Bulletin 382 - Friday, August 15, 2008

Tafime will expand its plant in Queretaro

Mexico,- Tafime will invest €50 million to expand their facilities in Queretaro Industrial Park. which will allow producing one million monoblocks per year for Chrysler engines, Pedro Ruiz Velazco, Canacintra Chairman, informed. The first stage has already started, with the installation of two important machines, and it is expected to be completed in 2010, he said. Tafime has 180 workers now, but with the announced investment plans are to reach 600 employees by 2010. Ruiz Velasco assured that the Company decided to invest in expanding their plant in Queretaro due to the fact that Mexico consumes one million monoblocks per year. This project, he said, is proof of the potential of the State of Queretaro, which is a strategic point for investment, "and I think it is the best place in Latin America to produce auto parts". This decision shows the confidence foreign capitals have in Mexico "and particularly in Queretaro, which keeps on receiving an important share of new companies that contribute to direct and indirect jobs generation", Canacintra's Chairman pointed-out.

Dataproducts will open new business unit

Acknowledged as the number one company in operations growth, Dataproduts, from the world corporation Clover Technologies Group, will make its sixth expansion in Mexicali IV Industrial Park. The expansion is due to the integration of a new business unit, which consists in the packing process of inkjet printer cartridges. "In 2004 we only had Plant I, now with the new building we are covering more than half a million square feet for our operations", Ino Landa, Dataproducts Vice-president said. He mentioned that to date Dataproducts has 5 business units, which have been integrated one at a time to complete the production cycle. The fourth units is a Waste Products Recycling Center, where cartridges are disassembled to separate metal, aluminum, plastic and anything that can be reused. And the fifth unit, soon to open in the sixth industrial building, will work on final packing.

All states in Bajio Region want Toyota Plant

All staes in the region known as Bajio Mexicano, i.e. Aguascalientes, San Luis Potosi and Guanajuato, are working to be chosen as the site for the second plant Toyota is planning to build in Mexico. Toyota already has a production plant in Tijuana Municipality in Baja California,with capacity to produce up to 50 thousand Tacoma trucks, as well as 18 thousand boxes for said vehicles, most of which are exported. The factory started operating in 2005 with a US$140 million investment and a year later Toyota made an additional US$37 million investment to expand production capacity from 30 thousand to 50 thousand units. During the first half of this year, Aguascalientes has received 60 direct investments in manufacturing sector, adding to a total amount of US$600 million; US$300 million of which are related to the automotive industry.

Hino Plant to be built in Guanajuato

Hino Motors, the largest Japanese buses manufacturer, said they will build a plant in Mexico in. order to increase international sales, since domestic demand in Japan has gone down, Bloomberg News informed. The Plant, which will be located in Guanajuato, will have a production capacity of 1,200 vehicles per year and will start operations in July 2009, the Company informed in a press release. Hino, which is 50% property of Toyota, is planning to expand outside Japan, because domestic demand by buses and urban transportation lines has dropped due to the increase in oil prices. According to Yoshiro Udagawa, the Company's spokesman, they sold 272 buses in Mexico in 2007 and forecasts are to sell 1,000 with the new plant. Hino Motors, based in Tokyo, will hold 80% of Hino Motors Manufacturing Mexico capital stock, in a joint venture with the Japanese Company Mitsui; the former will invest US$7.2 million, while the latter will contribute with US$1.8 million, the news agency said, quoting Udagawa.

LG establishes fourth plant in Mexico

Mexico City,- LG, one of the largest electronics companies in the world, will build their fourth. plant in Mexico for the foreign market. LG will manufacture front-load washing machines and stoves mainly for the US market in their facilities in Monterrey, Nuevo Leon, which will be thirtieth plant in the world of this Korean company. "For LG, Mexico is among the seven main sites both for manufacturing and for sales", Eduardo Velazquez, LG Electronics de Mexico Sales Director said in an interview. The Company would not disclose the amount to be invested in the new factory. The plants the Company has in Mexico supply 90% of products sold in Mexico and 80% of those sold in the USA. "The Company ships from Mexico supplies to two of its seven most important countries", said Antonio Hidalgo, LG Marketing Director in Mexico. Monterrey Plant, the Company says, has had an annual growth of 28% since 2001 and by the end of this year it is expected to manufacture more than US$1 billion.

Canadian investment grows in Mexico

Mexico,- Bilateral relations between Mexico and Canada have taken significant steps as far as .investment is concerned; since North America Free Trade Agreement (NAFTA) was enforced investment have advanced times eight. There are currently more than one thousand 900 subsidiaries of Canadian companies established in Mexico. Canadian investment in Mexico adds to a total amount of US$5.367 billion, ranking as the fourth largest foreign investor in Mexico, per figures from the Ministry of the Economy and Canadian Embassy in Mexico. In addition, Canada has clearly expressed its support to Puebla-Panama Plan as a mechanism to promote development in southern Mexico and Central America. S

EDITORIAL

U.S. Customs Reconciliation US Customs Value Maquiladoras Standard Cost Value Added

This type of overdeclaring will cause two things. 1) If the imported product is dutiable, the U.S. importer will pay more estimated duty and MPF than they should {although it is possible to recover the overpayment when the CBP Value Reconciliation is filed, the refund would not take place until the CBP Value Reconciliation is filed by the U.S. importer and liquidated by CBP, which could take up to a year or two after filing the Reconciliation} and, 2) It will precipitate a variance against the actual foreign operating costs incurred during the period. This will become apparent when the U.S. importer calculates the CBP Value Reconciliation.

Analysis of the Value Added Standard cost should be done periodically to minimize the value variances. It is not only a wise procedure for Customs purposes, but it also is very helpful to corporate management. Especially in cases where the products that are imported into the USA pay U.S. duty. An analysis of the value added standard cost would serve the purpose of answering those questions.

{A shelter is an independently owned company in Mexico that has a Maquiladora permit. The shelter is not related to the U.S. importer. The U.S. importer, instead of investing to open its own Maquiladora and encountering Mexican legal issues, contracts with a Shelter operator to hire workers, rent a building, administrate all expenses incurred in Mexico, handle Mexican Customs, etc. The shelter typically pays for all costs and then bills the U.S. company for all costs plus the Shelter s fees. In this case, the U.S. importer does not have a legal presence in Mexico. All responsibilities in Mexico lie with the Shelter. Production and quality management and supervision still remain with the U.S. importer and its own employees.}

{A subcontractor is an independent company in Mexico that also has a Maquiladora permit. In this case, a U.S. company negotiates with the subcontractor to produce or assemble a product, for the U.S. importer. The subcontractor makes all arrangements for its own account to assemble the product, and then charges the U.S. importer a fee for that assembly.}

PART THREE OF THREE...
Alex Romero
AFRomero & Co., Inc
General Manager

• » General Motors will invest MXN$3,000 million in automatic transmissions plant
• » National Prize of Technology 2007 to Chrysler of Mexico
• » Maquiladora sector resists the insecurity; it has not affected investments yet
• » Businessmen consider Mexico's Logistics as competitive
• » Daimler invests US$25 in spare parts