In today’s competitive environment, OEMs are looking for opportunities to reduce costs while maintaining product quality. To achieve this objective, more and more companies are looking at relocating their manufacturing – and Mexico is at the top of the list!
Mexico has become one of the largest manufacturing economies on the planet! For decades, U.S. companies have transitioned production to Mexico especially in the automotive, medical, and electronics industries. The obvious benefits of manufacturing in Mexico are its close proximity to the U.S. and lower labor costs, but the advantages go well beyond these. The following highlights the top 5 advantages of manufacturing in Mexico and makes the case for partnering with a proven and experienced manufacturer like Desin.
- Numerous Trade Agreements and Legal Protections: Mexico has an incredible number of Free Trade Agreements (FTAs), making it easy to transfer goods and services with over 50 countries globally. Much of the manufacturing in Mexico contains some degree of Intellectual Property (IP) so it is important this proprietary information and materials be protected. NAFTA, and now USMCA, promote doing business in Mexico by providing attractive provisions such as IP protection. Additionally, Mexico’s IP and labor laws are similar to those in the U.S., making it easier and less risky to transition business between the two countries. Lastly, “shelter companies”, as they are called, simplify the entry process and assist U.S. companies through permitting, licensing, recruiting, and other legal processes to establish manufacturing in Mexico and ensure compliance.
- Excellent Quality: due to the its highly skilled labor, Mexico has earned a reputation for manufacturing very highly quality products for various industries, including highly technical and precise sectors such as aerospace and medical devices. Additionally, many OEMs have moved beyond manufacturing and are transitioning some research and design activities in-country to take advantage of Mexico’s highly trained workforce.
- Responsible Business: over time, companies have continued to put more emphasis on responsible and sustainable manufacturing where importance is placed on the conditions of the factory and the origin of raw materials. One of the advantages of Mexico is the value it places on its workforce and keeping them safe. As noted above, Mexican labor laws are similar to those in the U.S. so there are limits on how many hours personnel can work each week, age limits in place to avoid child labor, and restrictions that ensure a safe work environment. Additionally, there are laws to ensure the quality and traceability of raw materials for manufactured products. Unfortunately, the same cannot be said for many countries in Asia. Therefore, companies can do business in Mexico knowing the workforce is taken care of under the local laws and their company’s reputation is not at risk.
- Skilled Labor and Lower Costs: this is the advantage that typically comes to mind when people think about manufacturing in Mexico. Wages continue to be appreciably lower in Mexico than many other potential manufacturing sites outside of the U.S., and companies often realize cost savings of 30+% due to labor alone. In addition to lower rates, as noted above, Mexico has a highly trained and qualified workforce. Many personnel attend universities or programs where they are trained for a given trade.
- Mature Infrastructure for Lower Costs: U.S. and Canadian companies have been benefiting from manufacturing in Mexico for many years. As a result, the infrastructure and supply chains are mature and functional, making it easier for new companies to migrate manufacturing into the country. Companies often report a savings of up to 50% for overhead costs such as real estate.
- Excellent Proximity to U.S. and Canada: its location has always been a huge advantage of manufacturing in Mexico! Flights are cheap and fast so you can easily travel to Mexico in a few hours to check on the status of production whereas most flights to Asia take a day! Additionally, the time difference between the U.S. and Mexico is minimal, allowing similar work schedules between personnel in U.S. and Mexico. This is a huge advantage compared to manufacturing in Asia where there is around a 14-hour time difference, especially when dealing with any urgent matters that cannot afford a delay! The other advantage of Mexico’s proximity is that finished goods often only take hours to arrive in the U.S. compared to weeks from most Asian countries, resulting in transportation costs that are much cheaper! Lastly, the benefit of Mexico’s geographic location relative to the U.S. has only been amplified during 2020 as there have been significant travel and logistics delays with Asia. For all of these reasons, companies are focusing on manufacturing in Mexico as an opportunity to make their production more reliable and profitable.
Desin’s Manufacturing Expertise in Mexico
Desin International is a vertically integrated contract manufacturer of Medical devices, User Interfaces, Medical Sensors, Industrial devices, Wearables, Internet of Things (IoT), Robotics, and Green Energy solutions.
Conveniently located in Mexico, in the central time zone, we specialize and differentiate ourselves by solving complex engineering challenges that require deep engineering involvement on projects from inception to manufacturing, with the highest cost efficiencies. For the past 20+ years, we have been providing sophisticated contract manufacturing solutions to our clients with globally competitive pricing, the highest quality standards, and sophisticated engineering designs.
At Desin, we work from simple projects to leading-edge projects. Our excellence in technological development combined with a superior team allow us to deliver outstanding technological devices, components, and processes to our clients.