News, Insights and Best Practices for Manufacturing in Mexico

Cosmetics company to build actuator in Mexico

29 Dec 2014

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

The benefits of foreign companies looking to begin some or all of their production operations through manufacturing in Mexico are too numerous to pass up. Over the years, the country has been working aggressively to make itself a destination for organizations to produce items that meet high standards of quality as it relates to consumer satisfaction, yet keeps overhead relatively low.

Mexico has accomplished its mission of being a great place to manufacture products as the nation currently boasts a highly skilled workforce that, from a wage perspective, is extremely competitive. By keeping salary and other operational costs down, manufacturing companies can see greater profit margins, grow their businesses and develop a strong reputation in the marketplace. This is just a small list of benefits to consider when looking at Mexico as an offshoring destination.

A large pipeline that is standing on top of a green field in MexicoThe benefits associated with manufacturing in Mexico are many. This is why companies are strongly considering the country as an offshoring destination.  

"Our strategy is to align with customers to enhance supply chain efficiency. Why transport actuators all the way from China when we can be right here in our customers' back yards?" - Phillip Brand, Global Marketing Director, Lindal Group

According to a report from Cosmetics Design, the Lindal Group, a company based in Germany, will devote $3.5 million toward the construction of an actuator facility that will be used to manufacture deodorants in Mexico. Taking this step will allow the company to get finished materials into the supply chain much faster and make it easier for the company to import necessary materials and export finished goods, particularly into and out of North America. 

"Our automation here in Mexico and proximity to customers and fillers, reduces costs and time and is a highly attractive alternative to Pacific Rim manufacturing, once all costs are tallied, Phillip Brand, Lindal Group's global marketing director, told Cosmetics Design. "Our strategy is to align with customers to enhance supply chain efficiency. Why transport actuators all the way from China when we can be right here in our customers' back yards?"

The attitudes shared by Lindal Group are similar to those of other organizations that have made Mexico their offshoring home. Simply stated, it just makes sense. With the North American Free Trade Agreement in place, the country's commitment to ensuring that its workforce remains highly skilled and reliable is unwavering. Also, given its proximity to the U.S. and easy access to waterways that allow materials to move in and out of the country, it's no wonder that Mexico is quickly becoming ideal for foreign manufacturing companies.

For organizations potentially considering taking this step, there are some best practices that should be followed in order to ensure successful operations:

  • Make lean manufacturing a priority: According to Half Cost Products, any organization that mass produces items that will later be sold to consumers should have lean strategies in place. Not only will this help keep products moving through the supply chain in an efficient manner, but it also allows finished products to reach consumers in a considerably shorter amount of time. This is due in part to the availability of necessary production materials, resulting in a substantially improved workflow.
  • Keep communication with customers open: Many manufacturers may have partnerships with other companies that don't care where the goods that go to market are manufactured or assembled. However, some will take great interest in this information and be well aware of the many media reports that often depict Mexico in a negative light. It's important for companies to ensure their customer base and corporate partners that their operations in the country are being handled responsibly and that those performing daily tasks are highly skilled and qualified to do so, Inbound Logistics wrote.
  • Site selection is critical: There are all sorts of products manufactured throughout Mexico on a daily basis. In fact, some regions or states specialize in the assembly of one product or another. According to a report from Site Selection, there are two corridors that should be considered for companies looking to establish operations in Mexico that are strictly based on their line of business and import and export needs. The NAFTA Highway Industrial Corridor is ideal for companies involved in medical device or electronics manufacturing. The Panamerican Industrial Corridor is ideal for organizations involved in the automotive or aerospace industries. Each location has its own set of unique logistics qualities that make it ideal for companies that do business in certain sectors. Therefore, organizations need to be aware of this information to help position themselves for success once they begin doing business in Mexico.

Manufacturing in Mexico will continue to grow in size and scope over time. Companies looking to bring down their overhead costs while at the same time, expanding their profit margins through the production of quality consumer goods, will likely consider Mexico as an offshoring location. The overall benefits of this activity, while too numerous to list individually, will continue being one of the key reasons foreign companies give the country a serious look.

As long as these organizations are well-versed on the best way to establish themselves from a logistical and governmental perspective, the overall positives associated with making Mexico an offshoring home will give companies the sense that they made the best decision for their businesses. 

 

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