North American manufacturing often benefits when one country sees strong growth. According to a new report from the U.S. Congress Joint Economic Committee, the U.S. manufacturing sector has added more than 500,000 positions since February 2010, showing a resurgence of American manufacturing. However, with strong growth comes the need to expand, and with labor and production costs remaining high in the U.S., many American manufacturers may choose to build new plants in Mexico as well as the U.S. In fact, expanding to Mexico may soon be more common among North American companies.
According to The Associated Press, Sen. Chris Coons, D-Del., said the U.S. Senate is committed to boosting the country's manufacturing sector.
"America's manufacturing sector is already coming back and is an important part of our nation's economic recovery," Coons said. "Manufacturing jobs are high-quality jobs - they pay more in wages and benefits, create local service jobs, and contribute significantly to the local economy."
Cost and skill will remain strong factors
The committee's report indicated strong growth in U.S. manufacturing will benefit the entire country. However, paying manufacturing workers often is expensive; according to the U.S. Bureau of Labor Statistics, Americans working in the manufacturing sector made an average of $24.61 an hour in November and averaged a total of 41 hours a week. However, Business Insider reported data from Morgan Stanley noted Mexico's manufacturing wages are much lower than in the U.S. - in fact, they are even lower than China's. One of the main reasons manufacturers are returning from offshore manufacturing destinations in Asia is due to the high expense of doing business half a world away. From increasing wages to shipping expenses to inflexible supply chains, in terms of cost, American manufacturers may save more by moving manufacturing to Mexico.
The U.S.' southern neighbor also has an experienced workforce that's needed in today's innovative manufacturing environment. According to the committee's report, approximately 600,000 high-skilled manufacturing jobs are unfilled in the U.S. because manufacturers are having troubles finding workers with the necessary qualifications. In fact, the AP reported data from a recent study, revealing that 83 percent of manufacturers are having trouble finding employees with their needed qualifications. This lack of skilled workers will hamper growth if American manufacturers are unable to find the employees they need. While the U.S. is creating programs to educate young workers to have the knowledge and abilities they need to fill these jobs, it could take years before manufacturers see the effects.
Mexico is well-known for having an experienced, qualified manufacturing workforce that is already skilled in all aspects of the industry. Mexico is home to numerous universities with concentrations in engineering and manufacturing, and many students gain knowledge through internships as well. While manufacturing in the U.S. is gaining ground, more companies may turn to offshore manufacturing in Mexico to meet their cost and labor needs.