The imposition of US tariffs has led to a decrease in foreign direct investment (FDI), especially from China, presenting an opportunity for increasing the substitution of imports in molds and dies. This could potentially allow Mexican manufacturers to gain market share and boost domestic production, according to Alfonso Peña, director general of the Nuevo León Tooling Cluster.
Current Import Situation
Mexico currently imports $5,000 billion worth of molds and dies from other countries: 2,800 billion for new ones and 2,200 billion for spare parts.
Cluster’s Growth
The Nuevo León Tooling Cluster started operations in 2018 when the country’s tooling production was $500 billion. It has since grown to around $950 billion, with Nuevo León contributing 16%, as per Peña.
Industry Challenges
Financing: The Achilles’ Heel of the Tooling Industry
Peña pointed out that the main challenge for tooling manufacturers in Mexico is access to financing. Most are small and medium-sized enterprises (SMEs) with difficulty securing loans.
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Production Timeline: Moldes production typically takes three months, from order placement to delivery, with payment terms ranging from 30 to 90 days. This leaves SMEs financing their production for up to six months.
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Production Strategy Adjustments: Due to high financing costs, many Mexican companies allocate portions of their capacity to manufacturing new molds, making engineering changes, or servicing existing ones. Tooling production moves rapidly.
Peña believes that the high cost of financing tooling production is a reason why Mexican companies are not fully dedicated to manufacturing tools: “After spending on materials and labor for five or six months, it’s challenging to justify complete focus on new molde production.”
