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Labor Wage in Mexico, Reduced Logistics Costs, Real Estate

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Is your company looking to reduce manufacturing costs?

Manufacturing costs in Mexico are lower than the US and other parts of the world. Every criterion you may consider for reducing costs can be found in Mexico.

From cost-effective wages in Mexico using a highly-skilled workforce to logistics cost savings with next-door proximity, the US’s southern neighbor isn’t just about rescuing a business in the red, but about smart business practices that allow your company to free up capital, spur innovation and successfully expand access to customers and consumers.

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Manufacturing costs in Mexico are lower than the US, Canada and many parts of the world. Every criterion you may consider for reducing costs can be found here. From wages in Mexico, overhead cost and start up costs to other cost related to doing business in Mexico.

Labor Cost in Mexico Compared to the US

Mexico has an abundance of highly-skilled, low-cost labor well-versed in aerospace, automotive, electronics, medical device and general manufacturing. The average wage in Mexico for an entry level assembler is $2.33 dollars an hour, allowing your manufacturing operation to significantly reduce labor costs while still maintaining the same high-quality as you would at home.

Something else to consider is the hours an employee works per week, the US has a 40-hour work week and Mexico has a 48-hour work week, this will increase your production output by 16%. Your products get made and back to market for less money and in less time. This isn’t about shaving pennies here and there, this is about a significant reduction in labor costs that goes directly towards your bottom line.

Logistics & Transportation Costs

A stone’s throw, next door, your neighbor – all these words accurately describe Mexico’s proximity to major North American markets. What this all means is major logistics savings. Time and distance equals money in this business. Mexico is connected to the US, Canada and the rest of the world via deep water container ports, trains and major highways that link to NAFTA transportation corridors. Executives also tout the production oversight cost savings in travel and time – you can visit your Mexican facility and be home to the US by dinner!

Offshore China can no longer compete with their container ships taking around 30 days to get back to the US. By expanding into Mexico, you can take advantage of just-in-time transportation that can get your products back into the US in hours, not days or months. Mexico means savings and it is just minutes away.

Industrial Real Estate Costs in Mexico

Mexico has a modern and solid industrial real estate market. Class A to Class C spaces are available where you will find shell, semi-finished and built-to-suit options, as well as inexpensive land for new facility construction. For example, in Tijuana you can expect to pay $0.44 -$0.52 US Dollars per square foot. In Mexicali, you can expect to pay $0.34 - $0.42 US Dollars per square foot. CPI has a network of industrial real estate options and can assist you in the site selection process ideal for your manufacturing needs.

Many of factors contribute to average industrial real estate leasing rates, depending on the city, proximity to metropolitan areas, vacancy rates and so on. Here is a snapshot comparing several US and Mexico industrial lease rates by location.

Exchange Rate Savings

When exploring foreign sites for manufacturing expansion, the local currency exchange rate can be an important factor. Just how far will your dollar go when buying goods and services to support your manufacturing operation? In Mexico, it goes far. Not only will you realize labor, transportation, logistics and real estate cost savings, but your purchasing power using the dollar is advantageous.

We at CPI are always looking at every way a manufacturer can save money by operating in Mexico and that includes the US Mexico exchange rate. The US Dollar to Mexican peso exchange rate has highly favored foreign companies operating in the region. For an in depth look at just how much you can save, click here to read our interview with a currency specialist and find out the cost savings benefits for manufacturers.

Electronics Manufacturing in Mexico

WHITE PAPER: MEXICO ELECTRONICS MANUFACTURING

Over 780 electronics manufacturers operate in the country with many electronics OEMs and electronics suppliers supporting the subcontract assembly industries, automotive electronics, aerospace electronics and more.

ELECTRONICS MANUFACTURING IN MEXICO IS HUGE!

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