Industrial sector: economic outlook, keys, projections and trends 2021

Today more than ever investing is essential in the industrial sector with the intention of strengthening recovery and growth processes, which had been running out since 2019, as a result of the fall in the Gross Domestic Product (GDP) and the industrial slowdown worldwide, added to the public health problems in the middle of 2020, financial volatility and concern in structural matters (1 ).

Since then, the Confederation of Industrial Chambers of the United Mexican States (Concamin) has requested a national infrastructure strategy, with main attention to the construction industry, since only in 2019 had presented a decrease of -8% in 20 entities of the country (1).

In this sense, the challenge is even greater if we consider the global panorama, which has affected the industrial productive sector to a greater or lesser extent. But nevertheless, the transition to the new normal is demanding the implementation of our strategies, policies, dynamics and priorities in economic and health matters.

Despite the situation generated by Covid-19, in Mexico the Monthly Indicator of Industrial Activity (IMAI) registered a real increase of 6.9% in July 2020 (2).

This new context requires creativity to repositioning the focus on current and ongoing projects in all industrial sectors. These figures are already beginning to change, and it is necessary to follow up on the issue to see progress in the matter and to see how it impacts the Mexican economy.

To learn more about industrial zones, see our article:
Guide to industrial zones for rent in Mexico City: concepts, locations and trends

What is the industrial sector?

Secondary sector base of other production chains Vallejo Properties
The industrial sector is one of the main economic sectors of any country, as it forms the basis of many other production chains.

In general terms, industry or industrial activity , which includes many types of subsectors, It is considered as such for carrying out processes of transformation of raw materials in finished products or that are part of the inputs of other industries (3).

It is a very important secondary sector for the economy of every country, since it implements different processes for the extraction of materials and their transformation, as final articles for export in B2B or B2C businesses (3).

This area is characterized by innovation and technology, as well as specialization and division of labor (3).

These types of activities tend to take place in urban areas and maintain a close relationship with the service sector, as part of the constitution of an integral economy (3). Further, industry is the sector that generates the most resources for GDP.

It is also important to clarify that, in addition to thus naming the set of sectors that transform or transport products, It is also used to name the facilities where large operations are carried out (hence its industrial level) on the same process or to all industries of the same genre or subsector (4).

If you are interested in the real estate sector, you can check our text: Real estate in CDMX: guide to trends, companies and recommendations after the pandemic ”.

Industry types

According to the International Labor Organization (ILO), the general categorization of industrial economic sectors, around the world, is the following (5):

1. Agriculture, plantations and rural sectors.

2. Food, beverages and tobacco.

3. Commerce.

4. Construction.

5. Education.

6. Manufacture of transport equipment.

7. Public function.

8. Hotels, restaurants and tourism.

9. Chemical industries.

10. Mechanical and electrical engineering.

11. Media, culture and graphics.

12. Mining, both coal and other types.

13. Oil, gas production and refining.

14. Production of base metals.

15. Postal and telecommunications services.

16. Health services.

17. Financial services and professional services.

18. Public services (water, gas and electricity).

19. Forestry, wood, pulp and paper.

20. Textiles, clothing, leather and footwear.

21. Transportation, including civil aviation, rail and road.

22. Maritime transport, ports, fishing and inland transport.

In this sense, it is necessary to take into account the different subsectors that exist, considering that not all have the same importance and level of development in the countries where these activities are generated.

The ideal space for any sector or subsector is an industrial warehouse.
If you want to know more, we suggest you read: “Industrial building: guide with everything you need to know”.

Aerial view of Vallejo Properties industrial zone
Industrial zones can encompass production subsectors of the same (or multiple) categories.

What are the main industrial sectors in Mexico?

According to the National Institute of Statistics and Geography (Inegi), there are four major industrial sectors in Mexico: mining, electric power generation, water and gas, construction and manufacturing industry. These include the following items and industrial activities (2):

1. Mining. Extraction of oil and gas, metallic and non-metallic minerals, and related services.

2. Generation, transmission and distribution of electrical energy, supply of water and gas through pipelines to the final consumer. Includes the same named activities.

3. Construction. Building, civil engineering works and specialized works.

4. Manufacturing industries. Food, beverage and tobacco, textiles, tanning and finishing of leather and fur, wood, paper, printing, petroleum and coal products, chemical, plastic and rubber industry, manufacture of non-mineral-based products. metal, metal products, machinery and computer equipment, communication, measurement and others, electronic components and accessories, electric power generation equipment, transportation equipment, furniture, mattresses and blinds, and other manufacturing industries.

At Vallejo Properties We have clusters of warehouses and industrial spaces that have great facilities , such as electrical substations, wells and other elements that can be very useful for your industrial processes.

Contact us , and we will gladly schedule a visit to our properties so that you know the benefits that the different locations we have offer you.

Another suitable space for an industrial business is the CEDI. If you are interested in knowing a little more, consult: “Distribution centers (CEDIS): types, characteristics and trends for the strategic management of these spaces”.

