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Mexico Is A Draw For Manufacturers
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Throughout
its 40-year life span, the maquiladora industry has continued to grow
in size and sophistication. Virtually every Fortune 1000 manufacturing
company has a presence in the Mexico/maquiladora market. Mexico is
a draw for manufacturers because of its geographical position, free-trade
agreements, high productivity and low cost labor. The maquila industry
is moving toward third-generation manufacturing with all of the technical
attributes of modern industry, including research and design capability
and highly skilled labor.
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Companies begin offshore
manufacturing in Mexico |
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Mexico,
moving from simple assembly in the 60s to today's high-tech manufacturing,
has served as a virtual "incubator" for U.S. companies' offshore manufacturing.
Manufacturers new to production outside the U.S. often begin their
global ventures on Mexico's northern border, frequently in a shelter
operation. As they grow in the sophistication needed for offshore
production, they move to wholly owned subsidiaries. For those companies
with products that lend themselves to production in Asia, many have
moved to China to take advantage of the very low cost of labor there.
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China or Mexico? |
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In
the last four years, there has been an outflow of production from
Mexico to China. Companies producing apparel, footwear, luggage and
toys have been able to take advantage of China's $.72 per hour labor.
Companies with time-sensitive products or those with a high ratio
of weight to value (major appliances, large screen TVs) have found
it to their advantage to stay in Mexico. And some companies with high
value intellectual rights have also avoided manufacturing in China.
Mexico's biggest advantage lies in its geography. Mexico's shared
border with the U.S. makes just-in-time logistics possible. Additionally,
the two country's business cultures share more commonality than the
business culture in Asia.
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Mexico's Northern Border,
the manufacturing center |
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Mexico's Northern border continues to attract manufacturing, effectively
acting as an extension of U.S. manufacturing. The proximity to the
U.S. market makes cities such as Cd. Juárez an ideal site. Their infrastructure
can compete with the best U.S. industrial parks and U.S. managers
are able to work in Mexico and live in the U.S.
While manufacturing employment in Mexico has declined, production
has increased leaving an abundance of available skilled labor in Mexico's
northern border cities. Companies new to offshore manufacturing continue
to find advantages in Mexico and still rely heavily on shelter operations
for their beginnings.
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Mexico's place in
the global manufacturing market |
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Mexico is likely to remain competitive with new and cheaper labor
markets. Many manufacturers see Mexico as the gateway to other markets
in South America. Others site the ability of Mexico's flexible labor
market as necessary to industries characterized by constant design
changes. Machinery, raw materials, components and supplies are easily
and quickly transported to northern Mexico. The finished products
are just as easily returned to the U.S. Truly northern Mexico is an
ideal place for manufacturing and distribution in the Americas.
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