Mexico has emerged as one of the top candidates for many international companies to shift their manufacturing operations and there are various reasons behind that such as Mexico being a developing nation, a large population in the country being economically active, there being a pro-business environment in the country, etc. Companies that have shifted their manufacturing operations to Mexico are enjoying various benefits which we have briefly discussed below:
Low Labor Costs
The most obvious benefit of manufacturing in Mexico is that the cost of labor in Mexico is beneficial for the companies. Because of worsening global economic conditions, it is estimated that average wages in Mexico are approximately 3/5th of what they are in China. This means that Mexico is cheaper in terms of hourly laborer wage rate than China.
But the cost is not the only benefit. Along with the cost of the labor, another advantage of manufacturing in Mexico is the quality of labor here. Mexico consists of highly skilled & talented individuals and every year, about 115,000 engineers graduate from Mexican universities and technological institutes.
Protection of Intellectual Property
The majority of the US companies use the Chinese labor workforce and according to Industry Week, Chinese entities are responsible for a huge portion of intellectual property theft experienced by US firms and companies.
In contrast to Chinese laws, Intellectual Property is safe in Mexico because the laws in Mexico are quite similar to those of the USA which means that US companies needn’t worry about any sort of intellectual property theft in Mexico, even for something as little as a game of Solitaire.
Another benefit of shifting the manufacturing operations to Mexico is that Mexico lies close to the US and both countries share a common border. The US is the largest consumer market in the World and almost every company in the world wants to target the US market. Manufacturing goods in Mexico means that goods will be able to reach the US faster. The flights to the US would be cheaper and time differences would also be negligible.
Let’s compare the production of any product, be it a simple thing as playing cards for games like Spider Solitaire, in China to that of Mexico. A flight from Shanghai to the US would take nearly a whole day to arrive in the US, whereas a flight from Mexico would take a few hours only and it would be cheaper than that of Shanghai. Plus, Mexico and the US have negligible time differences.
Apart from everything else, international companies from different companies of the world have been trusting Mexican workers for more than five decades, which shows that Mexico has experienced and skilled workers.
Along with this, the quality of products produced by Mexican workers is such that the product has been consumed all over the world in the past two years. So, if you choose to shift your manufacturing operations over to Mexico then you won’t have to worry about inexperienced workers or compromise on quality.
Short Supply Chain Length & Low Costs
If you shift the manufacturing operations of your company to Mexico then you will have the advantage of a short supply chain length and low cost for customers in the US or any part of North America. Since the US market is the most important for most companies, a company having its manufacturing operations in Mexico would enjoy the benefit of having a short-length supply chain.
Finished goods can be delivered to the US by truck in only 1-2 days which not only reduces the waiting period but also reduces shipping fees. Compared to Mexico, if a company has a supply chain from China or any other part of the world then not only would there be extended waiting periods and the possibility of goods being damaged but there would also be huge shipping fees.
Another benefit of manufacturing in Mexico is that the overall business environment and the attitude of people are pro-business. The people of Mexico welcome new opportunities with open arms and this is the reason that Mexico is one of the top exporters in the world it is also a part of more than 10 free-trade agreements with 45 countries from around the world. The positive business environment of Mexico is very beneficial for companies and businesses from all over the world. Nothing like playing Solitaire.
A Socially Responsible Country
Mexico is a socially responsible country that takes both its workers and the products it manufactures seriously. There is serious concern over the origin and quality of products all over the world along with the conditions under which they have been manufactured. Mexico has certain labor laws in place to protect its workers.
Along with this, Mexico has strict laws in place to prevent child labor. There are also strict rules in place to prevent the usage of contaminated raw materials. All of these reasons make Mexico a socially responsible country.