POPULATION

Cuernavaca is the capital of the State of Morelos; it has an estimated 337,966 inhabitants which equates to 21.77% of the state’s population. (Source INEGI 2000)

STATE DESCRIPTION

The State of Morelos has a population of 1,552,877 million individuals - (INEGI 2000). Morelos is one of the smallest states of Mexico but its importance in the history and defining of the Mexican nation is inversely proportional to its physical size. The State of Morelos is famous for its bio-diversity and climate. In the State of Morelos the staggered valleys of Central American begin, and the geography of North America takes shape. Morelos has 33 municipalities, and the state is known mostly for its historical and artistic character.

LOCATION

Cuernavaca is located in the northwestern part of the state, at an elevation of 4,856 feet above sea level. The state has 33 counties or municipalities. Morelos offers a geological overview of Mexico, including pine forests, lagoons, and volcanoes.

REGIONAL INFLUENCE

Cuernavaca serves primarily the domestic market. As Mexico City’s population approaches 12 million cities like Cuernavaca serve more and more as a weekend getaways for the upper class. The State of Morelos contains counties with very little industrial activity and scarce economic resources. The cities of the State of Morelos, namely Cuernavaca and Cuatla, serve primarily the Mexico City market. A determinant factor for growth is proximity and access to Mexico City.

PROXIMITY TO KEY CITIES AND SEA PORTS

The Workforce

DEMOGRAPHIC IMPACT

The workforce in Cuernavaca has limited exposure to industrial jobs; the only heavy industry established is a small faction of the auto industry. There are many service related industries located in the city and the workforce is well trained and hard working.

UNEMPLOYMENT PERCENTAGE

Click Here To Register

SKILL RANKING

Cuernavaca has few maquilas but several large industrial plants.

The most credible proof of the quality of the workforce is the type of industry established in the city. The principal industries in Cuernavaca are as follows:

EDUCATION and TRAINING

A training program has been established by the government that provides the workers with a minimum salary while training for a period of two months. The company however, must hire 70% of the trainees at the end of the program. Companies can participate in selection of workers for the training period.

TURNOVER RATES

The state does not publish turnover statistics but we expect them to be 5% to 9% per month, depending on the size of company. The large number of small shops that offer no benefits and few promotion possibilities contribute to higher employee turnover. High labor turnover-rates are a constant problem for most maquila operations in Mexico, especially along the border. Cuernavaca loses much of its population to the larger market of Mexico City.

The Operation

Monthly salary for executives and employees in US dollars not including benefits

 Source: Bancomext 1999-$9.00/USD

Hourly salary for laborers in US dollars, including obligatory benefits

Source State Government of the State of Mexico

Exchange rate at $9.50 pesos per $1.00 US

INDUSTRIAL COSTS

Costs increase 1% per month

Costs increase 1% per month

Mexico State Government-1999

INFRASTRUCTURE

Cuernavaca has an airport which connects to Mexico City, from there any destination is easily reached. There are 1,242 miles of roads in the state and access to the NAFTA highway and Mexico City is under 2 hours away. The municipal region of Cuernavaca contains the following 158 miles of Railroad, access to water main, sewerage system, storm drainage, water treatment plant, electrical network, customs station, telephone and fax, satellite communication, workers training center, and a personnel transportation system.

CUSTOMS

There is a customs facility in the industrial park, Ciudad Industrial Del Valle De Cuernavaca.

TAXES

Existing taxes in Mexico are Federal and include no reductions or incentives related to the following: Income, Value Added Tax (IVA), Assets Tax, Withholdings, Import/Export, Social Security, Housing Fund (INFONAVIT), Retirement Savings (SAR), Workers Income Tax (ISPT). State taxes include a Payroll tax of 2% waived during the two initial years of operation. Random Games Tax (15%) and a Vehicle Tenancy Tax (variable).

The Support

SERVICE and SUPPLIER COMPANIES

Service and supplier companies are limited to the automotive and domestic services industries.

The Politics

UNIONS

The labor force in Cuernavaca is unionized but does not represent a major impediment to new starts or expansion.

ADVANTAGES

• Close proximity to extremely large market of Mexico City.
• Access to NAFTA highway through Mexico City.
• Automotive industry already established.

DISADVANTAGES

• Small labor force.
• The State generates only 1.6% of the GNP
• High turnover because of the migration to and from, the Mexico City area.

OTHER BIG NAMES

The Following contains a list of some of the major operations in the Cuernavaca area.

Conclusion

The State of Morelos has been home to many major figures in Mexican history including famed Aztec leader Moctezuma, the Spanish Conqueror Cortes, Mexican dictator Porfirio Diaz, and revolutionary Emilano Zapata. Because of this Morelos is an important state, most manufacturing operations will be better suited elsewhere.