News, Insights and Best Practices for Manufacturing in Mexico

Foreign Companies Continue Investing in Mexico Manufacturing

   
20 Jul 2017

Category: Automotive Manufacturing, Labor & Economics, Manufacturing in Mexico, Politics & Regulations

Mexico manufacturing provides companies with a variety of benefits. Companies expanding to the country become part of dynamically growing industries with access to a global market and highly skilled and educated employees.

Industry Success

In 2015, Mexico stood as the sixth-largest auto parts manufacturer in the world. Currently, the country is the 4th largest automotive exporter to the world, and the primary auto exporter to the U.S. The growth of the automotive industry aligns perfectly with the expansion of Mexico's auto clusters that help provide economies of scale and infrastructure investment. 

"The growth in production and in exports has been spectacular," Eduardo Solis, president of the Mexican Automobile Industry Association. "The growth reflects the confidence the industry has in our country."

As many as 3 million vehicles were exported out of the country into foreign markets, with 70 percent of these automobiles being sent to the U.S. in 2015. The total amount of auto parts Mexico exported to the U.S. in 2015 was $79.5 Billion USD.

Manufacturing in Mexico

"...as many as 3 million vehicles were exported out of the country into foreign markets..."

Mexico manufacturing has never been more ideal for foreign companies. The country boasts an expanding skilled labor force owning the technical proficiency to assemble a wide range of products. In addition, because the salary demands of people living and working in Mexico aren't very high, companies can essentially see greater profit margins by due to lowered overhead costs related to labor.

As Mexico's government continues to put forth initiatives and pass legislation that makes the country attractive to foreign manufacturers, the Mexican economy will continue to flourish, as will customer satisfaction related to the quality of finished products being shipped to consumers around the world. Ultimately, this activity will open up more partnerships for Mexico and outside corporations.

"There's very little debate, very little questioning of Mexico's manufacturing competitiveness," said Nikolak Lippmann, strategist at Morgan Stanley specializing in Mexico equity. "That is very much something investors take for a given at this stage."

Overall, Mexico's export revenue was valued at $391 Billion USD in 2015, making the country the 10th largest exporter in the world. 85 percent of the exported goods were manufactured mobile phones, televisions, cars, computers and airplane parts. As a result, more companies are investing large sums of money to establish a manufacturing operation inside of the country.

Mexico manufacturing advantages have caused foreign companies to invest in more capitalThe manufacturing advantages offered by Mexico have caused foreign companies to invest more capital to establish operations in the country.

Companies Invest in Education 

It is not uncommon for companies to form partnerships with local education institutes to train specific skills needed for a specific industry. For example, Orbis Corporation opened a plastics manufacturing facility in 2015 and formed a partnership with the Instituto Estatal de Capacitación, a training school located in Silao, Guanajuato. Individuals working at Orbis will be trained in the areas of technical knowledge and general manufacturing in an interactive and hands-on program at the Silao Institute.

Mexico has made technical education a key point of emphasis in attempt to provide foreign companies with workers who are proficiently trained and ready to contribute right away to any manufacturing endeavors.

Find out why more companies are deciding to nearshore manufacture in Mexico.

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