News, Insights and Best Practices for Manufacturing in Mexico

The Mexican Maquila Industry: More Popular than Ever

   
15 Apr 2014

Category: Manufacturing in Mexico

These advancements in Mexico Manufacturing not only benefit investing countries' economies, Mexico is much closer to the U.S., which allows for faster delivery of products. America's cities along the border are also seeing local economic improvements. For example, in New Mexico, companies are building up large facilities so that they can supply products and services to the maquila industry in Mexico.

"We're seeing a steady 're-shoring' of industry investment from China to Mexico that's creating huge opportunities here for everything from manufacturing and transportation to warehousing services and technology-related enterprises," said New Mexico Economic Development Secretary Jon Barela. "We believe a wide array of businesses can flourish along the border as the maquila industry continues to grow."

Why Companies are Reshoring to Mexico from China

Transportation costs from China have become more expensive than ever, and they continue to rise. Additionally, China's economy is getting stronger, which is raising the cost of manufacturing there.

Some of the industries that have begun migrating to Mexico from China include aerospace and automotives. Other companies that have begun expanding to Mexico are companies that build custom projects with sharp deadlines. Mexico's proximity to the U.S. means that shipping finished products is much easier than shipping from China. There is also little chance of paying a tariff, because nearly all tariffs between Mexico and the U.S. were removed after the two countries signed the North American Free Trade Agreement along with Canada.

Learn about Mexico's 13 Free Trade Agreements here!

Mexico is Trading with Companies in Ireland

ZAPA_003.jpgCurrently, trade between Mexico and Ireland is 1 billion euros, but the lord mayor of Dublin, Oisin Quinn, plans to double that number over a period of five years. The deals planned to take place during the meeting between Irish and Mexican business people is expected to total up to millions of euros.

"We want to position Dublin as an ideal gateway into the 500 million people in Europe," Quinn said.

Israeli Companies also Investing in Mexico

The Arad Group, has acquired a controlling stake in Cicasa, a leading manufacturer of water meters. "The acquisition of Cicasa is in line with the international expansion strategy of the Arad Group," said Gabi Yankovitz, CEO of the Arad Group. "The deal will increase Arad's revenues and the group will gain a strong foothold in the fast expanding Mexican market and the large Latin American market."

The Arad Group also specializes in water meters, and companies leaders plan to sell Arad products alongside Cicasa products in Mexico. Because Mexico is expanding its infrastructure to the support the increased number of factories that have come from other countries, it requires a great deal of equipment such as meters and pipelines to improve its ability to deliver fresh water.

Companies that wish to take advantage of Mexico's inexpensive but effective labor, along with its proximity to the U.S.,  usually become part of the Maquiladora Industry and find that they maintain an amazing amount of productivity, with access to a global network. Check out our infographic to learn about nearshore manufacturing in Mexico!

 

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