Manufacturing Companies Moving To Mexico From The US

Manufacturing relocation to Mexico from the US has become increasingly prevalent in recent years, driven by a combination of factors such as competitive labor costs, a highly-educated workforce, and strategic geographic proximity. This trend underscores the allure of Mexico as a prime destination for companies seeking to optimize their production operations. 

With the allure of cost savings and access to skilled labor, more businesses are choosing to relocate their manufacturing facilities to Mexico, capitalizing on the benefits of nearshoring. This manufacturing relocation trend not only highlights Mexico's growing significance in the global manufacturing landscape but also represents a strategic move by companies to enhance their competitiveness and efficiency in today's interconnected market.

Even though manufacturing companies, mainly from the US, have been gradually moving their production activities to Mexico over the last forty years, the trend is now growing at a much faster rate. The following are a few of the main reasons why.

Competitive Labor Costs

Companies are always looking for cost saving measures without having to sacrifice quality. This is one of the reasons why Mexico has been able to draw in so many businesses. 

Relative to the US and most other developed nations, direct labor in Mexico is roughly 70% less expensive, when compared to the average hourly wage in the US. Such competitive labor expenses have proved to be a powerful driving force behind the success of Mexico’s industrial parks.

A Highly-Educated Workforce

Aside from offering inexpensive labor to companies, Mexico also has a highly educated workforce that is the equal of any developed country. Many people might be surprised to learn that Mexico currently graduates more engineers than the US annually. 

Along with their education, having multiple generations with experience in the manufacturing sector means that Mexico has a large pool of talented operational workers and professional managers. These workers can assist sophisticated companies expand beyond their original expectations and borders. Certain cities in Mexico, such as Tijuana, now have the biggest concentration of specialized manufacturing plants for medical devices across North America.

Proximity To The US

Mexico’s proximity to the US and Canada is one of the other major factors contributing to the growth of industrial manufacturing parks in the country. After weighing the cost of transportation and ever-rising wages in Asia, Mexico is viewed as a generally lower-cost option, while being conveniently located in the North American market. 

Furthermore, operational managers and corporate executives are known to visit their manufacturing facilities in Mexico more frequently, as the distance is much shorter, and time zone is usually the same, if not similar.

Prominent Industries

The growth of the manufacturing sector in Mexico can be seen almost across all industries. Some of the most notable ones include the medical device and aerospace industries, but it is still the automotive sector that has seen the biggest boom. 

Companies such as BMW, Nissan, Honda, Ford, Audi, Daimler, Mazda, and Toyota have either set up or are building new assembly plants in Mexico. This growth has also attracted more than 500 new automobile suppliers from the US and beyond in the last five years. 

According to government statistics, the automotive manufacturing industry in Mexico will soon be the largest industry in the country, which will make it a world leader in the sector. The aerospace industry in Mexico is also expected to grow much larger in the coming years.

Final Thoughts

Over the past decade, the Mexican government has been doing all it can to stimulate foreign investment and draw more manufacturing companies into the country. These strategic moves have been largely successful, especially with the emergence of the trade war between the US and China. 

Today, if you want an easier and more affordable alternative for your manufacturing needs, it is probably best to look to Mexico. If you want to learn more about Mexico’s main exports, you can click here.