News, Insights and Best Practices for Manufacturing in Mexico

Two US companies move manufacturing operations south to Mexico

17 Mar 2015

Category: Automotive Manufacturing, Labor & Economics, Manufacturing in Mexico, Medical Device Manufacturing

Expanding to Mexico has been a key point of emphasis for companies looking to increase their profit margins by lowering their overall operational costs. Mexico not only boasts one of the world's fastest growing economies, but its labor force is technically skilled and proficient in the manufacturing of many consumer goods items. In addition, the overall cost of hiring workers is significantly less than in many countries, especially the U.S., making Mexico one of the world's most attractive offshoring destinations.

It's not difficult to find news reports of organizations making significant financial investments into establishing a manufacturing presence in the country. Mexico's automotive, aerospace and medical device manufacturing sectors are burgeoning, and companies operating in these industries are taking a hard look at potentially moving all or part of their operations to this part of Latin America.

Mexico has the capacity to build state of the art manufacturing facilities that could produce medical devices, auto parts, and aerospace components.Mexico's reputation as an ideal place for foreign manufacturers to operate is growing.

Arkansas-based wheel maker moves to Mexico
Superior Industries International makes its home base in Rogers, Arkansas. However, the aluminum wheel manufacturer will soon begin to run its commercial production efforts out of a factory located in Chihuahua, Mexico. ABC News affiliate KATV reported that Superior invested $35 million toward the construction of a 260,000-square-foot plant expected to begin operations in April. As such, many of the company's jobs that were based in Rogers will now be transferred to the new location in Mexico.

In addition, Superior will also hire as many as 400 people at its new location which is expected to have an annual output of more than 2 million aluminum wheels.

"We successfully transitioned production from our Rogers, Arkansas, facility to other, more cost-efficient facilities, began the launch of our newly constructed facility in Mexico, strengthened our management team and board of directors, and began the process of enhancing our competitiveness," Don Stebbins, Superior Industries' CEO told the news outlet.

The company's website revealed that the new facility in Mexico will be called Plant 15 and will begin shipping products in Q1 of this year.

"Plant 15 is an important part of Superior's future strategy," Stebbins said. "This facility will help solidify our position as North America's largest manufacturer of aluminum wheels for light vehicles."

Medical device manufacturer establishes Mexico operations
According to a report from Maquila Properties, the Baja California region of Mexico - specifically Tijuana - is considered the capital of Mexico's medical device manufacturing sector. In addition, a ProMéxico report revealed that the country is one of the world's most proficient when it comes to the manufacturing and assembly of medical devices. The country is at the top of the list for suppliers of equipment of this kind to the U.S. and is the fifth-largest exporter of this equipment across the globe.

It's no wonder that companies operating in this industry are looking to take advantage of what Mexico has to offer when it comes to the medical device sector.

"Mexico's automotive, aerospace and medical device manufacturing sectors are burgeoning."

A report from Today's Medical Developments revealed that Phase 2 Medical, a company based in Rochester, New Hampshire, is currently producing products out of a 30,000-square-foot facility in Tijuana. The company was originally considering setting up operations in Costa Rica. However, the advantages that Tijuana offers to other medical device manufacturing companies was just too good for Phase 2 to ignore.

"We found that buildings were readily available, and business and labor costs were better than in Costa Rica," Adam Prime, CEO of Phase 2, told Today's Medical Developments. "We [also] ruled out China because it was not a good fit. Beyond the political situation and rising labor and shipping costs, it was too far away for us to manage."

Analysts expect the medical device manufacturing sector to have a valuation of at least $50 billion over the next five years. This rapid growth puts Mexico squarely in the center of the sector when it comes to the production and export of finished components that will be sold to consumers.

Companies in any industry considering expanding to Mexico should explore any and all options that will help make the transition a seamless one. Working with shelter companies will likely be the quickest way for organizations to begin doing business in Mexico. However, direct investments are also effective.

Whatever the choice, the offshoring advantages offered by Mexico are one of the primary reasons that so many foreign companies are considering making a move there.

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