USA Companies Are Choosing Mexico over Other Nations for Manufacturing

Mexico Manufacturing

 

Did you know that a product that says it is “Made in Mexico” is actually 40 percent manufactured in the United States?

The percentage of an imported product from Mexico that is essentially manufactured in the U.S. has increased in recent years because partnerships by Mexican and American companies are increasing, according to research by The Washington Post. Oftentimes, products are completed in Mexico, but they are manufactured on both sides of the border because American companies are increasingly confident that Mexicans have the skills to manufacture high-quality products.

“Mexico is fundamentally a sophisticated manufacturing economy that is growing at a very acceptable rate when compared to other emerging market economies,” wrote Andres Rozental, a senior fellow at the Brookings Institution, which is ranked as the world’s No. 1 think tank.

Years ago, many American companies were building manufacturing plants in China, but Rozental wrote that many of these companies are relocating to Mexico because of its increasingly skilled labor, its improving infrastructure, its economic and political stability, its proximity to the U.S. and its “ability to provide just-in-time sourcing and a relatively transparent regulatory framework in which to do business.”

Mexican-American partnerships are often very successful. The relationship between Neenah, Wis.-based Dormeo Octaspring and MFI International, which has manufacturing facilities on the Mexican side of the Ciudad Juárez, Mexico-El Paso Texas, border, is an example. Dormeo designs and manufactures high-quality mattresses in the U.S., and contract manufacturer MFI produces Dormeo’s soft goods (mattress covers) in Mexico and ships them to the U.S.

“MFI has been a great partner for us as we have started up production in the U.S.,” said Jon Stowe, Dormeo Octaspring’s senior vice president for North America. “MFI quickly turned around orders and produced a high-quality product for us.”

Mexico Has Many Advantages

Rozental wrote that Mexican maquiladoras are gaining the “upper hand” on Chinese factories because of their proximity to the U.S.

In fact, only 4 percent of a product that says it is “Made in China” is manufactured in the U.S., according toThe Washington Post’s Sept. 9, 2012 article.

Years ago, American companies often used Mexican labor for farm work, but they are now using the labor for “the high-skill manufacturing necessary to make airplanes and satellites,” according to The Washington Post.

In a March 11, 2013, speech, U.S. Ambassador to Mexico Earl Wayne pointed out that Mexico is the fourth-largest exporter of automobiles in the world, the No. 1 producer of flat-screen televisions and refrigerators, and the No. 4 provider of information technology services.

Wayne noted the following at his March 11 speech and his Nov. 13, 2012, presentation at the Mexican Business Summit.

* Almost 100,000 Mexicans earn degrees in Engineering annually. This is more than Canada and Germany.

* American companies, particularly small- and medium-sized manufacturers, can benefit from “just-in-time” manufacturing. The companies’ proximity to Mexico allows them to move the raw materials needed for manufacturing in small quantities, reduces the cost of warehousing these supplies, and allows them to change their production process regularly.

* The manufactured products can be delivered more expeditiously and more inexpensively from Mexico than other nations.

* American and Mexican manufacturing is becoming so “increasingly integrated” that many companies are moving their manufacturing plants from Asia to Mexico.

“U.S. companies are choosing Mexico over other markets for manufacturing and assembly,” said Wayne.

Many Companies Moving To Mexico

MFI International Mfg., which has helped more than 100 companies establish successful manufacturing operations in Mexico, through contract manufacturing programs and shelter services has a list of why manufacturing in Mexico is cost-effective.

The reasons include saving on tariffs because of free trade agreements, no income and value-added taxes for manufacturers, technical training support, Mexico’s skilled and affordable workforce, and how expeditiously products are manufactured.

Non-Mexican companies that outsource some of their manufacturing operations in Mexico include companies in dozens of industries, including appliances, electronics, furniture, medical devices, metal, petrochemical, plastics, pharmaceuticals, software design and textiles.  In addition, most of the world’s largest automobile companies have manufacturing facilities in Mexico and, The Washington Post reports that Mexico became “the No. 1 investment destination for the aerospace industry” in 2012.