3 Advantages of Manufacturing and Assembling in Mexico

At one time, Mexico was shut off from the rest of the commercial world by tariffs and trade regulations. In 1994, the North American Free Trade Agreement, commonly known as NAFTA, opened the door for Mexico to participate in the world’s economy. Today, Mexico boasts free trade agreements with over forty countries, more than any other country. Mexican factories are responsible for German electronics, Canadian aircraft parts, and many of the products in your very own home. For American entrepreneurs, Mexico presents a particularly attractive opportunity to take advantage of low production costs to manufacture nearly any consumer good imaginable. Here are three particular advantages of importing wire harness Mexico products.

1. Low Wages, High Performance

Although the country’s economy is growing rapidly, its wages are growing more slowly than many major manufacturing nations. Consider China, where wages last year quintupled to $1.63 an hour, compared to Mexico’s more modest growth to $2.10 from $1.50. In fact, the minimum wage in Shanghai is actually higher than that in Mexico City. Despite the lower cost per worker, many companies who outsource production to Mexico report consistent quality with manufacturers in other countries. It is a little known fact that Mexico graduates more engineers than even Germany. Although companies can pay far less in wages to manufacture goods in Mexico, the workers handling those goods are no less qualified.

2. Lower Transportation Costs

As you probably can guess, it costs more to move goods from Asia, as well. This is particularly true in light of the increase in oil prices. Many businesses are achieving not only significant savings, but also significant impact to inventory management. Shipping a container from China to the U.S. can take up to three months, whereas a truck hauling goods from Mexico can take only three or four days at the upper range. Additionally, due to the heavy availability of oil both in the Gulf and under Mexican soil, reserves of oil and gas are growing for the first time in nearly a decade. With such close proximity and lower fuel prices, shipping goods into the U.S. from Mexican factories is incredibly inexpensive.

3. Economy Forecast to Grow

Due to an open economy and a close reliance on the United States, the recent global economic recession had a particularly troubling effect on Mexico. In fact in 2010, the country’s economic growth was limited to a mere 1.6% per year. But after a rally among Mexican manufacturing, financial and oil and gas sectors, the country is set to grow at a rate of 4% this year and supposedly will reach 6% growth within the next four years. Investors and business owners alike can take advantage of lower costs now, and see realize greater improvements on their investments in the next few years. Additionally, Mexican businesses have had a very difficult time securing financing, providing many potentially-profitable investment and financing opportunities in Mexico that are going untapped.

The combined effect of low wages, logistics, and favorable currency fluctuations has made Mexico the least expensive place to manufacture goods sold in the United States. For more info on how you can find a wire harness Mexico manufacturer, contact LoDan Electronics today.