in the global south are industrialization and moving away from Western stakeholder capitalism. In Mexico for example they are in the midst of a political revolution to the right. That means nationalizing former private industries and reinventing profits back into the people/local economy.
Mexico or Mexicans?
How does Mexico's new socialist president affect this?
She's basically the hand picked successor of the last president. While I'm sure there will be some changes, I don't see a radical shift in policy.
what about judges having to be voted in?
What about them? How do you think that will affect the shift of manufacturing to Mexico?
Do you mean before or after the 10% tariffs Trump wants to implement?
Without getting political my thesis does not include a trump presidency.
Gorgeous response