News, Insights and Best Practices for Manufacturing in Mexico

Offshoring to Mexico as a proactive strategy

24 Oct 2013

Category: Labor & Economics, Manufacturing in Mexico

In today's manufacturing climate, North American businesses need to be proactively improving their business models to continue staying competitive. Expanding to Mexico is one of the best ways Canadian and U.S. manufacturers can control their operational and labor costs and remain successful in their fast-moving manufacturing industries. Yet, so many manufacturers are attached to their status quo, preferring to only change their strategies when they have no other option. This is often called the "wave" phenomenon, and getting caught in it can result in significant business and financial challenges for manufacturers.

The proactive approach produces more benefits
According to Manufacturing Today, the wave is "a naturally occurring movement that originates with action, activity, desire and focus, but ends with inaction, inconsistent implementation and, at its worst, panic because profits have disappeared." In business, unsuccessfully navigating the wave can result in disaster. 

Industry Week reported the manufacturers that are the most successful are globally oriented, are innovators of the newest technology and are active in dominant industrial clusters. For businesses that chose only to react to situations when they are moved to, growth is hard to accomplish without force. According to Manufacturing Today, old habits and behaviors as well as business models can hold manufacturers back in today's evolving industries, and it shouldn't take a major disaster to propel businesses to change.

Manufacturing Today used the recent demise of a large bookstore retailer as an example of the negative impact of the wave phenomenon. By not quickly entering the online commerce space, responding to declining revenue and reducing its production costs, the company was swept under by its innovative competition.

Preventing the power of the wave phenomenon can be difficult for even the most innovative companies, as resting on the business' successes and traditions can be all too easy. However, Manufacturing Today suggested manufacturers control their business objectives and continually strive to find new ways of doing things to prevent being caught up in an unpredictable situation. 

The site recommended manufacturers employ numerous strategies to stimulate ongoing growth, but refocusing a specific area of the business can be a great technique. One of the most important areas of manufacturing is the production of goods, which can be expensive due to labor and transportation costs.

Offshoring to Mexico allows businesses to streamline their operations in a cost-effective way and prevent the company from falling into reactive strategies. By proactively reducing the business' fabrication and assembly costs by manufacturing in Mexico, the company can be prepared in case financial issues arise in the future. The business can also see the cost-savings funnel back into the company, either to produce more goods or to expand the company's market. 


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