News, Insights and Best Practices for Manufacturing in Mexico

Millennials might benefit from nearshoring to Mexico

16 Jan 2015

Category: Labor & Economics, Manufacturing in Mexico

Pointing to the economic improvements happening in Mexico, Larry Fink, executive director at Black Rock, a financial services company, has suggested that millennials start businesses there. He believes Mexico's opportunities will provide people with possibilities that aren't available in a nation as fully developed as the U.S. There isn't enough room in the U.S. for a company to expand greatly, and much of the niche market areas have already been taken. But Mexico is a blank slate where many companies could turn an easy profit.

The reason for Mexico's status as a country that will soon blossom into a major global economy, Fink wrote, is the reforms that President Enrique Peña Nieto has brought into the country. These include the opening up of the energy sector, which has previously been dominated by state-owned oil and gas company Pemex. This means that foreign companies will come into the country and begin to invest in large-scale energy initiatives like deepwater drilling and oil fracking. Additionally, he has moved businesses out of what Fink calls the informal economy, and he has made it easier for small businesses to get loans.

Mexico's government allowed these forms to pass into law because it functions well and is democratic. Other countries in South America are not as stable politically as Mexico. Additionally, Mexico's government is working tirelessly to form trade agreements with other countries in other to ensure that imports and exports are inexpensive. Shipping to the U.S. from Mexico, for example, has no tariffs except for very specialized goods, thanks to the North American Free Trade Agreement. And the same is true when shipping from Mexico to Canada and vice-versa.

Not just for millennials - an example of one company's successful move to Mexico

Behind the spirit of expanding to Mexico, whether you are a millennial or not, is the ambition to earn money in an economy that has more opportunities than the U.S. One company that has succeeded in this ambition, according to Plastics News, is Evco Plastics, which specializes in custom injecting molding. It has plans to open a fourth plant in Mexico, following the successes of its previous three factories. The company is even considering a fifth plant, according to Garza Dávila, president of Evco Plastics in Mexico.

"We will probably look (for a site) in El Bajío," said Carlos González, sales director of Evco Plastics's Mexican subsidiary.

Evco already has factories in Monterrey and Cuidad Juárez. These factories account for about 35 percent of Evco's $130 million in total annual sales. The company opened its first plant in 2001, and it covers 72,000 square feet. Fifty-three machine operators and 23 technicians work there six days a week in three shifts.

One of the benefits of working in Mexico and working on custom products it that customers can receive their specialized goods much faster than if their products were shipped from China, where it can take longer to cross the ocean and is more expensive.

"(Evco has learned to) take advantage of the institutions in Mexico that have training programs," Dávila said. "… We are about to sign an agreement with Ciqa (Centro de Investigación en Quimica Aplicada, an applied chemistry research organization) . They can help us with tooling, injection molding, new compounds, etc., through research they have done in plastics."

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