Many U.S. businesses are pulling out of China and expanding to Mexico to take advantage of the country's growing production expertise. Yet manufacturers may want to note that while both countries are offshoring destinations where companies can reduce manufacturing costs, they are very different from each other. In Mexico, the workforce is highly-skilled in auto parts and other types of industrial production processes, while China concentrates more on footwear and furniture, according to Manufacturing.net. Yet these are not the only distinctions between the two countries.
In fact, Mexico and China have many psychological differences that U.S. businesses need to keep in mind when switching their offshore location. In an interview with global fabrication news source Metal Miner, German Dominguez, a Mexico sourcing expert, distinguished key differences manufacturers should remember when offshoring to Mexico instead of China: the need for a clear strategy and the drive to build partnerships with suppliers. However, there is another psychological aspect that results from both of these things - the focus on quality over quantity.
Whenever a manufacturer offshores to another country, it is essential that they have a comprehensive strategy in place. According to Dominguez, making the most of all Mexico has to offer requires having a clear business strategy in place because "sourcing in Mexico is a challenging and resource-intensive endeavor that requires strategy and flawless execution."
This is when a shelter company is vital to success. Most U.S. manufacturers don't have the insights needed to efficiently offshore to the country on their own. Shelter companies offer businesses with a management and location plan, a way to stay in compliance with Mexican labor laws and the ability to coordinate supply chains. Without this key knowledge, manufacturers aren't able to successfully offshore to Mexico as they would to China.
Since Mexico has a highly-experienced workforce with special skills in manufacturing and assembly, its employees can be very different from China's. According to Manufacturing.net, business that do well in China are focused on high volume products that are less well-made because manufacturers need to keep oceanic shipping costs in mind. Mexico is better suited to producing higher-quality items that are heavier. While goods made in Mexico are still produced at lower costs than the U.S., the workforce's specialty in manufacturing increases the quality of fabricated items and businesses having a shorter supply chain allows them to direct more resources toward production.
Dominguez said manufacturers need to be ready for longer wait times to receive a qualified material supply source. In a way, the wait time is one of the main reasons why having a clear strategy in place is important; supply bases in Mexico are rooted in the cultural need to build a relationship. If manufacturers are able to adapt to the lengthy process of creating that partnership, not only will materials be higher quality but businesses may see stronger returns.
According to Dominguez, when U.S. businesses offshore to China there is an expectation that Chinese sources will change to American standards, such as getting a quote fairly quickly. However, Mexican culture is built on family and relationships, and manufacturers may want to keep that in mind to take advantage of all that Mexico has to offer as an offshoring destination.
While there are many differences between Mexico and China, manufacturers should remain aware that culture plays an important role in expanding business to either country. When choosing to expand to Mexico and pull out of China, it is essential that manufacturers make sure they use an experienced shelter company to assist them. Mexican law continues to change and finding the right workforce can be tricky if manufacturers choose to do so independently.