If you’re considering relocating manufacturing operations south of the border, then understanding where to manufacture in Mexico is a key consideration. Mexico is a large country, and many parts are downright remote and isolated. Others are simply unsafe and risky.
Still, relocating to the Latin American country is highly successful for many small-medium companies when done right. But it requires choosing one of the best locations to manufacture in Mexico in order to make the most of this incredible opportunity.
Put simply, if you want to reduce costs, manufacture in Mexico. Relocating some or all of your assembly and fabrication work to this country is a great way to reduce costs like labor, transportation, etc.
Labor, for example, is incredibly competitive in Mexico, on par with wages in Asia. In fact, over the past few years, China’s rapidly rising wages have overtaken Mexico’s. Mexico’s wage growth has been much more stable and moderated. As such, US firms can make their products in Mexico for a fraction of the cost it would take in the US and for about as much or even less as it would take to pay for Chinese labor.
And thanks to the USMCA, manufacturing in Mexico also cuts down on direct material and equipment costs. Inputs and machinery can all be imported and exported back and forth across the border duty free under qualifying conditions. Because these materials and equipment are being used to manufacture for export to another USMCA country, the parts and tools that contribute are free from tariffs.
And manufacturing overhead is also lower in Mexico. Utilities, factory maintenance, and administrative salaries are all areas you can save by nearshoring to Mexico.
And as long as you choose from prime industrial locations, you can manufacture in Mexico stress-free with cost-saving access to vendors, a deep supply chain, and highly skilled labor. We will explore three of the best, most popular manufacturing locations south of the border out of a longer list of manufacturing cities, including:
With the largest inland port in all of Mexico, Monterrey offers manufacturers a competitive advantage in terms of supply chain benefits and access. The industrial powerhouse is located just about 125 miles from the Texas border. And it offers transport options like air, rail, truck, or ship, as well as boasting state-of-the art communications and transportation infrastructure.
Monterrey is located along the border with the United States in the Mexican state of Nuevo Leon. With its over 50 major industrial parks, it is a major manufacturing hub. The city is soon to be the home of Tesla’s new EV gigafactory as well as at least 1,000 other companies currently manufacturing there.
Some of these companies with sizeable footprints in this Mexican border city include:
Monterrey churns out qualified talent with approximately 30 colleges and technical training centers. The abundant and diverse labor market there is considerably more affordable than US labor and boasts a turnover rate of only about 5%.
Also located along the US-Mexico border, Tijuana is located in the industrial mega hub of Baja California. This major manufacturing center is also growing rapidly. Within the next decade, it is expected to surpass Guadalajara as Mexico’s 2nd largest city, thanks in part to the surge in manufacturing there over the past few decades.
The bustling industrial metropolis is home to the world’s largest international border crossing and most significant trade corridor in all of North America, the San Ysidro Port of Entry. With 34 lanes, the port sees 15 million vehicle crossings and billions of dollars in cargo annually.
Tijuana is one of the prime locations to manufacture in Mexico, not only because of its proximity to San Diego, California and world-class border crossing infrastructure, but also because of its highly integrated manufacturing hubs, industrial parks, and evolving technological innovation. The production technology and infrastructure there have allowed US companies to integrate seamlessly with Mexican factories or maquiladoras, which number about 600 in the city.
Also located in Mexico’s most northwestern border state, Mexicali is one of the hottest locations for foreign companies to manufacture in Mexico. Serving as Baja California’s capital city and just across the border from Calexico, California in the US, the Mexican manufacturing giant is home to over one million residents.
It is also considered one of the safest border cities in Mexico and Mexico’s 13th largest city. But it is the strategic location that makes Mexicali such a prime spot for export manufacturing. Over the past decade or so, the city has transformed from a predominantly agricultural economy to a hub for major manufacturing companies. Some of these companies leveraging Mexicali’s diverse and affordable skilled labor pool include:
Modern infrastructure, cutting-edge telecommunications, multiple transportation modes, a vibrant workforce, bilingual proficiency, and world-class industrial parks now characterize the new Mexicali and make this city one of the best locations to manufacture in all of Mexico.
These and other cities compete with one another for billions in investment from the US and other countries. And thanks to Mexico’s numerous free trade agreements, exports flow freely to the US and many other major global markets. While the majority of Mexico’s choice locations are along the US border, other cities in the central part of the country, like Mexico City, also offer incredible opportunity for serious manufacturers to leverage all that Mexico has to offer.
So, whether you set up just south of the border or somewhere in the interior, you can find an ideal manufacturing location to establish your nearshoring operation and ensure your company’s successful future.
