Everything seems to indicate that 2023 will be another good year for the consumer sector in Mexico, especially for the health and cleaning segments: supply chain problems are being solved; inflation, although high, remains controlled, as is the exchange rate; and many multinational companies are bringing part of their production from China and other Asian countries to our country, to reduce their dependence on that region, a phenomenon called nearshoring, which will trigger investment, innovation and development, employment and Mexican exports , mainly to North America.
However, growth could be lower than in previous years if the US economy slows more than expected or goes into recession.
For Procter & Gamble Mexico, one of the largest P&G operations in the world and the most important in Latin AmericaWith six manufacturing plants and two distribution centers, the slowdown of the US economy is the main challenge in 2023.
Carlos Trujillo, President and CEO of P&G Mexico, tells HIGH LEVEL the company’s challenges and plans for 2023.
AN: What is the growth expectation of P&G Mexico for 2023?
I am very optimistic: I expect this to be the ninth consecutive year of growth for P&G in Mexico, which is one of the company’s largest operations worldwide.
We closed 2022 in a very positive way. I dare to say that it was the best of the last 20 years of P&G in Mexico. Growth was double digit; obviously there were segments that grew more than others, such as Health and Cleaning, but in general they all grew.
There were many challenges, of course, one of the biggest being the whole supply chain issue, which hit us very hard and continues to be very difficult due to everything that is happening in the world.
2023 will also be a year of great challenges: the most important that I see is that the US economy slows down, because it would impact manufacturing and Mexican exports. It is the biggest risk that I see, although the unemployment rate in the US is very low and entering a recession with very little unemployment does not make sense; So I think the US economy is going to slow down a bit. The question is how much and how long.
The second, undoubtedly It is the rise in interest rates in Mexico, because when they shoot up, it affects everything. Inflation will also continue to be a challenge, although I believe that next year it will be under control. Today we have similar inflation and in some periods lower than the European and American ones, between 7 and 9%.
So, despite the challenges we have, I would say that the Mexican economy has been very kind to businessmen in recent years.
AN: What are the plans that P&G has for 2023?
As always, innovation is a fundamental part of our business model, and we will continue to bring new products to strengthen and grow all categories.
As far as investments are concerned, in the last three years there were important investments; for example, At the Health plant that we have in Naucalpan, in the State of Mexico, we allocated 100 million dollars to increase production capacity and we are building a new tablet plant. We are also investing tens of millions of dollars in the detergent plant in Vallejo, in Azcapotzalco, Mexico City, to increase production between 10 and 20%.
We have six production plants in Mexico: 50% of the production is for the local market, 40% for Latin America and the remaining 10% for the US and some countries in Europe and Asia.
In 2023 there will continue to be significant investments, mainly in production plants, due to increased demand, but also because P&G, like many companies, is analyzing how to take advantage of Mexico to reduce our dependence on China and other Asian countries.
We believe that Mexico can play a very important role in this nearshoring (a mechanism by which a company transfers part of the manufacturing, assembly or supply processes to a closer country or region). We are understanding what opportunities there are and we want this to happen not only in 2023, but the next three or four years.
And if this happens, the investment that we would bring to Mexico would be very large. Today I can’t say exactly how much it would be, but they are issues that we are studying. Likewise, we want to increase our distribution capacity, from two to three distribution centers in Mexico.
In 2023 we celebrate 75 years of operations in Mexico and we hope to be able to celebrate it with news from that side.
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