| Silao Industrial Profile |
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MAIN INDUSTRIES
MAIN COMPANIES Companies in the Silao automotive industry cluster include:
ADVANTAGES
DISADVANTAGES
Overview Silao is a GM town. This small city is home to one of the most important automotive clusters in Mexico and almost 99% of Silao’s exports are automotive related. Recent industrial activity from Lear, Wrigley and Contential Teves have helped raise the profile of Silao even further, but the real asset of this city is its central location: Mexico City is under a 4-hour drive away, Queretaro is only 90 minutes and Leon can be reached in under 30 minutes. While Silao is stealing the headlines, the surrounding cities of Irapuato, Celaya and San Luis Potosi are all excellent options for companies interested in central Mexico. If you are planning a trip to look at a new facility in Silao, make sure to consider these other locations as well. The Workforce POPULATION The municipality of Silao has a population of 134,337 individuals, of which 76,706 live in the city of Silao proper while the rest reside in the surrounding rural areas. This population is growing at an annual rate of 1.57%, which is lower than the 1.8% national growth rate. 48.8% of the city’s inhabitants are male and 51.2% female. Silao is home to an extremely young population, with over half of its residents (50.5%) being 19 years old or younger. LOCATION Silao is located in “El Bajio”, a high fertile valley sitting in the center of Mexico. While technically the Bajio region is considered to be the western part of the State of Guanajuato, many include the larger surrounding area as far as San Luis Potosi and east to Queretaro. The state of Guanajuato borders San Luis Potosi to the north, Queretaro to the east, Jalisco to the west and Michoacan to the south.
The city’s location makes it an attractive site for maquila operations as it is only 16 miles southeast of Leon, 9 miles from Guanajuato, 16 miles from Irapuato, less than one hour from Celaya, and 224 miles northwest of Mexico City.
PROXIMITY TO KEY CITIES
INDUSTRY SNAPSHOT Traditionally an agricultural and mining region, Guanajuato is now an important industrial state with 46 maquiladoras employing 12,460 people. Silao is an important city for two reasons; it is at the heart of the "El Bajio" region and the site of GM’s light-truck and SUVs assembly plant since 1990. Once the GM plant was opened, there has been a steady stream of suppliers following in their wake, bringing considerable industrial activity to the city. GM's supplier base is located near the plant in Silao in two modern industrial parks developed to facilitate GM’s logistics of materials handling. Silao central location also allows these companies to reach other key automotive clusters in Mexico such as Aguascalientes, Puebla and Saltillo. EXPORTS Silao exports accounted for $6,779.45 Million USD in 2003 and $3,649.33 Million USD in the first half of 2004, which represent about 75.69% of total state exports. The vast majority of exports relates to the auto and auto parts industry as seen in the following table: Silao Exports by Sector: Jan-July 2004
(COFOCE, Promotion of Commerce Coordinator of Guanajuato, 2004) It needs to be noted that once you leave the city of Silao, agricultural operations dominate in a large way. Many domestic and foreign growers have a significant presence in this part of the country and the countryside is doted by grain towers and vegetable fields. The Operation DEMOGRAPHICS LABOR AND EMPLOYMENT Silao has an economically active population of 41,094 individuals, or 44.78 % of the population over 12 years old. This percentage is considerably low when compared with the national average of 56.27%. Moreover, there is a big difference between the percentage of men and women that participate in productive activities: 68.01% of men are economically active while only 23.4% of women are. (INEGI 2001) UNEMPLOYMENT AND SUB-EMPLOYMENT SKILL LEVEL Prior to GM’s arrival, workers had limited experience in the manufacturing export industry. Today, the vast majority of the workforce in Silao has experience related to the auto and auto parts industry, but many new companies will have to draw on specialized labor from the surrounding cities. Education and skill level might be a problem. EDUCATION and TRAINING PROGRAMS The educational infrastructure in Silao is limited, given the small size of the city. However, students have access to educational institutions in the nearby cities of Leon, Queretaro, and Guanajuato. The city has a relatively high illiteracy rate of 12.9%, higher than the 10.5% national rate. According to the Ministry of Education, there are four senior high schools in Silao with a combined student enrollment of 865 students. Additionally, there are 528 students enrolled in technical schools and 383 studying a university program as seen in the table below: Enrolment in high schools and superior education institutions in Silao:
(Source –Ministry of Education, 2002) TURNOVER RATES The state does not publish turnover statistics but we expect them to be in the neighborhood of Click Here To Register WAGE RATES
Wages are the key driver of Mexico’s manufacturing industry. It is, therefore, one of the first and most important topics any company expanding in Mexico will consider. TeamNAFTA touches on the overall wage issues in our Info Center, but we have also provided some sample wages for Silao below. While we have access to more detailed wage information, we typically present that information in a tailored report addressing a company’s specific labor needs.
