Why Mexico is Ideal for Electronics Manufacturers
August 24, 2021
Mexico’s mature electronics manufacturing industry dates back decades and was one of the first manufacturing sectors to experience significant growth in Mexico. As a result of ongoing foreign investment, the industry has continued to expand rapidly and is now the sixth-largest in the world.
From flat-screen TVs to circuit boards, Mexico’s thriving electronics manufacturing industry includes virtually all types of electronics, but information technology is its primary export, making up around one-third of electronics manufacturing across the country.
Information technology or not, electronics manufacturers continue to relocate their operations from China to Mexico. Among its many advantages, Mexico offers manufacturers low labor costs, a skilled workforce, and close proximity to the United States and, as a result, has attracted major electronics manufacturers, such as Sony, Samsung, and LG.
Proximity to consumer markets
While China has long been a supplier of electronics to the United States, its distance from companies’ consumer markets creates long and complex supply chains which are more prone to problems. For this reason, big-name electronics companies have relocated their operations to Mexico. It’s much closer in proximity to large markets, such as the United States, which happens to be one of the top electronics importers in the world.
Mexico’s electronics manufacturing hotspots, such as Tijuana, sit right next to the border, making Mexico an even more advantageous location for companies looking to reduce costs and strengthen their supply chains.
Electronics manufacturing requires skilled labor as it often involves intricate processes and thorough quality control. Fulfilling this need for highly skilled workers, Mexico has heavily invested in education in an effort to drive productivity and improve quality of life and sees more annual technology and engineering graduates per capita than in the United States.
In addition to well-ranked universities, Mexico offers training programs in which a company’s workforce can receive specialized training on complex tools and manufacturing processes. These training centers are designed specifically for students looking to join Mexico’s high-tech manufacturing industries immediately upon graduation.
Lower production costs
China has long been a major exporter of electronic components and devices to the United States, but Mexico has become a strong competitor, now offering manufacturers cheaper labor provided by a workforce that often has more industry-specific skill and education. Labor wages in China are also likely to continue increasing while wages in Mexico remain stable, making it easier to predict costs.
Mexico’s geographic advantages offer manufacturers additional opportunities to lower cost. Instead of relying greatly on ships, which are both slow and expensive, manufacturers can use trucks, cutting down the costs of getting the product to consumers but also getting the product to target markets faster, giving global electronics manufacturers a competitive advantage over those who continue to manufacture overseas.
What to expect
While manufacturers looking to relocate to Mexico can expect to benefit from the competitive advantages the nation’s growing manufacturing industry has to offer, they’ll likely need extra assistance navigating the bureaucratic, legal, and logistical complexities of operating in a foreign country, including:
- Site selection: Though all of Mexico lies in favorable proximity to the largest markets for electronic goods, northern cities close to the border reduce transport times and allow for easier onsite visits. By bringing in an expert to assist, companies can more easily make these selections as well as negotiate purchases.
- Sourcing and hiring labor: In addition to finding a manufacturing facility that meets both location and workforce needs, manufacturers are tasked with navigating Mexico’s detailed labor laws which vary greatly from those in the United States.
- IP protections: Protecting intellectual property is often a concern when manufacturing in China, which is why many manufacturers prefer Mexico’s thorough intellectual property, patent, and trademark protections. However, effectively taking advantage of these laws can be a challenge if one is not well-versed in the subject.
Some companies may choose to outsource to a Mexican manufacturer and avoid many of the difficulties of moving manufacturing to a foreign country altogether. This, however, means giving up a certain level of control overproduction. For this reason, many companies choose to utilize the services of a shelter provider. Under a shelter company in Mexico, electronics manufacturers can get their operations up and running quickly with experts providing administrative and legal support and without needing to register as a Mexican entity.
How NAPS can help
NAPS has been helping electronics manufacturing companies successfully operate out of Mexico for decades. We have the experience and expertise to help you quickly ramp up your operations and oversee all administrative and compliance-related tasks to ensure you’re able to reap all the benefits of manufacturing in Mexico. Contact us today to find out what we can do for you.