Medical tourism and the medical equipment industry in Mexico

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Jun 212014
 

Mexico is both a growing market for medical tourism and a world leader for the manufacture of medical equipment.

Growing market for medical tourism

The global market for medical tourism in 2013 was estimated to be worth about $2.847 billion, with some 7 million patients seeking medical treatment outside their home country each year. According to Patients without Borders, a U.S. business that specializes in the field, Mexico is currently the second most popular destination for medical tourists, after Thailand. Nationwide, Mexico has more than 71,000 doctors working in hospitals and private clinics. Almost two-thirds of all doctors in Mexico are specialists, compared to an average of 57.7% for all OECD member nations.

Mexico’s Economy Secretariat estimates that, combined, the one million medical tourists in 2013 and the numerous affiliated services such as spas, massages and non-conventional therapies, contributed $4.2 billion to the national economy. This figure is growing at about 7% a year.

Patients without Borders claims that patients from the USA and Canada pay between 36 and 80% less for operations and medical treatments in Mexico than the cost in their home country. The most important states for medical tourism are Nuevo León, Baja California, Baja California Sur, Sonora, Tamaulipas, Chihuahua, Jalisco, Quintana Roo and Yucatán.

A plan to build a new “medical city” has been announced by health officials in Quintana Roo. It would be called “Jardines de la Sabiduría” (Gardens of Wisdom) and located on a 550-hectare lot between Cancún and Puerto Morelos. The new city would have four zones: residential, hospitals, recreation and cultural/educational, and would include at least four hospitals: for children, cancer care, dental work and orthopedic surgeries respectively. It remains to be seen if sufficient foreign investment can be found to bring this project to fruition.

World leader for medical equipment

Mexico is a major manufacturer of medical devices. Sales of Mexican-made medical equipment exceed $10.6 billion a year and are predicted to reach $14.9 billion by 2020. Manufacturing costs for medical devices in Mexico average 25% below those in the USA, the world’s largest market for such products.

Major medical device manufacturing areas in Mexico

Major medical device manufacturing areas in Mexico. Credit: Economy Secretariat.

Mexico’s exports of medical equipment and supplies were worth $6.2 billion in 2011, making Mexico by far the largest exporter of medical devices in Latin America, and the 11th largest in the world. 92 % of medical devices manufactured in Mexico are exported to the USA, accounting for two-thirds of all U.S. imports of those products.

According to Pro-Mexico, Mexico is the world’s largest exporter of bore needles; the 4th largest exporter of medical, surgical, dental and veterinary furniture; the 5th largest exporter worldwide of medical,surgical, dental and veterinary instruments and apparatus; and the 7th largest exporter worldwide of ozone therapy, oxygen therapy, aerosol therapy apparatus, breathing apparatus and other respiratory therapy apparatus.

More than 2,000 separate businesses, and about 135,000 workers help invent, design and manufacture medical devices in Mexico. Medical device manufacturing is concentrated mainly in northern border states, especially Baja California, where the cluster of more than 60 specialist firms includes Smiths, Tyco Healthcare, Cardinal Health, Medtronic, Gambro, ICU Medical, CLP, Sunrise Medical and North Safety Products.

Data:

  • The Medical Device Industry, 2012 (Pro-Mexico; pdf file)

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May 192014
 

Both the state and the city of Querétaro are growing rapidly in importance. The state has grown faster than any other over the past decade and has attracted significant foreign direct investments, especially in the aeronautical sector, but also other technology firms attracted by the state’s central location, proximity to Mexico City, easy access to other major cities, such as Guadalajara and Monterrey, excellent transport links to the northern border and both coasts, its highly educated workforce and enviable living standards.

The state’s success has not gone unrecognized. For example, Joseph Parilla and Alan Berube of the Brookings Institution’s Metropolitan Studies Program in “Finding the ‘New’ Mexico in Querétaro” describe the state as “ground zero for the country’s economic revolution, achieving average annual GDP growth of 5.5% over the last decade, highest among Mexico’s 31 states. It is home to major multinational corporations like GE and Samsung, a burgeoning middle class, new golf courses, and what will soon be Latin America’s second-largest shopping mall, all within a stone’s throw of an immaculately preserved colonial center (a UNESCO World Heritage site).”

