While there are many reasons that manufacturers look to Mexico for offshoring or nearshoring, Mexico's workforce is its greatest asset—and yours. Employers that understand the local expectations are able to benefit from a technically skilled workforce and the region's stable demographics.
Technically skilled workforce
Low-cost labor is what gets many manufacturers looking at Mexico in the first place. What gets them selecting a specific manufacturing venue in Mexico is the proven level of quality that comes along for that low cost. The Mexican workforce's technical skill is behind the excellence of many complex products ranging from aerospace components to medical devices and automobiles.
With manufacturing, a growing source of employment, state and federal governments, industry associations, and large manufacturing employers have made significant investments in training to connect employers with skilled workers in Mexico.
The federal government's public expenditure on all levels of education, as a share of total government expenditure, is the second-highest among countries within the international Organization for Economic Cooperation and Development (OECD). As OECD notes, countries invest in training to improve "economic prosperity and social cohesion" through the support of high levels of employment in quality jobs. Mexico supports these investments through public funding and by designing effective incentives for employers that support ongoing training of the labor force.
In addition, OECD reports that Mexico continues to increase its rate of higher education graduates, a factor that it says drives better labor market outcomes. Researchers project Mexico to be among the world's top 20 countries in terms of the highest number of higher education students by 2035. Many of those degrees are in the STEM subjects that help build knowledgeable managers.
There are also a number of training options to help unskilled workers achieve an expected level of manufacturing quality. Many employers pool resources to offer customized technical training for their specific industrial needs. CEFTA is one such example. The Advanced Technology Training Center in Tetakawi's Roca Fuerte Manufacturing Community in Guaymas, Sonora, Mexico, supplies manufacturers with a workforce trained to solve their specific challenges. You can learn more about CEFTA in this video:
Favorable demographics
While many traditional centers of manufacturing see declines in their workforce demographics, Mexico is not. This is particularly significant for regions like the United States and Germany, that face a skilled labor shortage across their manufacturing sectors.
Data from the World Bank indicates that Mexico's population is currently increasing at a rate of 1.13% annually. Statista projects that the overall population will increase by 19% to 145 million people between 2015 and 2050. And while the median age has slowly crept up in recent years, that's to a median age of 29.2 in 2020. For decades to come, the number of laborers coming into the workforce each year will be sufficient to offset those retiring.
Compared to many other countries, Mexico's demographics offer a sense of stability that appeals to manufacturers looking to make a long-term investment.
Global Demographics
|
|
Population Growth Rate |
Median Age |
|
U.S. |
0.8% |
38.2 |
|
Germany |
-0.17% |
47.4 |
|
China |
0.37% |
37.7 |
|
Vietnam |
0.9% |
30.9 |
|
Sri Lanka |
0.73% |
33.1 |
Managing your Mexico workforce
Employers new to Mexico will find that, with the right planning in place, they can create a loyal workforce of skilled laborers. Turnover ranges across the country, with rates from 3.59% in Saltillo to 2.5% in Hermosillo—excellent rates compared to the costly U.S. national average of 18%. However, those low turnover rates are for employers that understand the local culture and employee expectations.
Consider the following tips:
- Get to know Mexico's business culture. Adapting to Mexican culture will help businesses gain employee loyalty. For example, managers who make an effort to build personal relationships with employees will build trust, and being well-prepared for a business discussion is a must.
- Understand that team building is essential. Moving production processes to a new country can lead to challenges in implementation. Fostering teamwork throughout the workplace can support a collaborative environment across nations. Start by defining core goals to align the entire workforce to a single vision—but make sure that those definitions don't get lost in translation.
- Scan local comparable benefits. While federal labor law mandates specific benefits, most manufacturers build a balanced offering of employee benefits that boost employee satisfaction and productivity. Knowing what's being offered in a target region can help manufacturers stay competitive with employees while keeping to the low costs that make the location attractive.
- Follow local labor laws. While Mexico's workforce protections are similar to those found in other countries, there are unique steps to follow and organizations providing oversight.
Understanding local customs can help strengthen your employee retention rates. However, manufacturers operating in Mexico don't have to do this alone. By working with a shelter services provider, employers gain support from an expert in local hiring and retention practices.
Tetakawi offers Human Resources services including tailored recruiting, selection and hiring; training; and payroll and benefits administration. With experience managing more than 24,000 employees, the company has gained deep insight in the trends across local and regional labor markets. To develop an HR plan that helps your company take advantage of the strengths of the local workforce, contact Tetakawi today.
Thinking about manufacturing in Mexico? Download this ebook and start moving your due diligence forward.
