COVID-19 Response

LA Port and Supply Chain Disruption Has Manufacturers Looking South

The long-term labor dispute between the International Longshore and Warehouse Union and the Pacific Maritime Association is wreaking havoc on many importers, manufacturers, and supply chain members. Those companies which thought they were saving money by using Asian rim or Central American sources have found the weak link in their distribution plans. While they can get the product made at a low cost, it still has to find its way into the American delivery system.

After nine months of negotiations, the dispute appears to have been resolved, but the congestion and back-ups it has caused will probably linger on through the end of the year. Companies which need to have a fast turn-around have been forced to look elsewhere to find more options. They may need to re-route their shipments to other ports, or they could even have to resort to using air transportation. This could mean huge losses in a world that relies on instant access and just-in-time delivery.

According to California Apparel News, apparel maker Perry Ellis International will be unable to fill some $23 million in orders due to problems bringing goods into the country through the congested West Coast ports. Companies waiting for parts will have to shut down production lines if materials don’t arrive soon, thereby extending lead times and increasing end-user costs.

Reflecting on the slowdown in an article posted on Zero Hedge in February, the Retail Industry Leaders Association noted that “the work slowdown has created logistics nightmares for American exporters, manufacturers and retailers dependent on an efficient supply chain.” But other manufacturers who have seen the benefits of nearshore manufacturing have remained virtually unscathed by this dire news.

By working with manufacturers like MFI, which are closer to home, these far-sighted businesses are reaping the benefits of Mexican manufacturing. While loaded ships sit idle in the Pacific Ocean, companies taking advantage of cross-border manufacturing continue to see their products manufactured and delivered in a cost-effective and timely manner.

Faster to market, JIT, are some of the the many reasons of why companies from sectors such as diverse as, automotive, home furnishings, medical, performance apparel and aerospace manufacturers look south of the border, to Mexico, for their manufacturing partners. The country’s near-by location is a major advantage, lowering the risk of any supply chain disruption, with shipments moving smoothly over the U.S. border. There is a great deal of economic and political stability in the country, and the workforce is educated and affordable. On-site visits to discuss production details are easy to arrange without having to fly halfway around the world.

MFI has over thirty years of experience as a leading provider of cost-efficient and flexible manufacturing services in Mexico. We have proven to clients that Mexican manufacturing “Nearshore location” is a smart move in so many ways. Our Turnkey Contract Manufacturing and Shelter Services enable us to offer flexible manufacturing services without all the uncertainty of other options. The recent turmoil in the California ports only serves to strengthen our belief that we can help companies compete more effectively with cross-border/ nearshore manufacturing.