This recent PBS video segment looks at how economic reforms have enabled boomtowns such as Querétaro to spur economic growth in Mexico.

Two proposed projects in Querétaro deserve further comment.

The first is the announcement earlier this year that Arkansas State University was joining with private investors in Querétaro to break ground on the first U.S. university residential branch campus in Mexico. The campus is slated to be built in the municipality of Colón, some distance from the state capital. Just how significant this project is remains to be seen.

The second project, which holds much greater significance, is the renewed interest in constructing a high speed rail link capable of moving as many as 20,000 passengers/day connecting Querétaro City with Mexico City. This idea has been around for at least 20 years, but may finally be approaching lift off.

At a later stage, this line could easily be extended into the Bajío Region, to the industrial cities of León and Guanajuato, and also possibly westwards to Guadalajara. Tapatíos (the residents of Guadalajara) have dreamed of a high speed rail link to Mexico City for the past 30 years, following the demise at that time of the convenient and popular overnight train service linking the two cities.

The line’s proposed route is from the Buenavista station in Mexico City to Huehuetoca, and then mainly following the route of highway 57, the main Mexico City-Querétaro highway, to Querétaro.

The project would generate up to 9,000 direct jobs during construction and take about four years to complete at an estimated cost of $3.3 billion.

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Industrial development in the state of Hidalgo

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Apr 262014
 

A 200-million-dollar industrial development project known as Plataforma Logística de Hidalgo (PLATAH) in the central Mexican state of Hidalgo is being promoted as the nation’s latest industrial growth pole. The site’s major advantages are its proximity to Mexico City (30-40 minutes away by road) and its location alongside railways and the Arco Norte highway, which link the region to ports on both the Gulf Coast and the Pacific (see map).

platah-locationPLATAH is being developed by the Hidalgo state government in association with Artha Capital. In its initial stages, a 340-hectare site in Villa de Tezontepec, near Tizayuca, includes industrial sites and multimodal transport interchanges, supported by commercial areas and facilities for education, healthcare and business tourism.

PLATAH is projected to generate up to 10,000 new direct jobs. It is claimed that by providing employment in the region, the industrial park will reduce the need for workers to migrate or commute elsewhere for jobs, saving an estimated 8 million man-hours a year. The first factories in PLATAH are expected to be operational by early next year.

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León hosts Latin America’s largest trade fair for footwear

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Mar 262014
 

Mexico’s footwear industry is heavily concentrated in three main cities: León, Guadalajara and Mexico City. Factories and workshops in the city of León in the state of Guanajuato account for about 68% of all shoes made in Mexico. The two other important manufacturing areas for footwear are Guadalajara (Jalisco) where about 18% of the national production originates, and Mexico City (together with surrounding parts of the State of Mexico), responsible for 12%.

Footwear industry in Mexico

Concentration of shoe industry in Mexico.

According to the 2009 Economic Census, there were close to 7500 “productive units” related to shoe manufacturing in Mexico, with about half of them located in the state of Guanajuato. In 2012, national producers turned out 244 million pairs of footwear, of which 171 million pairs (70%) were made in Guanajuato.

Shoes are also an important international trade item. In 2013, shoe exports reached 26 million pairs, worth almost $600 million (an increase of 14% compared to 2012). The main export markets were the USA, Canada, Colombia, Guatemala, Panama and Japan.

Mexico’s shoe industry hosts several major trade fairs each year. The single biggest event, SAPICA (Salón de la Piel y el Calzado), is Latin America’s largest international footwear trade fair and is held in León twice a year. The next SAPICA trade fair opens today and runs 26-29 March 2014 in León, Guanajuato. This show has 45,000 square meters of exhibition space, more than 2000 stands and 850 presentations. SAPICA has gained international recognition and attracts 11,000 buyers (from the USA, Canada, Europe, Japan, and Central and South America) and 35,000 visitors each year.

