Why Mexico is Ideal for Medical Manufacturing
July 10, 2021
Mexico is well known for its thriving automotive and aerospace manufacturing industry, but it is also ideal for manufacturing a wide range of other products. The country has become the eighth largest exporter of medical devices, with exports totaling $17 billion in 2018, and is the United States’ most prominent source of imported medical equipment.
It’s no surprise that this segment of Mexican manufacturing continues to see significant growth. Compared to manufacturing in the United States, Mexico gives manufacturers a 20% cost advantage and significantly more tax incentives as a result of the country’s numerous trade agreements. Beyond cost savings, Mexico offers manufacturers other notable benefits including a stable supply chain, skilled workforce, and more.
Access to markets
One of the biggest advantages medical device manufacturers gain by moving their operations to Mexico is a streamlined supply chain. The United States and Canada consume more than 90 percent of Mexico’s medical device exports combined, and access to Mexico’s shipping ports and international highways makes it simpler and cheaper to access these target markets. By relocating from China to Mexico, manufacturers have the potential to cut shipping costs in half.
Mexico has more free trade agreements than any other country, and they offer foreign manufacturers significant tax incentives. The USMCA, formerly known as NAFTA, allows manufacturers to export their products duty-free to the United States’ prolific, and continuously growing, medical device market. Mexico’s other free trade agreements also open the opportunity for manufacturers to expand into overseas markets at a reduced cost.
Medical device manufacturing is most prevalent in specific cities like Baja, California, and Sonora. Within these cities, there are large manufacturing communities, locations that host numerous industrial spaces and also provide legal frameworks and various support services. By operating in one of these communities, medical device manufacturers can quickly scale their operations to meet changing business demands.
In addition to significantly reducing shipping costs, manufacturing medical devices in Mexico gives manufacturers access to a skilled and cost-effective labor force. Mexico already has comparatively low wages, which are becoming even more competitive as the peso’s value steadily depreciates and as costs of doing business in China rise. This opportunity for savings, however, does not mean compromising on quality. Individuals skilled in high-tech manufacturing make up much of the available workforce.
Ease of logistics
Because Mexico is already a world leader in medical device manufacturing, there is plenty of existing infrastructure that new manufacturers in Mexico can take advantage of to align with their transportation needs and supply channels. To further simplify logistics and attract new commercial manufacturers, Mexico has also invested in new infrastructure and in improving existing infrastructure such as transportation corridors.
Medical manufacturing with NAPS
For medical manufacturers looking to expand or relocate to Mexico, partnering with NAPS is a quick and reliable way to ramp up operations. Whether or not the company chooses to operate under a “shelter,” NAPS provides 100% of ongoing administrative support, from accounting to environmental safety, as well as all related compliance management. Clients can focus on their corporate vision and production processes with the confidence that their administration is running smoothly and is in complete compliance with Mexico’s business laws.