Tijuana's Top Manufacturing Industries

Tijuana is Mexico's second most populous city and a hot spot for foreign investors searching for manufacturing labor. Its location on the U.S. border, less than a half-hour drive from San Diego, has long contributed to the city's popularity as a manufacturing center. Its advantages go well beyond proximity to the world's largest consumer market. The largest city in Baja, California, also offers access to the global market through major international seaports, airports, and highway infrastructure.  

However, demand for manufacturing space and talent in Tijuana has also created a competitive market for manufacturers. As a result, manufacturers eyeing a location in Mexico must evaluate whether the advantages of a site in Tijuana outweigh the challenges. 
Below, we identify the common pros and cons of a Tijuana manufacturing location and the industries most likely to find success in this city.

2 big factors impacting your Tijuana manufacturing success

As noted above, Tijuana’s proximity to U.S. consumers has contributed to its long history as a manufacturing center. Today, Tijuana is the busiest border crossing in Mexico. Much of this traffic includes imported materials and exported finished goods. In fact, the state of Baja California attracts more than $1 billion in foreign direct investment each year, with 60-78% of that investment going directly into manufacturing.

With this success comes some challenges. As a result, there are two essential factors manufacturers must consider before moving forward with a site in Mexico: real estate and labor.

1. Real Estate

High demand for Tijuana’s industrial parks has caused leasing rates to jump 14% in 2023 alone, exceeding rates of $.80 per square foot per month. Those rates are beginning to come down, but cost is only one challenge. A 2023 Colliers International report on Tijuana’s real estate market reported that monthly rents averaged USD $.75 per square foot for Class A buildings – if any were to be found available. The report also revealed 0.37% availability among the company’s total inventory of 3.23 million square meters. That said, the developer is tracking significant amounts of new construction in the surrounding region. As a result, manufacturers that prioritize proximity to certain partners or customers may have an opportunity to get their name on a list for upcoming space in Tijuana. There is an 8-12 month lead time for new construction buildings in Tijuana. 

2. Demographics

Tijuana, with its population exceeding 2 million, stands as a major hub in Mexico for a skilled manufacturing workforce. This expertise is a result of the extensive manufacturing job market, where over a quarter of the population is engaged. The city's long history of manufacturing investment has also led to significant educational developments, with more than 50 public and private universities in Baja California, many of which focus on engineering and advanced technological studies.

However, the presence of numerous manufacturing employers in Tijuana leads to a significant challenge: a high employee turnover rate. In 2023, the accumulated turnover is expected to be around 60%. This rate indicates a competitive market where companies often have to increase salaries and bonuses to retain their workforce.

To understand the impact of a 60% turnover rate, consider a facility with 100 employees:

  • Employee Loss and Hiring Needs: With a 60% annual turnover rate, this means losing 60 employees in a year. Consequently, to maintain operational efficiency, the facility would need to hire and train 60 new employees within the same period.

  • Cost Implications: Recruiting and training new employees is expensive. Costs include advertising for positions, HR time for processing and interviewing, and training resources. There's also the hidden cost of lost productivity as new employees take time to reach the efficiency levels of their predecessors.

  • Quality Implications: High turnover can lead to a decline in product quality. Experienced workers develop the expertise and efficiency that new hires lack. Frequent turnover means a significant portion of the workforce is always in the learning phase, which can result in inconsistencies and errors in production.

For organizations operating in Tijuana, it is vital to balance the benefits of a skilled labor pool against the heightened costs and potential quality issues arising from high turnover rates. In light of these challenges, companies might find it advantageous to explore other regions with lower turnover rates. Locations like Hermosillo and Mazatlán could present viable alternatives. These areas offer a balance of skilled labor availability and potentially more stable workforce conditions, which can lead to reduced operational costs and improved consistency in product quality. By considering such alternatives, companies can strategically position themselves to optimize their manufacturing processes, ensuring sustainability and competitiveness in the market. 

Industries manufacturing in Tijuana

Tijuana has become a manufacturing powerhouse for many industries, including medical devices, electronics, aerospace, and automotive.

Medical device manufacturing

Tijuana’s medical device manufacturing industry is more than 30 years old. The sector hugely benefits from its proximity to San Diego, one of the oldest biotech hubs in the United States. Many California-based companies find that more competitive operational costs in Mexico allow them to reinvest cost savings into their U.S. headquarters and research activities.  

In 2022, Tijuana exported more than $2 billion in medical instruments and devices from Medtronic, Stryker Corp., Welch Allyn, B.D., and Thermo Fisher Scientific.

Electronics manufacturing

Tijuana’s electronics manufacturing industry has been established for around 50 years and provides 50,000 jobs over 122 companies. T.V.s and semiconductors are the most produced goods in the industry, but electronics manufacturing in Tijuana spans a wide range of appliances, electrical components, and media equipment.

Over 19 million T.V.s are manufactured in Tijuana each year. In 2022, the city saw more than $8 billion in exports of monitors and projectors. Several billion dollars worth of electrical wires and cables, electronic controls, power transformers, and semiconductors are also made here. These components are the foundation of the supply chain for the electronic device manufacturers in Tijuana. Electronics manufacturing companies in Tijuana include Poly, Kyocera, Philips, Foxconn, Samsung, and Panasonic.

Aerospace manufacturing

The aerospace industry has deep roots in Baja California. The state has more than 30% of all aerospace jobs in Mexico, employing more than 39,000 people, reports the Baja Aerospace Cluster. About half of those employees work in Tijuana. Aerospace companies manufacturing in Tijuana include Honeywell, Safran, BAP Aerospace, and Eaton Industries.

Automotive manufacturing

The automotive industry in Tijuana is also a manufacturing powerhouse specializing in truck chassis, stamped metal parts, seat belts, sound speakers, carbon fiber body kits, and electronic sensors. In 2022, commercial vehicles were among the city’s most significant exports, valued at more than $4 billion.

The industry employs 14,600 employees over 50 companies, and a few of those automotive companies include Hyundai, Toyota, and Goodridge.

Strike the right balance with your manufacturing location

While Tijuana has much to offer a manufacturer, the intense competition for resources against other manufacturers may be wrong for some companies. Manufacturers evaluating possible locations in Mexico must consider location against available real estate, labor, infrastructure, and other considerations.

This is an area where Tetakawi can help. Our site selection services help companies access data about potential sites for a more nuanced market assessment. To start the process of exploring the best site for your requirements, contact our team today.

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