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IBM to Make Personal Computers in Mexico for Export Market

July 24, 1985

MEXICO CITY (AP) _ The National Commission on Foreign Investments has approved a plan for International Business Machines Inc. to build personal computers, mainly for export, through a wholly owned operation in Mexico.

Approved under a relaxation of a law that requires subsidiaries of foreign companies to be more than 51 percent Mexican-owned, the operation will be the first by a completely U.S.-owned company in the microcomputer field in Mexico.

The announcement late Tuesday came a day after President Miguel de la Madrid said the government would step up measures to strengthen the economy, struggling anew against sliding prices for oil, the country’s main foreign exchange earner, and a new tide of devaluation in the peso currency.

The measures include reducing protectionism for Mexican industry from foreign competition and cutting government spending.

IBM’s operation was one of several from U.S. and European companies that the commission authorized for majority foreign ownership in the fields of tourism, measurement and control, petroleum equipment, pharmaceuticals and others.

The commission, which rejected an earlier IBM proposal for the project, said in a statement that under a revised IBM plan submitted last May the company will invest $91 million over five years in microcomputers and keep technology used in the Mexican operation competitive with industrialized countries.

Mexican industries will be developed to supply the operation, it said.

An IBM proposal presented in March 1984 was rejected last January after it drew protests from 30 companies that make personal computers here, mostly from imported kits. The companies have majority Mexican ownership and said a wholly owned IBM operation could drive them out of business.

IBM Mexico, the computer giant’s Mexican subsidiary, said it received approval after 18 months of negotiations by agreeing to make substantial changes, including agreeing to help develop Mexico’s electronics industry and to purchase its products.

Under the approved plan, IBM Mexico said it would expand its plant at El Salto in the western state of Jalisco in 1985 to include production of IBM microcomputers, with more than 95 percent of the computers to be exported for sale in countries outside the United States.

IBM Mexico said exports from its manufacturing expansion and from its program of purchasing equipment and programs from Mexican suppliers and manufacturers, are expected to reach $620 million within five years.

IBM, which has been in Mexico for more than 50 years, controls about 75 percent of the computer market.

It imports macrocomputers, used by industry, and makes the medium-sized System 36 minicomputers and Selectric III electric typewriters at its El Salto plant. It recently was authorized to manufacture electronic typewriters.

″This program will enable IBM to address customer requirements in the microcomputer area for new technologies and products offering attractive price-performance standards at internationally competitive prices,″ said Rodrigo Guerra, president and general manager of IBM Mexico.

He said it would also aid Mexico’s computer industry.

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