The flexibility of León’s shoe manufacturing industry has enabled firms such as Poppy Barley (based in Edmonton, Canada) to be able to market custom-made boots via their website and without the overheads of any conventional footwear stores . Individual purchasers take their own foot measurements, and then the boots are made to order and shipped to their homes. This “made to measure digital retail” approach flies in the face of the mass production that has become the norm in the footwear industry. The Poppy Barley website includes a section devoted to its manufacturing partner in León.

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Mexico’s 2014 Economic Census is underway

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Mar 222014
 

Mexico’s National Statistics Institute (INEGI) has begun collecting data for the 2014 Economic Census. The census, held every 5 years, surveys the estimated 5.7 million business places throughout the country, excluding only those used for agricultural, forestry and fishing operations, or exclusively for informal business activities.

Economic census 201425,000 trained census takers are now systematically covering all urban areas, together with a representative sample of rural areas, gathering data such as type and sector of operation, number of workers, educational levels, fixed assets and use of information technology.For the first time, companies can opt to enter data directly via a webpage.

Preliminary census results will be released in December this year, with more detailed tables released in stages between July and December 2015.

The Economic Census is held every five years. The results of previous economic censuses (2009, 2004, 1999, 1994, etc) can be accessed via the INEGI website.

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Mar 062014
 

In The market for commercial and industrial real estate in Mexico, we looked at a recent snapshot of the industrial real estate market in the last quarter of 2013, and saw how cities in the Bajío Region were outpacing cities in Central Mexico or Northern Mexico. (The snapshot came from the report ‘Industrial Markets in México (Q4 2013)‘ by Jones Lang LaSalle, a global real estate services firm.)

In this post, we take a look at the “Industrial Property Clock” for the same period, from the same report.

Industrial property clock (Jones Lang LaSalle)

Industrial property clock (Jones Lang LaSalle)

In general, cities in Central Mexico and in the Bajío are well “ahead” of cities in northern Mexico on this clock. The analysis by Jones Lang LaSalle suggests that the commercial and industrial property markets in Mexico City, Guanajuato, Guadalajara, San Luis Potosí, Puebla and Toluca are “peaking”. The two remaining cities in the Bahío (Querétaro and Aguascalientes) are joined by several cities in northern Mexico in the “rising market” portion of the graph, while Reynosa, Matamoros, Nuevo Laredo and Chihuahua are anchored in the “bottoming market” portion.

The following quotes are taken from the report:

Mexico City’s industrial market grows its footprint annually; rents have grown to pre-crisis levels

Puebla market is very tight; land is scarce and vacancy is at a low

Toluca market has been growing as an alternative to Mexico City, it is also attracting local businesses

Guanajuato is growing in several submarkets like Silao and Celaya thanks to car manufacturing and food related businesses

Guadalajara keeps occupying space and growing at El Salto and South Periférico

San Luis Potosí keeps attracting new industries related to consumer goods. The car manufacturing industry is taking advantage of the city’s communications and infrastructure

Querétaro has been active inaugurating new developments near the airport both for the aerospace business and for car manufacturing. These industries have taken advantage of the local educated labor force

Aguascalientes seems to be the new frontier for developers: at least three major national developers have inaugurated parks in this market, one of them is Nissan’s supplier park

Tijuana continues its path towards quickly becoming a speculative development marketplace once again. It is the first border city to regain this business climate

Nogales, the smallest of the Northwest Border region cities, is also enjoying the expansion of Kimberly Clark (KCI) leasing vacant space within the Nuevo Nogales Industrial Park

Ciudad Juárez keeps lowering the existing vacancy rate

Monterrey submarkets have been improving, especially Apodaca and Santa Catarina, where land prices and rents are growing

Nuevo Laredo, Reynosa and Matamoros have seen a slow down in their activities, however, tenants have stayed at their buildings; there are no new developments on the horizon and vacancy rates are around 10%

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The market for commercial and industrial real estate in Mexico

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Mar 012014
 

A recent snapshot of the industrial real estate market in the last quarter of 2013 compares progress in three industrial regions in Mexico: Northern Mexico, Central Mexico and the Bajío Region. The snapshot comes from the report ‘Industrial Markets in México (Q4 2013)‘ by Jones Lang LaSalle, a global real estate services firm specializing in commercial property management, leasing, and investment management.

