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Mexico Vs China Manufacturing Comparison

Manufacturing in Mexico Vs. China
Top 10 Reasons

Over a decade ago manufacturers wouldn't hesitate to say that China and other overseas locations were hands-down cheaper than anywhere in the world. That is no longer the case. The trend has shifted for both political as well as economic reasons, and Mexico has arrived to the top of the short list.

Why Are Companies Manufacturing in Mexico?

In today's dynamic manufacturing environment, companies have several attractive options to consider when expanding, relocating or simply starting a new manufacturing facility. Mexico is poised, standing ready, willing and able to attract world class manufacturing companies to their shores. Global companies have been manufacturing in Mexico for over 50 years, making now the right time to find out if you should be too.

Mexico, provides the best combination of assets for establishing a manufacturing plant (maquiladora).  Manufacturers with operations in Mexico and trade organizations cite major cost savings and ease of business as some of the main reasons for selecting Mexico.

Proximity Matters

For global manufacturing companies seeking to reduce costs there is no location in the world that is closer than Mexico. Location factors are important to manufacturers planning for transportation, logistics and time-in-transit costs to get their product to market. By reducing costs you can get your product back to market faster, free up capital to invest in your next innovation and all by taking advantage of a region ready to support your every endeavor.

At North America’s southern end, Mexico has next-door access to the United States and Canada. Along with cargo ships for transporting goods, “NAFTA  Corridors” and highways connect ground transportation from Mexico to all of North America, allowing products to be moved quickly and just-in-time. Compared to overseas locations like China where transportation can take nearly 30 days by container ship, shipping costs as well as time-in-transit becomes an all-too-critical consideration when manufacturers are operating in a different country.

Baja California is home to some of the top  manufacturing areas in Mexico, the northern border cities of Tijuana, Mexicali, and Tecate, all have a long history of trading and manufacturing. Each city has its unique benefits.

Cost savings can be found at every level of your nearshore Mexico manufacturing operation; from an abundance of highly-skilled and low-cost labor, next-door transportation, supply chain and logistics savings, to reduced or no-tariff import/export on manufactured goods.

Add the strong cultural ties, ease of doing business, stress-free travel for operational oversight, low-cost industrial real estate and a pro-manufacturing government, the benefits of manufacturing in Mexico are plentiful and within reach for every sized company.

NAFTA and Free Trade in Mexico

The North American Free Trade Agreement (NAFTA) is now in its 22nd year and is the world’s biggest success story for international trade agreements. Under NAFTA, the United States, Canada and Mexico, 99% of imports are duty-free with the remaining 1% benefiting from preferential-duty.

Additionally, under the Manufacturing, Maquiladora and Export Service Decree, the IMMEX Program allows for goods, raw materials and components to be imported into Mexico on a temporary basis, duty-free and VAT-free, as long as they are returned abroad within the established time-frames (most are 18mos). For the aerospace industries, aircraft and aircraft parts are also free of tariffs.

Industry Expertise & Experience

Mexico's entry to the manufacturing arena began more than 50 years ago. At its inception, the draw for foreign manufacturers was its low-cost labor rates. Today the manufacturing landscape is much different; Mexico has attracted global corporations such as Volkswagen, GM, Bombardier, Bose, Eaton and other world class companies by proving the technical skills and capabilities to compete not only in North America, but on the world stage as well.

Products manufactured in Mexico reach far beyond simple assembly, it is common to find companies that design, develop and manufacture some of the most complex products in the marketplace in a variety of industries. From pacemakers to airplanes, Mexico meets and exceeds the standards set by global companies.

Tijuana, the most visited border city in the globe, has become a manufacturing powerhouse for companies from all over the world pertaining to major industries such as Aerospace & Defense, Medical Device, Automotive and Electronics. Cities like Tijuana are burgeoning hubs for manufacturing activities.

Annual Labor Cost Comparison: Mexico vs. US

Mexico’s Workforce

Mexico has an abundant highly-skilled, low-cost labor pool catering to the Aerospace & Defense, Electronics, Medical Device, Automotive & Parts, Cleantech and contract manufacturing industries. With an over 257,000-strong manufacturing workforce in the state of Baja California, Mexico alone, finding talent for your production can’t get any easier.

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%. Click here to see example savings of a company with 100 employees and compare labor rates to see just how cost-effective it is to manufacture in Mexico.

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