A cut above: Local industry continues to outperform national averages

With the primary materials industry accounting for just 4.9% of state GDP in 2019, San Luis Potosí has come a long way since its foundation as a mining town in 1592. The early days of the city’s economic development are owed to its precious metal deposits, and the mark they made on the colonial economy was significant. As Mexico progressed, San Luis Potosí found itself in the centre of the “golden triangle” formed by three of the country’s most populous metropolitan areas – Mexico City, Guadalajara and Monterrey – making it an integral logistics point for a number of industries. Its proximity to the US border and location equidistant between the Pacific and Atlantic coasts was a key factor in the growth of the state economy. In 1890 the first train left the city bound for the Atlantic port of Tampico, which is still a significant export destination for goods manufactured in the state today, and Mexico’s modern rail network now connects San Luis Potosí to the eastern US and Mexico’s Pacific coast by US firm Kansas City Southern’s subsidiary routes. The state’s economy is in good health, often outperforming the national scenario, and moves are being made to boost small local businesses and promote burgeoning sectors.

Regional Group

The region has long served as an economic powerhouse. Around 76m consumers and 78% of Mexico’s GDP are located within a 500-km radius of the city of San Luis Potosí. The state also borders the Bajío region, a four-state ecosystem with complementary manufacturing and commercial industries. “The Bajío region has a set of strengths that make it unique at the national level; it is the engine room of the Mexican economy,” José Antonio Montes, the director of economic planning and competitiveness at the Secretariat of Economic Development (Secretaría de Desarrollo Económico, SEDECO), told OBG. “It is not just the home of the automotive industry, other sectors such as agriculture are diversifying the region’s offer.”

Together with San Luis Potosí, the Bajío states of Querétaro, Jalisco, Guanajuato and Aguascalientes, formed the Alianza Centro-Bajío-Occidente of likeminded states in 2018. The alliance aims to bring together experts, industry leaders and local governments in five of the fastest-growing states to establish the region as a leader in environmental, social, economic and educational development. The five member states have grown at 40% above the national average since 2012, according to data published by the Mexican Association of Employers, while the National Institute of Statistics and Geography reports that one in five pesos exported from Mexico is produced in these five states.


San Luis Potosí’s economy has grown steadily over the past decade, from MXN270bn ($14bn) in 2008 at constant prices to MXN369.2bn ($19.1bn) in 2018, according to SEDECO. In 2018 the state’s GDP was up 3%, making it the eighth-fastest growing local economy in Mexico that year, and considerably above the national average of 2%. Projections for 2019 show GDP continuing its upward trajectory, increasing by 1.3% to reach MXN373.8bn ($19.3bn). To compare, national growth forecasts for 2019 stand at 0. (https://mgtrailer.com/) 9%.

This impressive growth comes on the back of credit rating agency Fitch raising the state’s credit rating from stable to positive in July 2018. The agency pointed to the increasing strength of San Luis Potosí’s internal savings, investment, debt and sustainability indicators as reasons for the upgrade.

Primarily due to its location and the influx of investment to the area, San Luis Potosí’s export capacity is also on the rise, with the value of goods exported from the state up from $9.5m in 2016 to $15.2m in 2018. SEDECO estimates figures will reach $16.4m in 2019.

Meanwhile, the secondary sector, involving industries that process and add value to primary materials, grew by 2.3% in 2018, making it the 11th-highest performer of Mexico’s 32 states and well above the national average increase of 0.2%. The manufacturing sector was also up by 6.4%, putting the state in fourth place nationwide and considerably above the Mexican average of 1.7%.

Foreign Investment

Foreign direct investment (FDI) in San Luis Potosí has fluctuated in the past decade due in part to the effects of the 2007-08 financial crisis, which saw inflows sink to a low of $85m in 2009, according to SEDECO. However, FDI quickly returned, reaching a high of $2bn in 2013. In 2018 figures stood at $1.6bn, up from $1.37bn and $825m in 2017 and 2016, respectively. The five member states of the Alianza Centro-Bajío-Occidente accounted for $7.1bn in FDI in 2018, or 21.3% of the national total. San Luis Potosí accounted for 22.4% of the FDI funnelled to the alliance and 4.8% of the national total.

