Much of Mexico's success is owed to the manufacturing industry. According to estimates by the Boston Consulting Group, manufacturing exports added $20 to around $60 billion annually to Mexico's GDP over the past five years. Manufacturing in Mexico is an ideal way to reduce manufacturing costs - as of last year, average costs of production dropped below those in China. Mexico trading partners also provide nearshore incentive as the country's access to the global market is increasing manufacturing operations.
Part of Mexico's success in exporting the products of manufacturing comes from the fact that it has free trade agreements with more than 44 countries in the world. The familiar North American Free Trade Agreement is only one of them, and they extend across the world. Though approximately 75 percent of Mexican exports go to the U.S., the potential for these goods to meet a much larger global market is strong.
Economic growth in Mexico also depends in large part on global companies deciding to manufacture there. Manufacturing in Mexico has plenty of benefits in terms of cost and location, and manufacturing hubs exist where entire products can be made and finished from scratch within one industrial park. The cost savings this represents in terms of transportation and supply chain logistics are significant.
The business case for manufacturing in Mexico
Boston Consulting Group predicts the industries in which global manufacturers will engage most often in Mexico include transportation goods, computers and electronics, appliances and machinery.
"These industries have relatively high labor content, stringent logistical requirements, and strong existing manufacturing clusters in Mexico," according to BCG senior partner Eduardo León.
Labor is cheaper in Mexico than the U.S., and logistical requirements are easier to fill. Proximity to the U.S. solves possible supply chain issues that may arise in other countries, and the existence of manufacturing hubs can help even more with such concerns.
Companies with an interest in reducing manufacturing costs and exploring outsourcing alternatives should seriously consider expanding to Mexico. All economic indicators point to this decision being a wise one. Working with a Mexico shelter company can help organizations navigate any obstacles or intricate procedures they may encounter, and help them secure prime real estate and high-quality labor as well.