Mexico Manufacturing Consultants Confront 7 Misconceptions
November 24, 2020
Mexico manufacturing consultants understand that the decision to move operations to a new country is not made lightly. This decision is one that should be based on careful research and data. However, many manufacturing consultants also see that the noise and news around offshore manufacturing can too easily rule out viable choices in the early decision-making process. Certainly, there are a range of misconceptions about manufacturing in Mexico that could cause organizations to miss out on the many advantages that have enticed thousands of companies to operate there and led to the establishment of strong industrial supply chains.
Manufacturing consultants in Mexico can quickly clear up many of these misconceptions with clear data. Below are just some of the common misconceptions that exist when it comes to manufacturing in Mexico.
1. Cheap labor is the only reason to manufacture in Mexico
Not only is this inaccurate, but it also is a disservice to the incredibly well-qualified manufacturing workforce in Mexico. For starters, there are many reasons to manufacture in Mexico. This includes the efficiency of the supply chain that results from Mexico’s close proximity to high-demand markets in North America, as well as the tax benefits provided through the IMMEX/Maquiladora Program
More to the point, however, manufacturing training has been a priority for state and local governments working to meet the needs of foreign direct investors. Training includes technical universities that matriculate engineers and supervisors and dedicated technical institutes that work closely with manufacturers to ensure training meets their needs. The result is that the workforce in Mexico has gained a reputation for work on complex products, including aerospace components and in medical device manufacturing. An experienced Mexico manufacturing consultant can connect companies with qualified labor through HR support and program training guidance.
2. It’s not safe to manufacture in Mexico
Crime can be a problem in any country. However, thousands of manufacturers safely operate in Mexico, as evidenced by the steady stream of foreign direct investment in Mexico.
Certainly, there is crime in Mexico. Research indicates that violence in Mexico has climbed in recent years. A closer look into this problem reveals that much of the violence is the result of low-level gang fighting over drug markets. The levels of violence against citizens not involved in the drug trade are comparatively low, Mexico’s police officials report.
As in any country, manufacturers can safely operate, assuming they have an awareness of their surroundings and take appropriate precautions. For example, many Manufacturing Communities include security precautions ranging from gated entry points to surveillance cameras. Of course, these are standard precautions for many companies worldwide.
3. Manufacturing regulations are lax in Mexico
Far from it. Mexico has industrial health and safety and environmental regulations that dictate how manufacturers should keep their staff and the communities in which they work safe. Should this deter manufacturers? Not at all. By complying with these regulations, manufacturers demonstrate their commitment to their workforce and improve loyal workers.
In many ways, these regulations are similar to those found in other countries. However, manufacturing consultants in Mexico can help organizations navigate regulatory compliance with ease.
4. Manufacturing in Mexico isn’t as cost-effective as manufacturing in Asia
Evidence has grown in recent years that China is no longer the low-cost manufacturing center that it once was. As manufacturers reevaluate their global footprint, many find themselves weighing whether to move or add to their operations with a China-plus-one strategy. In considering other countries, many manufacturers find themselves weighing a move into other low-cost Asian nations against manufacturing in Mexico.
The truth is that the best strategy depends upon where you’re looking to sell your products. For companies that sell largely to North and/or South American markets, nearshoring in Mexico provides significant cost savings over moving to another Asia country. The clearest benefit is the reduced cost of shipping and shorter lead times for product delivery. In addition, it’s more cost-effective to travel to visit operations in Mexico compared to traveling across the world. More frequent travel can lend executives greater oversight into the quality levels driving complex manufacturing processes.
5. Mexico is losing out to a resurgence of U.S. manufacturing reshoring
While some manufacturers have opted to return manufacturing to the United States, the truth is that most companies leaving China are moving to another low-cost manufacturing country. Reshoring can be expensive, and it certainly isn’t easy.
The recently ratified USMCA trade agreement, and the incentives it provides for North American content, is enticing manufacturers to move to North America. However, many of those companies are finding that Mexico offers both low-cost manufacturing benefits and ease of market entry. The Shelter Program makes it easy for manufacturers to quickly ramp up operations. Companies may find they can ramp up operations within 30 to 90 days when working with an experienced shelter service provider.
6. Mexico manufacturing quality is unpredictable
Aerospace, automotive, and medical device manufacturers operating in Mexico would certainly disagree. For example, Mexico has become a leading producer of electronics due in part to the supply of skilled labor. These delicate assembly processes require high levels of quality control. Positions for skilled direct labor and electrical engineers often are difficult to fill with skilled labor in the U.S. and many European countries.
7. Manufacturing in Mexico hurts U.S. workers
The truth is that manufacturing in Mexico makes U.S.-based organizations more competitive in a global marketplace. U.S.-based organizations also benefit from manufacturing with Mexico, as manufacturing just over the border typically allows organizations to ship supplies from U.S.-based companies into Mexico for use in the manufacturing process.
What’s more, easy trade between the two countries means that millions of American jobs are dependent on trade with Mexico. Research indicates that many U.S. jobs benefit from the cost savings of manufacturing in Mexico, as lower-priced goods allow people to spend more on services.
Make an informed decision
With these misconceptions ruled out, it’s time to understand the many advantages that Mexico offers manufacturers. This is yet another area where Mexico manufacturing consultants can help. With an experienced advisor, manufacturers can develop a strategic approach to making the best decisions for positioning your manufacturing operation to succeed.
If you’re ready to learn more about how manufacturing in Mexico can position your company to succeed, contact Tetakawi today.