Human Resources 

The central region of San Luis Potosí contains the capital city and just over half of the population, and accounts for more than 84% of state GDP. According to SEDECO estimates, 1.2m people, or 43% of the population of San Luis Potosí state, is economically active. Of this, 445,181 workers are covered by the national insurance scheme provided by the Mexican Institute of Social Security. Although San Luis Potosí ranks among the top states in terms of formal employment, such figures point to a high level of informality among the workforce. The state government has reduced the number of informal workers by 34,600 since 2015 and is furthering efforts to incorporate more of the labour force into formal structures. In general, the labour environment is stable in San Luis Potosí and wages are competitive. The state has Mexico’s 12th-lowest unemployment rate at 3.1%, below the national figure of 3.7% as of August 2019.

Infrastructure and housing projects have engaged the local workforce, while continued injections from the automotive and tourism industries provide new investment avenues. Away from big business, a government scheme has brought together 75 micro, small and medium-sized enterprises (MSMEs) to integrate them into the supply chains of the state’s most important industries. Under the remit of SEDECO, the Programme to Strengthen Entrepreneurs and MSMEs grants support of between MXN100,000 ($5170) and MXN500,000 ($25,900) to help MSMEs and entrepreneurs over the age of 30 to finance productive projects.

Automotive Powerhouse

The automotive sector continues to dominate the current panorama in the state, generating 8% of its GDP. The first automotive investment arrived in San Luis Potosí in 1968, since then, the number of firms with in-state operations has risen to 235 as of June 2019. By country, Japan has the largest presence with 47 companies, representing 20% of sectoral participation. This is followed by the US with 40 firms (17%) and Mexico with 34 companies (14.5%). Some of the largest global players in the industry are located in the state, with US firm General Motors opening a plant in 2006 and Germany’s BMW inaugurating it’s largest facility in May 2019. “If San Luis Potosí were a country, it would be among the world’s top-11 most important vehicle producers,” Montes told OBG.


The state’s advantageous location has seen it develop into an important logistics centre for the whole country. When General Motors arrived in San Luis Potosí, for example, several smaller businesses arrived at the same time to provide logistical support, and this trend promises to continue as specialists congregate around new industry leaders.

Among the companies to set up operations in the area are US haulage and logistics giants Penske, Link Transport, Ryder, and Anchor Bay Packaging, as well as German-owned courier company DHL. Maricela Valencia, commercial director of Logistik Industrial Park, told OBG that more than 80% of the businesses in her park provide logistical services.


Aside from the automotive industry, agriculture holds a leading position in San Luis Potosí. According to SEDECO, the local livestock industry grew by 11.4% in 2018 – the second-highest rate among all states in Mexico. To compare, the livestock segment grew at an average national rate of 2.4%. The state also remains Mexico’s premier exporter of unrefined sugarcane; the second-largest producer of tomatoes; the third-highest producer of soy, oranges and beef; and the fourth largest in chillies, goat meat and eggs.


Efforts to diversify the local economy and promote MSMEs have seen San Luis Potosí’s tourism portfolio steadily gaining reputation. Between 2015 and 2018, 5.1m tourists visited the state – significantly more than the 3.25m visitors seen in the previous three years. Recognising the area’s potential, the administration of President Andrés Manuel López Obrador is considering to build an airport in the region of La Huasteca in the state, which it says will increase tourism revenues in the area by 30-40%. Business tourism is also being encouraged with regular direct flights between San Luis Potosí and Mexico City, a MXN400m ($20.7m) airport renovation funded by Grupo Aeroportuario Centro Norte, and the construction of a large convention centre with 5600 sq metres of meeting space and 9000 sq metres for expositions. Gustavo Puente Orozco, the state secretary of economic development, announced new flights to Houston and Dallas in 2018, and a flight to Detroit was opened in May 2019, connecting San Luis Potosí with some of the US’ major industrial centres.


The renegotiation of the North American Free Trade Agreement is causing uncertainty among businesses in San Luis Potosí, mainly owing to the large amount of trade that the state does with the US and the prevalence of North American FDI within the region. In June 2019 Mexico became the first of the three countries to ratify the US-Mexico-Canada Agreement (USMCA), with the US and Canada expected to do the same. One of the major competitive advantages that the agreement will bring – particularly applicable for San Luis Potosí’s formidable manufacturing sector – is the stipulation in the USMCA that 75% of a product’s value must be added in the region.

Traditional industries have continued their strong performance into 2019, while new sectors are emerging that are aimed at diversifying San Luis Potosí’s economic offer. Collaboration brought by the Alianza Centro-Bajío-Occidente, coupled with predictions for another strong year, means San Luis Potosí will likely continue to consolidate its position as one of Mexico’s most attractive and reliable states for investment.