Click to Discover the Top 10 Mexican Cities for Quality of Life in 2024: Key Insights for Manufacturing Expansion

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8716 Sherwood Terrace
San Diego, CA 92154 USA
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MANUFACTURERS ARE NOT WORRIED ABOUT THE NEW MINIMUM WAGE IN MEXICO

Manufacturers Are not Worried about the New Minimum Wage in Mexico

CPI INSIDER SERIES: THE NUTS & BOLTS OF MANUFACTURING IN MEXICO: An Interview with Eduardo Sánchez Alonso, Director of Talent Management for Co-Production International.

In January, Mexico’s new President Andres Manuel Lopez Obrador issued a decree to boost the economy and spur investment along the northern border region. Part of the incentivized package included doubling the minimum wage in Mexico’s border region from 88 pesos (about $5 dollars) a day to 176 pesos per day. Though this could imply an increase in the cost to do business at border maquiladoras and companies manufacturing in Mexico, manufacturers aren’t concerned about it. Mr. Sanchez from Co-Production International explains why.

What is the impact of the new minimum wage increase on manufacturers in Mexico’s northern border region?

There is a minimal impact. Most manufacturing companies across the Mexican border already pay above the new minimum wage.

Is it common for manufacturers in Mexico to pay more than the minimum wage?

Yes, it is a common best practice. To be competitive and to become an attractive company to work for, manufacturers must offer a competitive compensation package. For direct employees average salary in Mexico is an important reason to leave a job, generating turnover; so a correct strategy involving a competitive compensation package, appropriate work conditions and a positive work environment will reduce or eliminate turnover and increase retention and engagement rates.

Does this mean manufacturing labor costs in Mexico are still less expensive than the US?

Yes! Though manufacturers employ best practices for employee retention, including offering competitive and attractive wages, the labor costs in Mexico are still cost effective compared to US labor costs. The average hourly rate for a Mexican worker in US factories in the Mexican border region is $2.50 dollars per hour. Additionally, manufacturing labor costs in Mexico are still less than China. When you add in logistics costs and time to market, Mexico is still the more competitive and cost-effective than China (Read Top 10 Reasons for Manufacturing in Mexico vs. China). Here is an example labor cost comparison between the US and Mexico:

Figure 2 Labor Cost Comparison US vs Mexico

What border region municipalities fall under this new minimum wage increase?

There are over 40 municipalities subject to the new minimum wage increase, here is the list and more details: https://www.co-production.net/mexico-manufacturing-news/border-tax-adjustment.html

How does a Mexico shelter company help manufacturers with payroll and labor law compliance?

Many manufacturers get started in Mexico using shelter companies like CPI. CPi's Maquiladora Shelter Solutions allows foreign manufacturers to operate under CPI’s existing corporation, speeding up ramp up times and minimizing risk and exposure while manufacturing in Mexico. Shelter companies in Mexico also manage the administrative duties required to operate, including labor law compliance, administering payroll and HR, allowing you to focus 100% on manufacturing.

Ready To Establish Your Manufacturing Operation In Mexico?

Look No Further Than Our Team Of Specialists!

Whether you have questions about the process or are ready to get started, we're here to help.
Contact us today at (855) 480-0837 to learn how we can provide you with expert support every step of the way, from exploration to setup and beyond. With our extensive experience providing Shelter Services in Mexico, we'll ensure the success of your manufacturing operation in Mexico.
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Co-Production International, Inc. Administrative Service Provider San Diego, California
Sales and Consultation Inquiries:
Toll Free: 855.480.0837

ico flag usaUSA Corporate Office
Ph: 619.429.4344
8716 Sherwood Terrace
San Diego, CA 92154
USA

ico flag usaMéxico Corporate Office
Tel.: 664.454.3330
Boulevard Agua Caliente 4558
Int. 701, Colonia Aviación
C.P. 22014, Baja California
info@co-production.net

ico flag usa Monterrey Nuevo León Office
Av. Benito Juárez 1102 Col. Centro
Piso 4 Torre Sur, Oficina 432
Monterrey, Nuevo León 64000, Mexico
info@co-production.net

Co-Production International, Inc. Administrative Service Provider San Diego, California

ico flag usaUSA Corporate Office
Ph: 619.429.4344 / 855.480.0837
8716 Sherwood Terrace
San Diego, CA 92154 USA

ico flag usaMéxico Corporate Office
Tel.: 664.454.3330
Boulevard Agua Caliente 4558
Int. 701, Colonia Aviación
C.P. 22014, Baja California
info@co-production.net

ico flag usaMonterrey Nuevo León Office
Av. Benito Juárez 1102 Col. Centro
Piso 4 Torre Sur, Oficina 432
Monterrey, Nuevo León 64000, Mexico
info@co-production.net

ico flag usaUSA Corporate Office
Ph: 619.429.4344 / 855.480.0837
8716 Sherwood Terrace
San Diego, CA 92154 USA

ico flag usaMéxico Corporate Office
Tel.: 664.454.3330
Boulevard Agua Caliente 4558
Int. 701, Colonia Aviación
C.P. 22014, Baja California
info@co-production.net

ico flag usaMéxico Monterrey Office
Av. Benito Juárez 1102 Col. Centro
Piso 4 Torre Sur, Oficina 432
Monterrey, Nuevo León 64000, Mexico
info@co-production.net