News, Insights and Best Practices for Manufacturing in Mexico

Businesses choosing Mexico over China to offshore manufacturing

01 Aug 2013

Category: Manufacturing in Mexico

Times are beginning to change again in the manufacturing industry. China was once thought of as the can't-miss hot spot for production, but the emergence Mexico has opened the eyes of many business leaders across the United States. Organizations that have shifted their manufacturing halfway across the world to China are now listening to economic and market experts, who have hailed Mexico as the top venue for manufacturing expansion.

Cost of business rising in China
Cheap wages and low shipping costs are alluring factors to move manufacturing to China, yet the cost of doing business there has been steadily rising. That, combined with the fact the Yuan has risen in value in recent years has made it more expensive to produce and export goods in the country.

The evolving global manufacturing outlook that's high on Mexico and less bullish on China has moved business owners like Robert Moser, president of Casabella, cleaning products and kitchen equipment maker, to exit the Chinese market and instead, focus on manufacturing in Mexico.

"When you look at total costs, you're pretty much at parity," Moser, who runs his business out of Congers, New York, told USA Today.

Doing business in Mexico is starting to make sense
Mexican President Enrique Peña Nieto has made it one of his greatest initiatives to make the country an emerging market that businesses are not afraid to shift their manufacturing to. Mexico shelter companies offer organizations a low-cost solution complete with lower wages, stable labor relations, decreased landed transportation costs, favorable currency exchange rates and reasonable tariff costs, according to Bloomberg. It's also important to note the Mexican economy is beginning to turnaround.

While the economy appears to be on the upswing, business leaders must look past that and at the true costs of manufacturing. According to USA Today, the country is part of more than 40 free trade agreements, which can reduce production costs even further. Decision-makers also must consider the time difference between some areas in the U.S. and China is 16 hours, and would be much lower when partnering with facilities in Mexico.

Mexico shelter companies pose several advantages
Moving manufacturing to Mexico is a big choice, and will often require a lot of deliberation. This is exactly why pairing with a shelter company across the border can be a great decision. These businesses can customize solutions for their clients and provide comprehensive labor, logistical and HR services, just to name a few. Inc. magazine stated that a slower strategy when moving manufacturing can often be the right approach.

Scott Stanley, an offshoring expert, told the magazine that starting off production in Mexico at a snail's pace could work out better than moving all manufacturing to a facility at once. This strategy minimizes risks and also ensures that manufacturing won't suffer any major lapses.

Melissa Palmer, CEO of Hoopnotica, a company that created an innovative hula hoop, told Inc. she is happy that she moved her business' manufacturing from China to Mexico simply because of the proximity of the country. She found a facility in Mexico that is just hours from her headquarters in Venice, California, and loves the fact she can simply "zip down to the factory in a day." 

The Offshore Group: You Manufacture ... We Do The Rest

Related posts