Industrial Downgrading? the Television Industry in Mexico. Technological Change and Cluster “Deformation”
The aim of this paper is to present the evolution of the manufacture of TV sets in Mexico emphasizing both industrial upgrading and the cluster formation, as well as the challenges in this transformation. We focus on the changes from analog to digital TV and their impacts (positive and negative) on industrial agglomeration, employment, skills and business model. The central question is the following: what are the limits to the upgrading process based on local capability formation? Are there any spillovers after a cluster “deformation”?
From the experience of a continuous restructuring global industry located in a emerging market (the TV industry in Mexico) we want to show an interesting story that shows that, despite the formation of a cluster and the upgrading process achieved by the companies, the impacts to the host regions in terms of industrial organization as well as labor could be positive but negative too (downgrading process). In other words, the evolution of capabilities is not linear and there are some limits.
The impact of FDI in Mexico aimed at producing TV sets has been very important. In 2007 exports to the United States of television sets placed first in total exports from Mexico, after the oil. Tijuana was considered the world capital of TV. There are three areas responsible for the competitiveness of television industry in Mexico, in order of importance: the corporate strategies themselves, the economies of scale and comparative advantages. From 2003 to 2014 the TV industry had been in a continuous restructuring process because the technological change from analog to digital. This mutation has been impacted the local industry in many ways (organization, technology, business and employment). This study compares a previous diagnosis of the TV cluster in the state of Baja California, Mexico in ten years comparison. The methodology of the study is based on company visits, managers interviews, and surveys applied in 2003 and 2013.
The study is divided into fourth sections. The first reviews the evolution of the industry. In the second section we highlight the importance in Mexico of the production of picture tube television sets and shows the industrial upgrading and clustering formation. The third section presents the results of the transition from analogue to digital TV and latter from OEMs to CM. And finally we elaborate the recent challenges and draw some conclusions, theoretical (upgrading into a global value chain perspective) and practical (the host regions need to be care about this experience in other to avoid the downgrading process).