News, Insights and Best Practices for Manufacturing in Mexico

POSCO adds another factory in Mexico

06 Feb 2014

Category: Automotive Manufacturing

South Korean steel company POSCO is opening its second galvanizing plant in Mexico, according to the Korea Times

The new plant is located in Altamira, Tamulipas, and will be capable of producing 500,000 tons of galvanized steel. POSCO's first factory can produce 400,000 tons. Together, these factories make POSCO the second-largest steel manufacturer in the region, according to the source.

"The completion of our second plant in Mexico shows the close ties between POSCO and Mexico since setting up our branch office there in 1981," said POSCO CEO Chung Joon-yang in a statement.

POSCO began manufacturing steel in Mexico partly because of its proximity to the U.S., which is a major buyer of its galvanized steel sheets. 

Benefits of nearshoring
Many companies have begun to see the benefits of expanding to Mexico with the help of a shelter company to ease the transition. Industry Week summarized the benefits of nearshoring in one article as "Closer, cheaper, friendlier." The distance between the U.S. and Mexico is much shorter than between the U.S. and other offshoring sites, which means supply chains are that much shorter. Mexico helps firms deal with the effects of global competition, according to Arnold Maltz, an associate professor at the W.P. Carey School of Business, Arizona State University.

"The stability of the time schedule of supply has become paramount in manufacturing," said Rich Bergmann, global lead for manufacturing for Accenture. "Whether we like it or not, a 12-month forecast, steady-state demand is no longer a reality. Everyone is running lean supply chains and inventories. Being close to customers is key to reducing lead time. Add to that the overall total landed cost and that explains why reshoring is occurring in Mexico."

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