As global markets continue to evolve, Mexico has emerged as a manufacturing powerhouse. Its strategic location, coupled with a highly favorable business environment, has attracted a wide array of industries looking to optimize their operations. From automotive to aerospace, companies across a vast number of sectors are finding that manufacturing in Mexico offers significant cost efficiencies. From fabrication to packaging to assembly and more, having a manufacturing footprint in Mexico gives companies access to a highly skilled labor force and proximity to major markets in North America and beyond.

The allure of Mexico’s manufacturing promise is backed by staggering growth statistics. Over the past decade, the country has seen a robust expansion in its manufacturing output, making it one of the most dynamic regions in Latin America for industrial development. According to a number of indicators, Mexico’s manufacturing output in 2022 and 2023 showed a substantial increase, marking a continuation of its recovery and expansion trend post-pandemic. Read on to learn more about the growth of industries that are manufacturing in Mexico today.

The Expansion of Manufacturing In Mexico

The growth of manufacturing in Mexico is notable not only for its pace, but also its breadth. A number of sources, including industry analyses and global economic reports, highlight how sectors—ranging from traditional industries like textiles to high-tech fields such as electronics and medical devices—have flourished. For instance, a recent report by Macrotrends notes that Mexico’s product manufacturing output for 2022 was significantly higher than in previous years, reflecting a nearly 22% increase from 2020.

Further insights from Morgan Stanley suggest that nearshoring trends and increased foreign direct investment have played crucial roles in fueling this growth, positioning Mexico not only as a manufacturing hub, but also as a critical player in the North American supply chain dynamic. In a June 2023 report, the firm noted that the evolution of nearshoring is set to propel the Mexico manufacturing market from $455 billion to an estimated $609 billion in the next five years. In fact, according to the same report, manufacturing exports currently compose 40% of the country’s $1.3 trillion economy.

Companies based in the United States have experienced outsized benefits from moving their operations to Mexico. In fact, according to Boston Consulting Group, as of February 2024, Mexico is now the largest exporter to the U.S. across sectors, overtaking China in late 2023. What’s more, according to BCG, more than 90% of North American manufacturers surveyed said they plan to move some of their production and sourcing to different countries in the coming years, and Mexico is well positioned to absorb the bulk of these shifting operations.

The Beneficiaries of Manufacturing In Mexico

Businesses across various sectors are continuing to reap the benefits of manufacturing and operating in Mexico. The automotive industry, for example, has seen companies like General Motors and Volkswagen expand their operations to take advantage of lower labor costs and free trade agreements that facilitate easier access to the U.S. market. Similarly, the aerospace industry has found a fertile ground in states like Baja California and Nuevo Leon, where the combination of government incentives and robust infrastructure combine to support complex manufacturing processes.

Many companies are attracted to Mexico due to its competitive skilled labor costs, proximity to key markets, and a regulatory environment that supports business growth. Additionally, Mexico’s participation in free trade agreements and other programs—including the USMCA, the IMMEX program and its maquiladora industry—helps to enhance its attractiveness as a manufacturing base, allowing for tariff-free exports to the United States.

What’s Fueling the Growth?

The surge in Mexico’s manufacturing prowess can be attributed to several global and macroeconomic factors. The shift towards nearshoring, driven by the complexities of managing a global supply chain amid international trade tensions, has clearly benefited Mexican manufacturing, assembly and packaging. Companies are looking to reduce their dependencies on distant markets, especially in the context of rising shipping costs and geopolitical uncertainties—and at the same time, Mexico has invested heavily in technology and infrastructure, making it a natural alternative where businesses can relocate and start producing goods nearly immediately.

Moreover, the Mexican government’s proactive approach to attracting foreign investment through its many incentives for high-tech industries further encourages foreign companies to establish or expand their manufacturing footprint in the country. This strategic focus not only supports the existing manufacturing landscape, but also paves the way for the introduction of even more advanced manufacturing techniques and innovations in the years to come.

Seizing Opportunities in Mexico Manufacturing

The growth trajectory of manufacturing in Mexico presents substantial opportunities for businesses looking to enhance their operational efficiencies and market reach. As industries continue to expand and diversify within Mexico, the potential for new investments and partnerships remains high. But it can be challenging to know where to begin.

For companies considering a venture into Mexico manufacturing, understanding the full scope of benefits and navigating the entry process is crucial. NAPS offers expertise and support for businesses aiming to make the most of the nation’s thriving manufacturing sector. Get in touch with our team of experts today to explore how your company can benefit from the vibrant and growing manufacturing landscape in Mexico.