Source: Area industry wage studies and interviews with local managers, $11.00 pesos/USD
*CFE.-June 2004, ** Pemex.-June 2004, *** Comision Nacional del Agua.-June 2004 INDUSTRIAL REAL ESTATE Silao has adequate infrastructure to support maquila operations. The industrial parks have ample electricity, water, drainage systems, natural gas, and fiber optic telecommunication services. Most land sites already have these utilities to the lot. AVAILABLE SPACE There are two main industrial parks in Silao – Las Colinas and FIPASI – and a smaller one called NESIN. Las Colinas, the newer park of the three, has experienced considerable activity in the past couple months and land sites are starting to become limited. Both FIPASI and NESIN do not have available space at the moment. Here are current industrial real estate costs of Class “A” plants in the parks:
Exchange Rate $11.00 pesos/dollar TRANSPORTATION Highways Guanajuato possesses an adequate highway infrastructure, including 2,101 miles of highways. The quality of the road network in Guanajuato is higher than the national average, taking various characteristics into account such as quality of the asphalt, sign posting, road shoulders, and technical specifications. The city is well served by trucking companies making daily trips to the U.S. border cities of Laredo and El Paso, Texas. A four-lane highway connects the main cities in Guanajuato – Silao, Leon, Guanajuato, Irapuato, Salamanca and Celaya. It also connects to the cities of Guadalajara, Aguascalientes and Queretaro where it joins Interstate Highway 57, known as the NAFTA Highway. This highway connects Mexico City with Nuevo Laredo and is the main trade route between Mexico and the U.S. Given its central location, Silao has access to the three important NAFTA corridors.
Railroads Silao is connected to the main national railroad network. This 674-mile railway has access to the ports of Manzanillo and Veracruz on the Pacific Coast and the Gulf of Mexico respectively as well as to the border cities of Ojinaga and Nuevo Laredo. FERROMEX (Ferrocarriles Mexicanos) and TFM (Transportes Ferrocarrileros de Mexico) provide service to the city. Air Transportation
Silao is home to the El Bajio International Airport that offers daily direct flights to Mexico’s largest cities and several U.S. destinations like Chicago, Los Angeles, Oakland, Houston, Dallas and Atlanta. The closest fully staffed Mexican customs office is in Queretaro. Some of the services offered at the Queretaro customs office include:
INCENTIVES The government offers incentives in relation to payroll taxes, training programs, and assistance in the procedures for meeting requirements at three levels of government (federal, state, and municipal). Additional incentives can be negotiated depending on the location of the new project, type of manufacturing activity and job creation. The incentives include: infrastructure works, fees with the State Public Registry and construction permits. STATE OF GUANAJUATO INCENTIVES
Sectors offering special opportunities:
(Source: BANCOMEXT) The Support SUPPORT SERVICE COMPANIES GM’s light truck plant is helping to create an automotive cluster with several world class suppliers that have started operations in the area. Nevertheless, large-scale operations from other, non-related industries will find a limited number of companies to support them and will need to rely on suppliers from Leon, Queretaro and Mexico City. The Politics UNIONS Unionized labor in Silao does not represent a major impediment for new start ups or expansion projects. Every national labor union in Mexico has representation in Silao, including the Revolutionary Confederation of Mexican Workers (CROM), the Revolutionary Confederation of Workers and Farmers (CROC), and the formerly state-run union, the Mexican Workers Confederation (CTM). Local labor relations are excellent and stable; unions’ leaders are cognizant of overseas competition and thus maintain a harmonious working environment with management. POLITICAL INFLUENCES Guanajuato has been governed by the conservative PAN party during the last 12 years. A well-known strategy to raise the standard of living in Guanajuato has been the promotion of foreign direct investment. The state government will assist companies seeking to relocate to the state. Furthermore, the Government of Guanajuato has recently created the Guanajuato World Trade Commission (COFOCE), a decentralized organization whose objectives are:
OTHER COMPANIES IN SILAO
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