Benefits of Manufacturing in Mexico
February 03, 2020
Cheap labor and fast turnaround times have historically led businesses from all over the world to turn to China for all their manufacturing needs. However, for 50 years, Mexico has been the base for US companies’ manufacturing needs and with more free trade agreements in place than any other country, it may be time for the rest of the world to consider Mexico too.
Lowest Labor Costs
Labor costs were notoriously low for decades in China, further securing its global reach as the manufacturing capital of the world. However, in recent times, Mexican labor costs have been steadily decreasing, while labor costs have risen by approximately 5% per annum in China and since 2007, China’s labor cost has risen by a total of 60% in US dollar terms.
Not only does Mexico offer lower labor costs, but it also supplies manufacturers with a highly skilled workforce with approximately 115,000 engineers graduating from its universities and technological institutes.
A Shorter Supply Chain
While rush orders are almost impossible to fulfil when manufacturing out of China, the proximity of Mexico alongside the rising rate in productivity, results in turnaround times of 1-2 days. Trucks loaded with goods pass across the border daily and deliver direct to business owners, whereas ships from the Far East will leave businesses waiting for goods as well as paying over the odds for shipping costs.
Protection of Intellectual Property
It’s no secret that the Asian ‘knock off’ market has been thriving for years and Industry Week have recently published that China is responsible for up to 80% of all intellectual property theft experienced by US firms. In Mexico, Intellectual Property laws are aligned with that of the US which is turn means that one of the major benefits of choosing electronics manufacturing in Mexico is that your Intellectual Property is protected.
There are numerous benefits to the close proximity of Mexico to the United States. Travel, including flights, is not only significantly cheaper, but while business executives could expect to spend the best part of a day to travel to China, a flight to Mexico can be completed in a matter of hours. Productivity is subsequently increased with the reduced travel time alongside the eliminated jet lag. There is also the advantage of time zones.
Given communication between the United States and China could only be conducted outside of working hours each day, Mexico, for the most part keeps the same work schedule as the US and is therefore communication channels are always open.
Socially Responsible Working Conditions
Unlike China where workers can sometimes clock over 60 hours, Mexico labor laws run parallel to the United States with maximum hours topping at 48 which in turn leads to a more focused and productive workforce. The other major concern of child labor in China is negated in Mexico due to its stringent child labor laws and occupational health and safety. This level of social responsibility filters down to the safety of the inputs used to produce manufactured goods which ultimately benefits the consumer.