News, Insights and Best Practices for Manufacturing in Mexico

Mexico's manufacturing coming of age

04 Dec 2013

Category: Labor & Economics, Manufacturing in Mexico

Mexico is in the midst of a manufacturing boom. North American companies are increasingly moving out of China and reshoring or nearshoring their manufacturing to Mexico. In fact, the country has become a low cost manufacturing haven for many companies. Expanding to Mexico is a way to stay profitable during this crucial time in the industry. According to the Los Angeles Times, being close to end-markets, having fast shipping and employing high-quality, productive laborers at affordable wages are just some of the benefits manufacturers are experiencing when they offshore manufacturing to Mexico.

In fact, many manufacturers are seeing this time as a type of Renaissance in Mexican manufacturing, yet it may not be a resurgence but an evolution. Manufacturing in Mexico has always been strong, but the current movement back to North America by many companies is set to make Mexican manufacturing even stronger. According to an article by Adina Moloman for Made in Mexico, high-tech manufacturing innovations in the country are propelling the country forward and may make it easier for even the smallest manufacturers to move operations to the country. From using robots and other types of automation tools to employing workers with college degrees, Mexican manufacturing may be in the midst of a significant growth spurt. 

Productive levels, number of manufacturers in Mexico sour
The Los Angeles Times reported that as more North American companies choose to offshore manufacturing to Mexico, a noticeable wave of new opportunities for Mexican workers is arising. According to the article, an industry group that monitors maquiladora activity found employment in Mexico skyrocketed by 25 percent to 2 million between 2009 and 2012, and foreign investment rose by more than 50 percent during the same time. Mexico is becoming known for having a workforce educated in various manufacturing industries, the Los Angeles Times reported. Combined with a quick logistical process, Mexico is becoming a better bet for many manufacturers than other offshoring destinations.

"Companies are bringing back parts of manufacturing to Mexico. They are saying, 'We want our manufacturing process close to our engineers, we want our inventory next to our customers so it's easier to ship,'" Joe Mazza, a partner at advisory and accounting firm McGladrey, told the newspaper. "There are also many companies in China that are not exiting China, but reducing their manufacturing and bringing some to Mexico."

This ability to expand and maintain all of the advantages of offshore manufacturing is a benefit of manufacturing in Mexico. According to the article by Moloman, Mexico is unique in that is has the perfect environment for manufacturers to innovate while keeping costs low and product quality high. Smaller supply chains mean manufacturers can try out a new innovation right away and adapt it to consumer preferences. Manufacturing in China created a long, inflexible supply chain that couldn't adapt to consumer demand and needs, making innovation and growth difficult for many companies. In turn, as more businesses enter into Mexican manufacturing and expand their production processes, the country's manufacturing environment will grow as well, effectively creating even more business opportunities and benefits for manufacturers.

In addition, manufacturing in Mexico is becoming a great business strategy for all manufacturers, no matter their size. 

"Mexico is very flexible," Guillermo Romero, a general manager for 3D Robotics, told the Los Angeles Times. "You can start projects here and grow them."

According to the Los Angeles Times, one safe manufacturing company found it's production levels double just five years after it expanded to Mexico. 

However, being part of the manufacturing evolution within Mexico requires North American companies to expand production to the country correctly. Using a shelter company helps manufacturers acquire a maquiladora in the right industrial cluster and hire the best workers to achieve strong growth.

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