Figures from the industrial sector in Mexico

In the four most important industrial sectors in our country, there is an important variation in the most recent cut of the month of July (2):

Industrial production table
The industrial sector has presented relevant variations compared to the previous month to the evaluation (in July 2020) and compared to the same month of the previous year. Source: Inegi.

In this sense, we see that the manufacturing industry is the one that has grown the most in the comparison of the month, and the least is mining. Compared to the values of the previous year, the construction is the most affected.

Likewise, the growth of this industry has been equally limited, as well as mining, in the comparison of the month. On the other hand, the generation, transmission and distribution of electricity and gas to the final consumer has a more controlled variation, although negative from the previous year and positive from the previous month.

Finally, the four items show a clearly negative change compared to the previous year and with slow progress compared to the previous month. This is due to the variables mentioned on the world economic situation and the need for a national investment and growth strategy in these areas.

If what interests you are commercial premises, we suggest you read:
“Rent of commercial premises: economic activation guide”.

Manufacturing sector with the highest growth 2020 Vallejo Properties
Manufacturing is the industrial sector that has grown the most comparatively between June and July 2020.

Industrial sector projections 2020-2021

According to the consulting firm Deloitte, the drop in Mexican GDP , due to unemployment in economic activity and social confinement, is impacting industries heterogeneously , so the analysis and projection of these sectors is variable (6).

In this sense, For the end of the year and the beginning of the next, a contraction is expected in activities that depend more on social interaction, such as those related to tourism and services, with the exception of areas such as health or telecommunications (6).

The impact on industries as a result of the pandemic has been heterogeneous, so the recovery will take place in the same way, with personalized strategies in each area.

A general deterioration in economic conditions is also forecast, however, the speed of recovery of the industries will be differentiated, and it will depend on financial stimuli and the time it takes to extend health and social distancing measures (6).

It is because of that, for each of the industrial sectors, there is a growth forecast at the end of the year based on the heterogeneity of economic impacts, in accordance with what was analyzed up to June by the Deloitte company. It should be clarified that the traffic light and the following classification is not official or governmental (6):

• Food industry. Its performance traffic light is green, which means that it has an annual variation greater than the upper limit. It is expected to close with -1%, since, although it started the year with positive numbers, the drop in consumption affected that forecast.

• Financial services. Your traffic light is yellow, which means you are within range. Its growth forecast is -7.5%, due to the fall in market rates and the volatility in the exchange rate, which is reflected in the liquidity of the banks.

• Energy. Its traffic light is green and has a forecast of -8%, due to the internal financial problems in Petróleos Mexicanos (Pemex) and the Federal Electricity Commission (CFE), in addition to what happened as a result of Covid-19 and the changes in ongoing energy policy.

• Telecommunications. Its traffic light is green and its growth forecast is 4% (the first positive on the list). This is due to the fact that social isolation intensified the use of technology to continue with productive activities, which is why this sector was present in other important segments.

• Consumption. Yellow traffic light with -8.8% forecast for closure. Although this industry was strengthened through digital channels, commercialization is expected to have a significant drop, since demand will consist of facing the challenges of the new normal to make consumption and health habits sustainable during the reactivation.

• Building. You are at the red light, which means you are below the lower limit. His prognosis is -16%. The suspension of activities significantly damaged this industry, especially for the acquisition or development of new projects, but has allowed the availability of spaces to be greater.

This can be an unprecedented opportunity if you are looking for a commercial, corporate or industrial space, like the ones we offer at Vallejo Properties. Contact us for more details.

• Mining. Green light and -9% growth forecast. This is due to the fall in activities in the automotive, manufacturing and metalworking industries, which influence demand and investment in this sector.

• Health Sciences. Yellow traffic light with a positive forecast of 5%. As a result of the pandemic, there has been a logical increase in demand in this sector, which has been translated into economic benefits, but we will have to see what happens after the expected decrease in infections.

• Tourism. With a red traffic light, minus 16% at closing. Undoubtedly, this is one of the sectors most affected, so it will be essential to pay attention to the promotion and reactivation measures of the sector.

• Manufacturing industry. Red traffic light and minus 9%. It is important that this sector realign its supply chain and identify the risks of attention to understand the new needs of the client and the changes in demand. Within this industrial activity, the following are included:

• Heavy industry. With forecast of -16% and red light.

• Electrical-electronic. Red traffic light with -19% forecast for the end of the year.

• Chemistry. Yellow traffic light with -8%.

• Machinery and equipment. Red traffic light with -22%.

• Textile and footwear. Red traffic light and -8%.

• Automotive. Red traffic light and with -19% closure in 2020.

This sectoral analysis allows us to identify the variables decrease in the various fields of industry, to generate a diversified strategy that considers the situation of each of the productive sectors in the country.

Without a doubt, this is a major challenge, especially if you are looking for a space for your business. At Vallejo Properties you can count on us to support you in the transition to the new normal, without being left behind. Write to us and we will advise you.

