Sunday, July 28, 2013

Yucatán state government announces huge commercial investment commitment, with 5,000 new jobs as a bonus

U.S. companies bet on the land of the Maya

Mérida, Yucatán -
The secretary of economic development has announced that 10 domestic and foreign companies will invest 400 million pesos in business expansion from now through 2015, a move which the industries say will create up to 5,000 jobs in the largest of the peninsula's three states.

The investment is worth about $32 million US dollars. The companies indicated most of the money will be spent on enlarging existing physical facilities, purchasing new machinery and equipment and expanding their labor forces. In the first year alone the businesses said they would generate 2,365 new jobs in the state.

In return Yucatán will grant the enterprises stimulus benefits, including the reimbursement of 5% of construction costs for foreign owned plants and 6% for Mexican owned ones. For businesses which do not own their operational sites, the state may instead cover corporate leasehold obligations for a period. The cash will come from funds set aside by the state specifically to attract domestic and foreign investment.

The news was reported late Saturday in several national newspapers after its announcement by development secretary David Alpizar Carrillo, who said the state is focused on promoting the many economic advantages it can offer to business.

The 10 business have already signed and delivered formal letters of intent, said Alpizar. They include a wide array of industries, ranging from aerospace components to furniture to textiles manufacture.

The enterprises were identified as Furniture Brands, Jerzees Yucatán, PCC Airfoils México, Leather Cut and Sew Services, Latin American Services, Grupo Moyel Dzibalché, Safety Offshore México, Vertical Knits, Hilos Trenzados del Sureste and Mayan Tejidos. They are located in Mérida and other locations throughout the state.

The companies aid they selected Yucatán for further investment because of its reputation for security, sound infrastructure and its access to the sea at the nearby port of Progreso.

Furniture Brands, a U.S. stock exchange company based in St. Louis, markets high end home furnishings under several brand names. It plans to invest about $10.4 million dollars, enabling it to increase its work force to 500 within the next 36 months.

PCS Air Foils LLC, a Portland, Oregon based company, manufactures airplane, helicopter and ship parts. It will invest about $2 million dollars locally.

Mayan Tejidos, a large scale Mexican manufacturer of henequén fabrics - a plant which is native to the peninsula - will invest $16 million, increasing its employment ranks from 1,200 to 2,000.

"Economic purists argue that the government should not invest in projects which offer only the hope of indirect returns," said Alpizar. "But actual practice demonstrates that when the government invests public resources intelligently in a way which attracts enterprises, the return on those investments creates a multiplier effect throughout the entire economy by creating employment, in a way which would not have occurred spontaneously."

This year the state will pump 18 million pesos (about $1.44 million dollars) into stimulus packages, an amount which is expected to increase substantially in 2014, according to Alpizar. The money will be paid as direct cash reimbursements for demonstrated investments. In the case of new machinery acquisitions, the state will reimburse 2% of the purchase price.

The president of the Business Advisory Coordination Council of Mérida, Nicolás Madáhuar Bohem, noted that foreign enterprises today are keen to put money into Latin America, where the costs of production are equivalent to those in Asia, and projected returns on capital are about the same.

PRI governor Rolando Zapata Bello said the stimulus investments are part of the state's master development plan, which is focused on tourism, the attraction of industry and land usage.

Zapata said the most important feature of the new investment commitment is that the 5,000 jobs will be evenly distributed in Mérida and eight counties throughout Yucatán. "Those who live in the state's interior won't have to travel to Mérida. They'll be able to find dignified work within their own immediate communities," he noted.

July 23 - Mexican state debt leaps, while Peña Nieto announces plans to get workers on real payrolls
Apr. 9 - Yucatán tourism remained flat in first quarter of 2013
Jan 25 - Enrique Peña Nieto: "We want to create greater legal confidence in investing in Mexico"
Oct. 3, 2012 - A spendthrift Yucatán looks for cash anywhere, anyway
July 29, 2012 - Yucatán has well-educated labor force, but offers one of Mexico's worst job markets

© MGRR 2013. All rights reserved. This article may be cited or briefly quoted with proper attribution or a hyperlink, but not reproduced without permission.

No comments:

Post a Comment