Why More Appliance Manufacturers Are Moving to Mexico

December 21, 2021

From air conditioners to washing machines and microwave ovens to vacuum cleaners, many of the appliances you find in United States households today are manufactured in Mexico. Currently responsible for 30% to 44% of the United States’ annual imports of home appliances, Mexico’s thriving industry is likely to expand as demand for appliances increases.

Some of the biggest names in the household appliance industry, like Whirlpool, LG, and Electrolux, already have state-of-the-art facilities in Mexico, and as the appliance market grows, Mexico is receiving even more foreign investment. Whirlpool alone announced in July of 2021 that it will be investing $120 million into the expansion of its Ramos Arizpe plant. But why do these large enterprises continue to choose Mexico?

Industry Overlap

One of the strongest industries is electronic manufacturing in Mexico, which, in turn, benefits the appliance manufacturing sector. With essential components and electric manufacturing capabilities at their fingertips, manufacturers for major appliance brands often see lower supply and labor costs.

Manufacturing Clusters

Many appliance manufacturers choose to manufacture in Monterrey or other cities in the Nuevo León state. One of the biggest regions for appliance manufacturing, as well as other top manufacturing sectors, Nuevo León contains the Nuevo León Home Appliances Cluster, which aims to strengthen appliance manufacturing in Mexico by combining the forces of industry, government, and academia.

Local Suppliers

Many Tier 1, 2, and 3 appliance manufacturers are located within and around Monterrey, with others found throughout the country, meaning multinational appliance OEMs have access to local suppliers that meet cost and delivery time requirements.

Added Benefits of Nearshoring Your Appliance Manufacturing Operations

Mexico’s strong and stable appliance industry helps companies currently operating there find continued success, but the country also offers numerous other advantages for manufacturers looking to relocate from overseas and strengthen their supply chain (which has become even more critical in the wake of the COVID-19 pandemic).

The USMCA

With numerous free trade agreements, such as the USMCA, and a generally amicable trade relationship with the United States, Mexico offers manufacturers a more stable position than China, which is still locked in a trade war with the United States causing an increase in tariffs. Appliance manufacturers exporting to U.S. markets from Mexico not only get greater security but also receive duty-free treatment.

Increased Demand

Demand for home appliances has risen due to the pandemic and, as a result, many companies have seen remarkable growth. According to Baldwin Britton, VP of the Board of Directors of the Nuevo León Home Appliances, many home appliance manufacturers experienced sustained growth of about 25% during the second half of 2020. As the public’s movement continues to pick up, this growth is likely to continue and encourage even more foreign investment.

Other Advantages of Manufacturing in Mexico

  • Skilled Labor: Mexico’s heavy investment in higher education and vocational training means manufacturers can easily find a highly skilled workforce knowledgeable in appliance manufacturing.
  • The IMMEX Program: By operating under Mexico’s IMMEX program, manufacturers can reduce or eliminate tariffs on goods and products. They also have the opportunity to work with a shelter company and hand off administrative duties so they can focus solely on production and executive duties.
  • Logistical benefits: In addition to the USMCA and IMMEX program, Mexico’s proximity to the United States continues to attract foreign companies. With reduced transport times and distances, manufacturers see lowered costs and greater operational efficiencies.

Find Success in Mexico with NAPS

No matter your industry, NAPS is here to ensure you can focus on doing what you do best—manufacturing high-quality products. With our complete administrative and compliance services, you can take full advantage of everything Mexico has to offer while we worry about recruitment, accounting, human resources, and more. Contact NAPS today to learn more about how we can help you grow your manufacturing business in Mexico.