DEVELOPMENT OF THE DISPLAY DEVICES REGIONAL CLUSTER March 2004
GENERAL OBJECTIVE OF THE PROGRAM Define and implement the necessary actions in order to promote the development of the new age of the display devices cluster in the north-west of Mexico, through this specific objectives: Keep current companies operating in the region at a competitive level. Increase the value chain of the cluster with new technologies and improved processes.
To achieve the objectives we have done an analysis of: 1. Composition of the cluster Localization Employment Production Industrial integration 2. Value Chain 3. Economic Impact 4. Technology status (Current and forecast) 5. Development of projects and initiatives to promote the cluster Main findings.
COMPOSITION OF THE DISPLAY DEVICES CLUSTER
OEM COMPANIES # PLANTAS COMPANIES 9 8 7 6 5 4 3 2 1 0 4 9 1 1 MEXICALI TIJUANA ROSARITO SAN LUIS CIUDADES CITIES CITIES # COMPANIES MEXICALI 4 TIJUANA 9 ROSARITO 1 SAN LUIS 1 TOTAL 15 ProduCen s own data, February 2003
OEM S EMPLOYMENT EMPLOYMENT EMPLEOS 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 MEXICALI 5,420 TIJUANA 15,291 ROSARITO CIUDADES 1,600 SAN LUIS 360 CITIES EMPLOYMENT MEXICALI 5,420 TIJUANA 15,291 ROSARITO 1,600 SAN LUIS 360 TOTAL 22,671 CITIES EMPLOYMENT MEXICALI 23.9% TIJUANA 67.4% ROSARITO 7.1% SAN LUIS 1.6% TOTAL 100.0% ProduCen s own data, February 2003
PRODUCTION OF TV S PRODUCTION PRODUCCION 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 MEXICALI TIJUANA ROSARITO SAN LUIS CIUDADES CITIES CITIES PRODUCTION MEXICALI 3,500,000 TIJUANA 12,284,000 ROSARITO 2,300,000 SAN LUIS 910,000 TOTAL 18,994,000 CITIES PRODUCTION MEXICALI 18.4% TIJUANA 64.7% ROSARITO 12.1% SAN LUIS 4.8% TOTAL 100.0% ProduCen s own data, February 2003
PRODUCTION OF PC MONITORS PRODUCCION PRODUCTION 5,000,000 4,646,000 4,000,000 3,000,000 2,000,000 1,450,000 1,000,000 0 MEXICALI TIJUANA CIUDADES CITIES CITIES PRODUCTION CITIES PRODUCTION MEXICALI 1,450,000 MEXICALI 23.8% TIJUANA 4,646,000 TIJUANA 76.2% TOTAL 6,096,000 TOTAL 100.0% ProduCen s own data, February 2003
COMPANIES IN THE CLUSTER OEM S SONY HITACHI CONSUMER PRODS MATSUSHITA TV & NETWORK SAMSUNG MEXICANA SANYO MANUFACTURING JVC INDUSTRIAL ADI SYSTEMS DIAMOND ELECTRONICS DELTA ELECTRONICS DAEWOO ELECTRONICS SHARP ELECTRONICA SONY PIMS (MITSUBISHI) LG ELECTRONICS BENQ MEXICANA (ACER) Total: 15 ProduCen s own data, February 2003
Regional grouping of Display Devices direct suppliers TECATE 5-10 TIJUANA 80-120 MEXICALI 25-40 ROSARITO 2-5 ENSENADA 2-5 Total: 120-180 ProduCen s own data, February 2003
Display devices - Baja California SLRC Companies/ EMPLOYMENT OEM S 15/22,000+ (Final products) 1 st. Tier 120-180/15,000 + Subassemblies & parts 2nd. Tier 4+/2,000+ Raw materials & basic components 3Rd. Tier Multiples/---- Services, indirect and support Most of them from Asian Origin. They are concentrated in the assembly. All transnational Diverse technologies in terms of final product. Low collaboration in technology and process between them. The companies that supply key parts and components come from Asia (yoke, PCB, components,etc.) Most of them are small and medium companies and only 20 are large -- Focus in current needs of operation (most of them not dedicated ). Do not consider formally technological change
Productive Chain WOOD PAINT FASTNERS SUBSTANCES GLASS OTHERS WIRE SHEET METAL RESINS & ADIT. WELDING MTS. COMPONENTS PCB PLASTIC FILM FOAM CARDBOARD SUPPLIES 1 SUPPLIES 2 SUPPLIES 3 WOOD CABNT. LENSES, MIRROR & SCREENS TUNNER CRT YOKE ACCESORIES SPEAKERS HARNES REMOTE CONTROL CHASSIS PLASTIC COVERS ASSEMBLED PCB PACKAGING LCD SCREEN PLASMA PANEL OTHER DISPLAYS PROJECTION CONVENTIONAL LCD PLASMA OTHERS REGION NO REGION
TECHNOLOGY AND VALUE CHAIN
LIFE CYCLE OF TV TECHNOLOGY INTRODUCTION GROWTH MATURITY DOWNFALL FLAT CONVEN. PLASMA LCD 3 CRT - REAR PROJECTION CONVENTIONAL ANALOG BLACK AND WHITE DLP LCD REAR PROJECTION Assembly in B.C. CUSTOM T.V 3D T.V ORGANIC MATERIALS
VALUE DISTRIBUTION OF THE T.V. BUSINESS 10 Years 5 Years Added Value Currently RESEARCH AND DEVELOPMENT DESIGN OF NEW PRODUCTS PRODUCTION OF STRATEGIC PARTS AND COMPONENTS PRODUCTION OF GENERIC PARTS AND COMPONENTS ASSEMBLY AND PACKAGING DISTRIBUTION CUSTOMIZATION POST-SALE SERVICES DEVELOPMENT OF BRANDS & MARKETS Pre-manufacturing Manufacturing Post-manufacturing L5 L1 L5
THE DEVELOPMENT PROGRAM
