- Manufacturing in Mexico
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Today, with so many global manufacturing choices, some ask–why manufacture in Mexico? Increasingly, companies are learning of the significant advantages and benefits of manufacturing in Mexico as a maquiladora such as labor cost savings, western culture, 12 Free Trade Agreements with 46 nations, and close US proximity versus other global locations. The majority of manufacturing in Mexico takes place just a few miles south of the United States border, such as Tijuana. TACNA is helping companies quickly realize these benefits by establishing Mexican manufacturing operations within twelve weeks.
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. Beyond base labor cost savings, there is also significant savings in medical premiums; workers compensation and retirement benefit costs. Major cost savings are also achieved through a shorter supply chain and lower logistics costs compared to other low cost manufacturing regions.
Mexico is the United States’ second-largest export market and third-largest trading partner. Many large global companies have chosen to locate significant manufacturing operations in Mexico, particularly along the U.S. Mexican border. This is the case because of the low cost labor market in Mexico, yet with the close proximity to the U.S. consumption markets. Along the 2,000-mile shared border, state and local governments interact closely. Operating and manufacturing in Mexico’s border region may be relevant for your company as well.
The Baja region has an abundant, young, educated labor force. With all major corridors paved in concrete, an international airport with direct flights to Asia, reliable utility services, a major seaport and state of art communications infrastructure, Baja is ideally suited for manufacturing. Foreign nationals can feel safe and comfortable driving in or residing in the region. Baja is supported through a government sponsored program called IMMEX. This program allows foreign companies to avoid duties and pay a minimum of taxes while manufacturing in Mexico.
Many U.S. companies that are exploring manufacturing or assembly offshore consider both Mexico and Asian options. As a result of steady annual increases in Chinese wages and low concentration of skilled workers in Mainland China’s coastal region, Mexico manufacturing is increasingly being seen as an alternative to China. Mexico’s predictable, steady wages offer certainty to companies looking to forecast manufacturing costs. Mexico has closed the competitive gap that, until recent years, made China a more attractive locale for most types of manufacturing.
With land, sea and air ports in immediate proximity, Baja California, Mexico is an ideal location for low cost final assembly of globally sourced components. Many foreign component manufacturers have located in Baja to support assembly manufacturing in Mexico. Factories in the region are often ISO certified and operate under the latest lean manufacturing methodologies.
Retail packaging is often labor intensive with short runs and a constant of changing of packaging presentation to accommodate seasonality, consumer preference, style and trends. Endless combinations of retail end cap displays, point of sale displays, and set configurations lend themselves to manual assembly. Mexico is ideal for location of this labor intensive process. Products made in the US can be packaged in Mexico and can still be labeled as Made in USA.
For those companies considering Mexico operations, many questions come to mind. Where do I start? What will my savings be? How long will it take? Are there experts who can help me? We can provide the answers to these questions and more.