News, Insights and Best Practices for Manufacturing in Mexico

Foreign companies continue to invest in Mexico manufacturing

09 Feb 2015

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

Manufacturing in Mexico has offered companies already doing business there a variety of benefits. In fact, there are so many that other companies are strongly considering expanding to the developing nation to take advantage of what can only be described as a friendly environment for foreign organizations to operate in.

According to a Bloomberg News report, Mexico currently stands as the sixth-largest auto parts manufacturer in the world. The growth of this particular industry aligns perfectly with the expansion of Mexico's auto manufacturing industry. Citing data from INA, a trade group, Mexico's auto parts production sector generated $81.5 billion in revenue in 2014.

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

This year, as many as 2.9 million vehicles are expected to be exported out of the country into foreign markets, with 70 percent of these automobiles being sent to the U.S.

"More companies are investing large sums of money to establish a manufacturing operation inside of the country."

"The growth pickup in the U.S. is going to be felt first and foremost in countries like Mexico," Gerardo Rodriguez, portfolio manager of investment management firm Black Rock Inc., told Bloomberg. "Going into 2015, clearly Mexico is one of the markets that's looking attractive."

Manufacturing in Mexico 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 $397.5 billion in 2014, with 85 percent of this number related to the manufacturing of 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.

 while in a Mexican manufacturing facility, a large robotic arm works to cut a large piece of thing and sturdy metal.The manufacturing advantages offered by Mexico has caused foreign companies to invest more capital to establish operations in the country.

Plastics maker opens new factory in Mexico
Orbis Corp. is a company that manufactures a variety of plastic goods. Some of these items include reusable plastic containers, dunnage and pallets. Based in Oconomowoc, Wisconsin, Orbis operates a number of facilities around the globe.

According to a Plastics News report, the company recently opened a 265,000 square foot manufacturing facility employing 140 people, in Silao, Mexico. Orbis operates several product service centers in Mexico. However, this is the company's first Mexican manufacturing operation.

"I am very pleased to make this investment in the future of Orbis Corporation in Mexico," Bill Ash, the company's president told Plastics in Packaging. "The new facility features best-in-class design for efficient product flow, productivity and environmental sustainability."

In addition to its new factory, Orbis also formed a partnership with Instituto Estatal de Capacitación, a training school located in Silao. Individuals working at Orbis will be trained in the areas of technical knowledge and general manufacturing in a program that is interactive and hands-on.

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. The country's government is fully committed to pulling marketshare away from popular offshoring destinations such as China and India, and so far, their efforts appear to be successful. In the coming years, expect many more corporations to shift portions of their operations into the country.

Related posts