News, Insights and Best Practices for Manufacturing in Mexico

Perception may not be the reality in Mexico

12 Sep 2013

Category: Manufacturing in Mexico, Politics & Regulations

Many executives at manufacturing firms may have a perception of what life is like in Mexico, but they are wrong. However, a blog post written by Mark Kennedy, professor of political management and director of the Graduate School of Political Management at George Washington University for The Huffington Post, discussed how that idea of Mexican culture is far different than reality.

Mexico has capable workers outside of labor
Many U.S. businesses hold the perception that the Mexican workforce is only suited for manual labor; but what American business owners may not know is that the country has a "young, industrious workforce" that can carry out all elements on a company's supply chain, wrote Kennedy. By pairing with shelter companies in Mexico, manufacturers can focus their energy on production, while allowing a third-party firm to manage human resources, import-export services and tax and fiscal compliance, as well as a host of other benefits. The Mexican labor force is skilled and ready for any tasks that American manufacturers can throw at them.

In addition, Kennedy cited recent census numbers that revealed half of Mexico's population is 26 or younger. By producing more than 115,000 young engineers each year, Mexican shelter companies could have more qualified employees than potential partners in Canada, the United Kingdom, Germany and Brazil. Kennedy also discussed how Mexico has led the way in production of different products. For instance, the country is know the largest flat screen television exporter, the third-largest computer manufacturer and fourth-largest vehicle exporter in the world, while its IT services industry is in the top five worldwide.

Politics in Mexico have stabilized
Many leaders of manufacturing firms may have heard the stories of political unrest in Mexico, but since the turn of the century, relationships have gotten much better between the Institutional Revolutionary Party President César Camacho Quiroz and the National Action Party President Gustavo Madero, wrote Kennedy. In fact, the two groups, as well as the Party of the Democratic Revolution, have formed allegiance known as the Pact of Mexico, in which they promise to collaborate on political issues.

A recent article for The Wall Street Journal demonstrated just how far the political parties in Mexico have come. Several reforms, such as a constitutional change to put an end to the public teachers union, a legal reform to take away the opportunity to receive immunity from criminal prosecution for public officials and a telecommunications bill removes the "quasi-monopolistic powers of " Telmex and América Móvil. Furthermore, President Enrique Peña Nieto's team works with officials from other parties on potential legislation.

"I spend around 60 percent of my time with members of the opposition, discussing bills," Aurelio Nuño, chief of staff to Peña Nieto, told The Wall Street Journal. "We've all gotten to know each other very well. You come to see each other as people, not just politicians."

Manufacturers in the U.S. should embrace the opportunities to outsource some elements of their operations to shelter companies in Mexico because politicians within the country have guided the nation in the right direction. Taking advantage of these solutions could lead to dramatic cost savings.

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