News, Insights and Best Practices for Manufacturing in Mexico

Advantages of nearshoring

17 Sep 2014

Category: Labor & Economics, Logistics Management, Manufacturing in Mexico

Offshoring in itself offers many competitive edges as an outsourcing alternative, but the advantages of nearshoring are unparalleled in terms of reducing manufacturing costs. Not only does manufacturing right across the border in Mexico capitalize on the low costs and skilled labor of a rising global manufacturing power, but it also makes production much more efficient.

Mexico at the forefront of global manufacturing
According to the Boston Consulting Group, Mexico is now considerably less expensive to manufacture in than China, as wages there have been on the rise while Mexico's remain stable. Due to this low wage growth alongside a strengthened infrastructure and stable exchange rates, Mexico has become a major contender as the new global manufacturing base.

Proximity and productivity
Beyond low manufacturing costs, manufacturing in Mexico also capitalizes on the wealth of benefits that come along with production proximity. Some of the greatest advantages of nearshoring include increased improved management and project cost, according to Lanshore. Similar time zones means shorter lead times, better response times and more efficient collaboration, while manufacturers in Mexico incur fewer travel expenses and general supply chain costs than their overseas counterparts.

An additional benefit to be reaped of nearshoring is also cultural similarity. According to Inbound Logistics, much of the Mexican labor force is bilingual, improving project communication overall. This literal and figurative closeness gives the U.S. more control over intellectual property management, digital schedules and general supply chains, further increasing production efficiency. All of this contributes to a much higher level of manufacturing productivity and consequently improves speed to market.

 

 

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