News, Insights and Best Practices for Manufacturing in Mexico

Mexico, a Manufacturing Hub with Numerous Trade Agreements

23 Dec 2014

Category: Automotive Manufacturing, Manufacturing in Mexico

Mexico is becoming a major country that is capable of controlling a manufacturing industry because of support from its new regulations, which make it easier for foreign companies to expand and begin building factories for exporting goods. There are also other reasons for Mexico's expanded manufacturing industry aside from its regulations.

Mexico's international presence allows it to compete on a global scale
For example, according to Forbes, Mexico has become a truly international country. It has not only benefited from the North American Free Trade Agreement, allowing for virtually tariff-free shipping between Mexico and the other two North American countries, but it also made trade agreements with many other countries. Mexico's export agreements range from other parts of Latin America, to South America and also to places as distant as Asia and Europe.

These exporting laws have made it easy for Mexico to compete with China in the manufacturing sector. For example, China's wages are increasing, according to Forbes, and it is quickly becoming more cost efficient to build in Mexico versus China. Blackburn News reported KPMG's Canadian manufacturing Outlook 2013 found that only 14 percent of companies plan to outsource to China in 2014. In 2013, that number was 31 percent. According to the Blackburn, energy costs, the price of shipping goods back and forth between countries and wage inflation are all reasons why companies are leaving China.

Companies are expanding to Mexico
Instead of moving to China, many auto companies are moving to Mexico instead. Last year, Chrysler made plans to build $1.3 billion worth of manufacturing plants in Mexico. Audi has also invested over $1 billion to build its luxury line of cars in Chiapa.

Another car company, Kia, is currently "in talks" to open a factory in Monterrey, Mexico, according to Just Auto, an automotive news site. If the Kia factory opens, it will begin production in 2016, and produce Soul, Forte and Picanto models.

Just Auto cited Kia's expanded global sales as one reason why Kia seeks to expand its factory presence.

Reasons to hire an offshore shelter company
Hiring a company to take care of the challenges having to do with nearshoring to Mexico can be a great way to expand quickly and easily. Additionally, a Mexican shelter company knows the ins and outs of the country, so that it will be able to choose exactly the right site for the perfect factory, depending on the industry and other requirements.


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