Over the years Mexico has grown into one of the largest manufacturing economies in the world and encompasses numerous industries including automotive, aerospace, electronics, and more.
In fact, more and more businesses from the United States and elsewhere have moved their operations there – mostly due to the benefits they gain.
If you’re weighing your options and want to know exactly what advantages can be gained by manufacturing in Mexico, here are the main benefits that you should be aware of:
Benefits of Manufacturing in Mexico
1. Cost-Effective Yet Qualified Workforce
The most obvious benefit of manufacturing in Mexico is the fact that its workforce is highly-skilled and qualified, yet at the same time cost-effective. The labor cost in Mexico is about 70% less than in the United States and is currently lower than in China too.
Despite being cheaper, the quality of Mexico’s workforce is reliable due to the heavy emphasis the government places on education and training. For example, Mexico turns out over 100,000 engineering graduates yearly from its high education institutes.
2. Closer Supply Chain
Most of the other large manufacturing hubs are located in the Far East. Comparatively, Mexico is much closer to the United States, and that closer supply chain has several benefits for American companies.
Not only will it be cheaper to transport products from Mexico, but it also makes it easier to carry out rush orders, emergency parts requests, and so on. Even companies that aren’t based in the United States can benefit from Mexico’s proximity to such a large market.
3. Minimized Risks
One of the main reasons why many international companies find a competitive advantage in manufacturing Mexico so enticing is due to the shelter program. By using shelter services, international companies can start doing business in Mexico without creating a local entity.
Instead, the shelter services will take care of the administrative details, maintain permits and licenses, as well as ensure compliance with Mexican laws.
4. Intellectual Property Protection
The intellectual property laws in Mexico are similar to the United States and are strictly enforced. Any patents or trademarks can be registered easily so that companies can protect themselves from intellectual property theft.
The strength of Mexico’s intellectual property protection is part of the reason why the electronics industry manufactures in Mexico – including big brands such as Samsung and LG.
5. Existing Industry Clusters
Businesses that operate in Mexico can leverage the diversity of their existing industry clusters. That diversity allows businesses to hook up with a growing base of OEMs and other companies operating in the largest industries in Mexico such as electronics, automotive, aerospace, and computer manufacturing.
Aside from directly cooperating with companies that are already in Mexico, businesses can also benefit from the existing infrastructure and supply chains built in these industry clusters.
6. Free Trade Agreements
Although you may not realize it, Mexico has more Free Trade Agreements (FTAs) than any other nation in the world. Its FTAs with over 50 countries make it a strong exporter and make it easy to ship products manufactured in Mexico across the globe.
It should be noted that 14 of Mexico’s FTAs give it access to countries that control 60% of the world’s GDP.
7. Social Responsibility
More and more businesses nowadays recognize that as much as the quality and origin of products is important – so too are the conditions under which they’re manufactured. On that front Mexico is definitely better than many other countries and has a strong commitment to social responsibility.
To be more specific, Mexico’s labor laws are similar to the United States and it has 48-hour workweeks. It also has strict regulations regarding workplace safety, laws protecting child labor, and rules to mandate the safety of raw materials.
See why manufacturing in Mexico is an attractive proposition? By this point, it should be clear how your business can benefit, and the next step you should take is to start looking into exactly what you need to do to start taking advantage of it.