Cities included in industrial real estate study

Cities included in industrial real estate study (Jones Lang LaSalle)

The pattern of commercial and industrial real estate in Mexico

The five main cities of the Bajío Region (Aguascalientes, Guadalajara, Guanajuato, Querétaro and San Luis Potosí) are booming in terms of commercial and industrial real estate. In the final quarter of 2013, the region added about 550,000 m2 of commercial and industrial space. This was more than double the additional space added in Central Mexico (Mexico City, Toluca and Puebla) and close to the total amount (614,000 m2) spread between 10 cities in northern Mexico (see map).

In the North Region, “Tijuana has been occupying vacant space… and Ciudad Juárez is on its way to recovering from low rents and high vacancy”, while the automotive sector is driving growth in Saltillo-Ramos Arizpe.

The Central Region is helped “by third party logistics companies that grow their business and footprint in Mexico City’s surroundings”, while “Toluca and Puebla grew mainly because of the car manufacturing demand for space.” Commercial rents rose in Mexico City and in Toluca. “Big Box requirements keep driving this market. Development has been very active at the Tepotzotlán toll booth surroundings.”

The Bajío Region has consolidated “with new industrial parks related not only to the new car manufacturing plants, but also for new investments related to aerospace, food and personal consumer” products.

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Nov 022013
 

Innovation is an important ingredient of economic growth, especially growth in the decades ahead. While most people know what innovation is, it is not an easy concept to measure. Fortunately three different groups have attempted to measure it and compare countries on their “innovativeness”. All three rely on such measures as research and development, number of patents, number of researchers per person, manufacturing, and the percentage of college graduates with science and engineering degrees. However, the number and character of the specific individual variables they use are quite different. As a result their international rankings can be very different. The three approaches are briefly discussed below.

1. Bloomberg’s “Global Innovation Quotient” is based on R&D intensity (20%); manufacturing capability (10%); researcher concentration (20%); productivity (20%); High-tech density (20%); patent activity (5%) and tertiary (education) efficiency (5%).  [For more details, see Global Innovation Index (pdf)]

Bloomberg’s “Global Innovation Quotient”, for 96 countries, ranked Mexico ranked in 2012 as 46th, just behind Chile (41st) and Argentina (43rd), but ahead of Brazil (57th) and Venezuela (62nd). Other notable countries ranked as follows: Finland (1st), Singapore (2nd), USA (7th), Switzerland (8th), Canada (19th), Russia (22nd), Israel (29th) and China (32nd) and Indonesia (64th).

2. In 2009, a “Global Innovation Index” was produced by The Boston Consulting Group (BCG), the National Association of Manufacturers (NAM), and The Manufacturing Institute (MI). In March 2009, the Global Innovation Index ranked Mexico 57th. For comparison, it had Chile at 37th, Argentina at 92nd, Brazil at 72nd, and Venezuela at 108th.

These rankings are significantly higher than the Bloomberg rankings above because this index included more countries which pushed the Latin American countries lower down on the ranking list. But there are other important differences in how innovativeness was measured in the two studies. Compare the following rankings with the ones in paragraph above: Finland (7th), Singapore (1st), Switzerland (3rd), USA (8th), Canada (14th), Russia (49th), (Israel 16th), China (27th) and Indonesia (71st).

3. The third index, confusingly also called the “Global Innovation Index”, is published jointly by Cornell University, INSEAD (The Business School of the World) and the World Intellectual Property Organization (WIPO).

global-innovation-index-2013This very complicated index is based on six pillars (Institutions, human and capital research, infrastructure, market sophistication, business sophistication, knowledge and technological outputs and creative outputs.), each with sub-pillars, and a total of 84 indicators. Of the 134 countries analyzed in 2012, Mexico ranked 79th, way behind Chile (39th) also lagging behind Brazil (58th) and Argentina (70th), but way ahead of Venezuela (118th). This complex index’s rankings are different from but generally align with the two other indices: Finland (4th), Singapore (3rd), USA (10th), Switzerland (1st), Canada (12th), Russia (51st), Israel (17th) China (34th) and Indonesia (100th).

