Brazilian Companies Invest $900M in Mexico: Frasle, Gerdau Lead the Way

03 Jul, 2024

Brazilian Companies Invest $900M in Mexico Frasle, Gerdau Lead the Way

An increasing number of Brazilian companies are investing in Mexico to get closer to the U.S. market. Recently, Frasle Mobility announced the acquisition of a Mexican auto parts manufacturer for R$2.1 billion, the largest deal ever made by the company controlled by Randoncorp. Other groups, including Gerdau and WEG, are also focusing on this strategy.

This trend, known as nearshoring, involves relocating industrial operations to neighboring countries. Recent announcements indicate Brazilian investments in Mexico will amount to another $900 million, signaling a strong post-pandemic return of investment to the country. According to the Brazilian National Industry Confederation (CNI), Brazilian companies' investments in Mexico grew 22.9% from 2020 to 2022, reaching $1.2 billion.

WEG, with a presence in Mexico since 2000, will set up a new paint plant with investments of R$100 million. Gerdau is preparing to establish a special steel unit with an annual capacity of 600,000 tonnes and estimated investments of at least $500 million. Frasle will begin local production following its recent acquisition.

The Mexican market's size and post-pandemic strategies like shortening production chains and trade defense measures against China have increased the country’s attractiveness. Proximity to the U.S. and the USMCA agreement also contribute to its appeal. Key investment sectors include automotive, manufacturing, technology, electronics, chemicals, and software.