As the manufacturing industry continually shifts to nearshoring operations in Mexico from China, the preponderance of products made in Mexico is steadily increasing. As a consumer, the first concern is whether or not the quality of the product made in Mexico is commensurate with those made in the United States and China. In addition to this, it is important to consider the top industries thriving in Mexico and the companies behind the success.
The Quality of Products Made in Mexico
Companies considering nearshoring their manufacturing operations to another country often question whether or not the quality of their product will remain high even when offshored in another country. For companies nearshoring their manufacturing to Mexico, the consensus seems to be positive. Due to the Maquiladora program, an increasing number of businesses have moved their manufacturing in order to gain cost savings, and many have found that in doing this they have also procured a higher quality product as well. This is due in part to the presence of an increasingly skilled workforce that has developed as a result of the booming Maquiladora program over the past 50 years. One of the main benefits of maquiladoras in Mexico includes the ability of the skilled workforce in Mexico to quickly adapt to innovations and technological advancements, making them an incredible asset to American businesses looking to save money on the cost of manufacturing, while still producing a high-quality product.
Mexico’s Top 10 Exports
There are a vast array of products manufactured in Mexico, but in order to understand the breadth of these products made in Mexico, it is important to look at the trend of top exported products of Mexico leaving the country to see which industries are benefiting most from nearshoring their manufacturing operations to Mexico. Below are the top ten exports produced in Mexico in 2015 shipments.
- Vehicles: $90.4 billion (23.7% of total exports)
- Electronic equipment: $81.2 billion (21.3% of total exports)
- Machines, engines, pumps: $58.9 billion (15.5% of total exports)
- Oil: $22.8 billion (6% of total exports)
- Medical, technical equipment: $15.2 billion (4% of total exports)
- Furniture, lighting, signs: $9.9 billion (2.6% of total exports)
- Plastics: $8.3 billion (2.2% of total exports)
- Gems, precious metals, coins: $7.1 billion (1.9% of total exports)
- Iron or steel products: $5.7 billion (1.5% of total exports)
- Vegetables: $5.6 billion (1.5% of total exports)
Top Companies Manufacturing Products in Mexico
Many companies have made the move to shift their manufacturing operations to Mexico. However, the global footprint of these companies varies greatly. In recent years, Mexico has become a hub for major companies to nearshore their manufacturing needs, increase their profits and continue producing high-quality products. From the automotive industry in Mexico to medical device manufacturing in Mexico, more industries are turning to Mexico for skilled labor, economic factors, and more. This transition to manufacturing in Mexico is due in large part to the North American Free Trade Agreement (NAFTA), which has contributed significantly to the growth of new business in Mexico and improved trade relations between Mexico and the United States. Below are four of the top companies producing their goods in Mexico.
- Ford: Auto giant Ford is one of the largest companies participating in Mexico’s Maquiladora program. Ford was among the first companies to begin expanding their manufacturing operations to Mexico in 1925 and they have gradually continued that expansion throughout the years. In September of 2016, Ford announced that they would be moving all of their small-car production to Mexico in the next two to three years. This helps Ford compete with other car manufacturers of small vehicles and enables them to keep their larger car and truck manufacturing in the United States.
- Volkswagen: Another auto industry leader, Volkswagon, also began establishing Maquiladoras in Mexico in the last fifty years. By nearshoring their manufacturing to Mexico, Volkswagon was able to experience increased profits from internal demand within Mexico and reduce the cost of their vehicles to the consumer.
- Sabritas: Sabritas is a subsidiary brand of PepsiCo and produces Frito-Lay snacks like Doritos, Cheetos, and Tostitos. In 2014, PepsiCo announced that they would be making an additional five billion dollar investment in Mexico, which is in addition to the three billion PepsiCo has invested since 2009. A lot of this investment, however, is for the local Mexican market.
- Nestle: Nestle, best known for producing chocolate and candy, is another large company that has expanding production to Mexico. In 2014, Nestle announced they were planning to make a one billion dollar investment in two additional factories in Mexico in the next five years. Like Sabritas, a lot of Nestle’s investment is for the local Mexican market.
How NAPS Can Help
North American Production Sharing, Inc. (NAPS) operating model helps ensure companies can be successful in manufacturing their products in Mexico by outsourcing their administrative and compliance management services to allow companies to focus on their production and quality control.