A space that we recommend for an industrial project, are the warehouses of this type, c find out more at: “Industrial warehouses: characteristics, areas and recommendations”.

Keys to the industrial sector Vallejo Properties
The keys to the industrial sector are based on autonomy, information, technology, data management and synchronization of devices in real time.

Keys and trends 2021 of the industrial sector

The industry faces various challenges, among which stand out six key trends for the development of the “factory of the future”. It is important to consider that this new agenda should be considered flexibly, but with the objective of long-term sustained development (7):

1. Consumer demand will be largely personalized and individualized. This will take as a context the ecological perspective that will dominate the use of resources and the measurement of our impact on the environment.

2. Artificial intelligence and cobots will be essential elements for production, taking into account automation in different industrial areas, shortening inefficiencies and reducing long hours.

The production lines must be flexible so that they can be reordered, when required, taking into account times of crisis, such as the one we are experiencing now.

In this sense, artificial intelligence will serve to refine and parameterize human instructions. Further, the cobots, or collaborative robots, will take care, more than to replace, to work hand in hand with humans in the improvement and safety of industrial spaces, without this posing a threat to jobs.

3. Virtuality will be essential to verify processes and errors, with so-called digital twins or “Digital twins” , with which the operation of certain machines, equipment or devices can be simulated, before the production line is put into operation.

This allows the operating models to be reviewed remotely, anticipating risk situations and optimizing times and forms, in tests that are commonly exhaustive. It is also important to consider the machine learning , as a source of predictive analytics to streamline and improve performance.

4. Along with these technological advances, it will be important to have a regulation regarding the connection of machines, processes and people , which will be promoted by the internet of things, 5G and augmented reality.

In this way, not only execution is important, but the creation of standardized protocols to drive the industry transition and accompanying it, safeguarding the data with effective protocols based on engineering and business fundamentals.

5. In this sense, information will play a fundamental role, more than ever, to predict, correct and evolve calculations, systems and processes, so the edge computing prepare the ground for a new and decisive functionality of data and information in production algorithms, of practically all industrial sectors.

Another important part of information and analytics is the observation and execution of digital strategies to commercially accelerate your business.

One of those strategies is based on the tool Google Ads , for the realization of ads focused on your target audience. Mastering technology and information in this sense it will make your business a specialized power within the industry.

6. From the same perspective, not only consumer demand will be important, but also the requirement of specialization that will be required for professionals in these fields in order to cope with the new normal.

Further, the operation of any industry will demand mostly equipped spaces to carry out its processes in a sustained way.

Finally, the economic outlook for the industrial sector, according to the sectoral analysis, is not favorable in all cases: In the majority, a contraction and a technical recession are indicated, in general terms, due to the prolongation of the health phenomenon.

The Mexican economy will be one of the hardest hit as a result of the pandemic, according to the International Monetary Fund (IMF), taking into account that the world economy will fall 4.9% (8).

In that sense, transformation will take place at all levels in much of the world, so it is necessary to accept and face change, as soon as possible, to take into account the trends and keys of the industry in order to take the next step in your business.

Collaborative robots in the industrial sector Vallejo Properties
The participation of collaborative robots allows synchronization and automation machinery and processes safely in the industrial sector.

Don’t forget that at Vallejo Properties we have an appropriate and equipped space for your industrial growth ideas. Get to know our properties and take advantage of the properties we have for you.

If you are looking to learn more about the real estate market, read our article:
“Real estate market: spaces, trends and projections 2020-2021”.

References

1. Antonio García. Mexico’s industrial sector calls for national construction strategy. Urban Center, 2020. Retrieved September 24, 2020.

2. Inegi. Monthly Indicator of Industrial Activity . National Institute of Statistics and Geography (Inegi), 2020. Retrieved September 24, 2020.

3. Amalia González. Definition of Industry . Simple Economy, 2018. Retrieved September 25, 2020.

4. EcuRed. Industry. EcuRed, 2019. Retrieved September 25, 2020.

5. ILO. Sectors and industries . International Labor Organization (ILO), s / f. Retrieved September 24, 2020.

6. Deloitte. Industry Trends | July 2020. Deloitte and Econosignal, 2020. Retrieved September 25, 2020.

7. Philipp Wallner. 5 Industry 4.0 trends: the Factory of the Future (2020 and beyond …). Interempresas, 2020. Retrieved September 28, 2020.

8. Leticia Hernández. Mexican economy will be one of the hardest hit in the world by COVID-19, according to the IMF . El Financiero, 2020. Retrieved September 25, 2020.

Let us find
the perfect location

for your business

Tenemos
la ubicación perfecta

para tu negocio.

¡Te ayudamos a encontrar el espacio perfecto para tí!
Envíanos un mensaje con tus necesidades, y nos pondremos en contacto contigo a la brevedad posible.

We have
the perfect location

for your business.

Let us help you find the perfect space!
Send us a message with your needs, and we will contact you as soon as possible.