Conclusion

These three indices appear to tell us that Mexico is relatively weak when it comes to innovativeness. Mexico, along with Brazil and India, appears to lag behind other major emerging economies such as China, Russia, South Africa and Thailand. This is a bit surprising considering that Mexico is a world leader in the export of smart phones, flat panel TVs, automobiles and appliances. Apparently these exports are manufactured in Mexico but the innovations that go into their designs mostly come from elsewhere.

Though Mexico is graduating thousands of engineers and science majors, these are either not yet innovating or are finding employment in other countries. If Mexico is to compete in future world trade, it would do well to take steps now to improve its innovativeness.

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The geography of gold mining in Mexico

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Sep 122013
 

Production of gold has more than tripled from the 23.5 metric tons recorded in 2000 to 88.6 metric tons in 2012, 3.2% of world production, 5.3% more than the previous year, and the ninth consecutive year-on-year increase. Analysts believe that gold production will double again between now and 2020.

Mexico is the world’s 11th largest producer of gold, well behind China (13% of world total), Australia (10%)  the USA (9%) and Russia (7%). Mexico exports gold, mainly to the USA and Switzerland.

The vast majority of gold and silver production in Mexico comes from a handful of major corporations, led by Canadian mining firm Goldcorp, whose main mines are at Los Filos (Guerrero) and Peñasquito (Zacatecas).

Gold production in Mexico, 2011. Data: INEGI. Credit: Tony Burton/Geo-Mexico

Gold production in Mexico, 2011. Data: INEGI. Credit: Tony Burton/Geo-Mexico

The map shows the six main gold mining states in Mexico. Production in Sonora has grown rapidly in the past decade and that state is now responsible for 32% of national production, ahead of Zacatecas (20%), Chihuahua (15%), Guerrero (13%), Durango (9%) and San Luis Potosí (7%).

The main gold-mining municipalities in each of these six states are:

  • Sonora: Caborca, Sahuaripa, Santa Ana, Álamos, Altar and Trincheras
  • Zacatecas: Mazapil, Luis Moya, Ojocaliente, Fresnillo and Concepción del Oro
  • Chihuahua: Urique, Chinipas, Ocampo, Madera
  • Guerrero: Eduardo Neri and Coyuca de Catalán
  • Durango: Santiago Papasquiaro and San Dimas
  • San Luis Potosí: Villa de la Paz

We will explore the controversy surrounding Goldcorp’s Los Filos opencast mine in Guerrero, billed as Latin America’s largest gold mine development, and some other mining controversies in Mexico, in a future post.

Mining towns described briefly previously on Geo-Mexico.com include:

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The geography of cement production in Mexico

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Nov 102012
 

In a recent post we saw how Mexico is one of the world’s leading cement manufacturing countries:

The map shows the location of the 34 cement plants currently operating in Mexico. They include 15 belonging to Cemex, 7 to Holcim Apasco, 4 to Cruz Azul, 3 to Cementos Chihuahua, 3 to Cementos Moctezuma and 2 to Lafarge. A new company, Cementos Fortaleza (part-owned by Carlos Slim, the world’s richest man), is due to open in the state of Hidalgo early next year.

Cement plants in Mexico, 2011

Cement plants in Mexico, 2011. Credit: Tony Burton / Geo-Mexico; all rights reserved. Click to enlarge.

According to the Center for Clean Air Policy’s “Sector-based Approaches Case Study: Mexico”,

“The northern region of the country has traditionally been the largest consumer of cement, accounting for 48% of sales mainly for use in infrastructure construction projects, housing and office complexes, and other construction activities. Central Mexico is also a relatively strong market for domestic producers. However, the primary use differs somewhat in that the main source of demand is from construction of new buildings such as hotels and office complexes. The relatively slower pace of economic growth in southern Mexico accounts for the lower share (17%) of domestic cement sales in the south.”

The paucity of cement plants in southern Mexico is particularly well reflected by the map.

The main raw material for cement is limestone. The distribution of cement plants in Mexico tends to follow the distribution of “limestones and clastic rocks” (rocks made of particles of other rocks) on the map of Mexico’s surface geology.

Mexico's surface geology

Mexico’s surface geology. Click map to enlarge.

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