Mexico Manufacturing Labor Savings Estimator
The most significant benefit for most companies moving to Mexico is labor savings. This savings results from the difference in fully burdened hourly labor cost in the U.S. compared to that of Mexico. Because this item is so significant, we invite you to perform a calculation of potential labor savings for your company’s direct factory workers using our estimator.
To complete this calculation, please use this simple estimator below.
| Approximate Savings Calculation | |
| Formula: | |
| 1-Number of positions moving to Mexico | |
| 2-Multiply by paid hours per year per U.S employee x 2,080 | |
| 3-Equals work hours moving to Mexico | |
| 4-Multiply by Mexico fully burdened direct rate, say | $3.00 /hour |
| 5-Equals total direct laborer cost in Mexico = | |
| 6-Less fully burdened annual U.S. Cost of positions moved (A) - | |
| 7-Equals Annual Savings = | |
| (A) Fully burdened U.S. cost should include wages, employer taxes, medical, other benefits and workers compensation premiums etc. Please calculate your burdened cost and insert hereFor example, if a company were moving 100 positions to Mexico and its fully burdened labor rate were $20 per hour, the annual labor related savings would be $3,536,000. | |
This is a very simplistic model, but gives you a sense of the potential savings your company can realize by manufacturing in Mexico. Additional indirect savings in the form of lower cost rent, utilities and materials are not included in this estimation. Be mindful of the fact that some offsetting costs exist in the form of border crossing fees and incremental transportation. We would be pleased to work jointly with your company to develop a comprehensive analysis tailored to your specific situation. We can be reached at 619-661-1261.