MAIN PARTICIPANTS Ing. Sergio Tagliapietra Secretary of Economic Development, SEDECO Lic. Mario Juarez Promotion Undersecretary, SEDECO Lic. Rocio Ruíz Undersecretary of Industry and Commerce, Ministry of Economy (SE) Lic. Sergio García de Alba Undersecretary of Small Business, Ministry of Economy Lic. Humberto Jasso General Director of Heavy Industries and High Technology, Ministry of Economy Lic. Daniel Romero National President, CNIME Ing. Octavio Garza CANIETI s representative, Northwest center
PROJECTS AND INITIATIVES 1 OEM S: Keep the investment, attract new technologies and extend the productive chain 2 SUPPLIER DEVELOPMENT: Consulting and training for current suppliers of the cluster. 3 FINANCIAL SUPPORT: Aimed at development of current and new companies. 4 NEW SUPPLIERS: Entrepreneurship programs targeted at specific business opportunities GROWTH AND DEVELOPMENT 5 ATTRACTION OF NEW INVESTMENTS: To extend the cluster of display device. 6 CENTER FOR RESEARCH AND DEVELOPMENT: To support current and future technologies. 7 INTELLECTUAL CAPITAL: Training for professional and technical employees
2003 PROGRAM ACHIEVED MILESTONES Initial need Integration of of determined participating SEDECO ProduCen organizations meeting with JMA s General board diagnostic CANIETI s Strategy and project assembly with JMA definition JETRO Definition of of rules of of origin and tariffs for new technologies Design of of the Digital TV training program Governor and Sedeco visit to to Asia SEDECO s Asia-Mexico business trip J F M A M J J A S O N D
OEM S Rules of Origin for New TV Technologies The final definition is currently in evaluation between Mexico, EE.UU and Canada, based on the proposal and agreements reached on December 11 th. After such confirmation, the countries will adopt a decision of classification about these goods in compliance with NAFTA. Decision confirmation expected by February 2004.
INTELLECTUAL CAPITAL The Center for research and development of digital technology (CITEDI) and promoting institutions are organizing a specialized training in Digital TV. General Objective: Update to engineers about the new technologies, from analog TV to Digital TV. The program will begin on April 2004. Additional efforts are being put in place to develop training programs at a technical and operative levels; as well as updating the study plans of related careers.
SUPPLIER BASE DEVELOPMENT STRATEGIES
SUPPLIER DEVELOPMENT 2 main strategies are being promoted that will allow us to fulfill the goal of developing the supplier base: Attract critical components and raw material supplier to the region from foreign countries. Assist currently established component and raw material suppliers to grow and diversify in the region. As an initial activity we are working on determining the regional market value for the direct critical supplies and commodities of the display device cluster.
NEW INVESTMENTS STRATEGY ACTIONS Meetings in Asia (Nov 24 to Dec 5, 2004): In Japan meetings with JAITA and Japanese OEM s were held in order to explain the project and its goals. In Taiwan, meetings were held with the Taiwán Electrical & Electrónic Manufacturers Association (TEEMA) and also with potential Display Device Industry Suppliers. Targeted meetings with prospects (suppliers) in Asia will be planned for the months of march-april 2004. Special benefits are being developed for strategic suppliers.
2004 PROGRAM PROJECTED MILESTONES Meeting with JMA SEDECO s SEDECO s members Asia-Mexico Follow-up trips business trip to foreign countries Meeting with Japan s Ambassador to Mexico Meetings with representatives from other Asian/foreign countries Final definition of rules of origin and tariffs for new technologies Supplier development strategies in operation 1 st st. Digital TV training program delivered Training programs for technical levels International display technology forum in Tijuana J F M A M J J A S O N D
KEY REMARKS There is a strong backup from regional organizations, the state s government and federal government for this program. Special emphasis will be set on new product technologies and the regional development of more added value operations. OEM s decisions play a crucial role in further development of the regional cluster, thus your participation is considered fundamental.
KEY REMARKS OEM S play a key part in LURING AND DEVELOPING THE SUPPLIERS IN THE REGION THAT WILL ADD COMPETITIVNESS TO ITS MEMBER COMPANIES. Together we will be able to reach success in the objective of not only maintaining the short term competitive advantages of this industry in our region, but to ensure the innovation and growth of this Industry for years to come.
Thank you very much. Muchas gracias.