Mexico Manufacturing Will Soon Surpass China as the Leader of American Manufacturing

June 19, 2014

China has long been a staple in the world of manufacturing and production. However, recent developments such as rising shipping prices and labor rates that have contributed to an dramatic increase in costs that is forcing many companies to consider alternative manufacturing locations.

Mexico manufacturing seems to be coming to the forefront as an alternative that makes a lot of sense for companies around the world. The most obvious savings would seem to stem from the decreased cost of shipping, as Mexico is significantly more accessible to the U.S. than China; however, labor rates in Mexico are now virtually on par with China and in many cases, the cost of energy is cheaper.

In additional to Mexico’s low-cost manufacturing attributes, the country ranks high in both productivity and quality of production.
World-class companies are already beginning to see the benefits of choosing Mexico manufacturing. Mazda, Honda, Audi, Care Fusion, DJ Ortho and many other large corporations are just a few examples of established companies who have either begun manufacturing in Mexico or significantly increased their workforce.

To make the move to Mexico a smooth proposition, many companies are choosing to outsource their administration and compliance management to shelter companies.  Shelter companies, such as North American Production Sharing (NAPS, Inc.), Mexico’s largest, helps manufacturers by enabling them to focus on production and quality control, while they handle virtually every other activity in the plant, including human resources, import/export, Mexico accounting, environmental health and safety and the government compliance across all functional areas.

The Mexican government is being praised for its foresight to set up special programs for foreign companies to invest in Mexico manufacturing facilities.  The IMMEX Program, or formally known as the Maquiladora Program, is by far the largest and most influential initiative over the past 50 years.  This program allows foreign companies to operate in Mexico with many special tax and fiscal incentives, especially for companies who ship 100% of their finished goods outside of Mexico. With some 3,000 companies operating under the IMMEX program, it has contributed to Mexico’s growing middle class and is creating a significant domestic market for goods and services.

Manufacturing in Mexico could be on the cusp of a significant expansion.  With automotive manufacturing in Mexico driving the way, many companies are beginning to realize the true benefits of Mexico manufacturing and shelter companies are making it possible for a smooth transition.