According to the Economy Ministry, Mexico was the world’s 10th most important vehicle producer in 2007, with production exceeding 2 million. The auto industry’s domestic importance is huge. National Institute of Statistics and Economy Ministry figures show that it represents about 3% of gross domestic product, 15% of manufacturing output, and employs some 1 million people.

Auto production in 2007 reached record levels. Moreover, there has been a clear, strong recovery over the past two years, after significant falls in production in 2000-2004. This trend seems set to continue:

–Vehicle production stood at 188,090 units during April, a 28.4% year-on-year increase.

–The January-April total, at 679,981 units, represented a 13.8% year-on-year rise.

Exports are the main growth driver–from January-April the number of vehicles sent abroad rose 18.5%. While the U.S. market remains (and will remain) the most important destination for auto exports, there is some diversification Exports to Europe in January-April represented 14.4% of the total, up from 10.0% last year. Meanwhile exports to the U.S. declined from 76.4% to 71.5%.

The $3 billion Ford will invest is significant for the overall economy, given that total foreign direct investment in manufacturing in 2007 stood at $11.5 billion. Only foreign acquisitions of Mexican banks represented bigger capital inflows.

Moreover, it represents a national success, as the United Auto Workers union lobbied hard to produce the Ford Fiesta for North America in U.S. territory (part of the investment will be geared toward this).

Mexico has important advantages for the global auto industry, namely:

–geographic location and increasing integration with the U.S. economy–virtually all plants are in states bordering the U.S. or in the center of the country;

–wage competitiveness: Mexican auto workers earn about one-sixth of U.S. counterparts–though China’s are lower, the gap with Mexico is shrinking;

–an experienced and relatively large pool of qualified workers;

–a stable political system and growing domestic market;

–the peso mostly mirroring the U.S. dollar, providing some certainty on exchange rate movement–the peso has not appreciated as strongly as other industrialized and emerging economy currencies.

However, drawbacks are also significant, and may hinder growth. Infrastructure development is behind industrialized countries. Inputs are expensive–for example, until recently, Mexico had the industry’s second-highest electricity costs, after Japan. Labor unrest, while infrequent, has also flared up in recent years.

Mexico could become a global production center for small vehicles, yet high input costs and poor infrastructure must first be addressed. Production falls have happened in the recent past, and recent gains could prove reversible in the absence of appropriate policy.

Boston Pizza International’s new smaller-scale store design, at about 4,100 square feet, is expected to make it “more affordable than ever to own a Boston Pizza franchise,” the company said in a statement Thursday.

The new store template is an opportunity “perfect for markets that were previously challenging due to market size or real estate availability,” said Ken Otto, the Toronto-based chain’s chief operating officer.

“One of our core pillars is a focus on franchisee profitability. This new prototype delivers against this by offering a reduced size model that is perfect for smaller communities.”

In terms of occupancy, the new space would allow for 140 seats with a 50-seat patio and would include both the “welcoming family restaurant and… lively sports bar” now seen in the chain’s larger outlets.

By comparison, the typical Boston Pizza building currently takes up 6,000-6,500 square feet, with capacity for 180-225 seats plus patio seating for 50-75.

“We believe a multi-channel approach to real estate and development is the best way to expand the Boston Pizza brand and extend our dominance in the casual dining category,” Otto said Thursday.

The company in recent months also made moves to expand its presence beyond the suburban landscape where it’s most often now seen, by developing stores in “prime urban locations” across the country and in “non-traditional” sites such as hotels, sports venues and strip malls.

“We are looking at building on the success of our urban prototype in Toronto in other major markets as well as growing through the opening of new stores in smaller, more rural communities that we haven’t entered yet,” Otto said.

Born out of an Edmonton restaurant, Boston Pizza and Spaghetti House, in 1964, the company — which then included 44 stores — was bought in 1983 by then-franchisee Jim Treliving and partner George Melville, who oversaw its expansions into Ontario, Quebec and Atlantic Canada.

The chain, which booked gross sales of $853 million in 2010, also began southward expansion in 2000 under the name Boston’s The Gourmet Pizza, now including about 50 U.S. outlets and three in Mexico.