7 Key Benefits Of Manufacturing Auto Parts In Mexico
Did you know that Mexico is the fifth-largest OEM and aftermarket auto parts manufacturing hub in the world? Many US and Canadian companies are moving their manufacturing to Mexico because doing so comes with a variety of benefits. Let’s cover seven of them.
1. Fast Shipping Times From Mexico
Ground shipping parts or components from Mexico to the US (or Canada) is much faster than shipping parts or components across the ocean from Asia. In fact, our U.S.- and Canada-based clients can get product via normal freight within as little as two or three days, and expedited shipping can take as little as 24 hours.
The same cannot be said about trans-oceanic shipping. Between loading, transit, and unloading, it’s not uncommon for shipments to take several months. (For more on shipping times, take a look at this article on the Intran blog.)
2. Smaller Order Options
Typically, order volumes are dictated by shipping method. If a manufacturer is shipping by container, the minimum order is usually a full container. If a manufacturer is shipping by truck, the minimum order can be as small as a pallet.
The order size is important in a couple of ways:
- As orders become larger, more cash is tied up into inventory. If it takes more than a couple of weeks to sell or use up the parts or components in a container, it doesn’t make financial sense to buy a container’s worth of inventory.
- Larger orders are inherently more disruptive if they’re delayed. A customs hold on a pallet of parts shipped by truck is an inconvenience; after all, it doesn’t take much to pack and ship another pallet of parts while one is held. But a customs hold on an entire container? That’s a problem that doesn’t have an easy solution. Even if another container can be filled and shipped immediately, it will take several weeks to arrive.
Because most parts and components manufactured in Mexico are shipped by truck, a pallet of parts can be manufactured and shipped quickly and easily. Even for high volume contracts, shipping by truck has a lot of cash flow benefits.
3. Fewer Supply Chain Interruptions
When shipping giant Hanjin went bankrupt, their employees were let go, which caused millions of containers full of products to be frozen in place. It was a logistical nightmare for all the customers involved.
While we don’t expect ocean cargo companies to go bankrupt every year, the point is that any number of things can go wrong when shipping cargo halfway around the globe. The more interruptions that occur during the supply chain, the higher the costs. When pricing parts or components, it’s important to consider the potential risks of an interruption and adjust costs accordingly.
To lower the risk of supply chain interruptions, it’s best to play it safe and stick with a manufacturer that’s located in close proximity. For U.S.- and Canada-based auto parts distributors, a Mexican manufacturer is the safest bet because the supply chain between the company and Mexico is incredibly short, which means fewer risks of supply chain interruption.
4. Lower Shipping Costs From Mexico
The costs associated with manufacturing in Mexico are low. The hourly compensation costs in Mexican manufacturing are among the lowest in the world, and as a result contract manufacturers in Mexico are typically directly competitive with Asian manufacturers on a per-piece rate.
However, this cost competitiveness overlooks the low shipping costs of Mexican manufacturing. As a result of the short distance between Mexican manufacturing and the US and Canadian markets, Mexican manufacturing often has a cost advantage over manufacturers in Asia.
5. Quality Production
Did you know that Mexico has more graduates in construction, engineering, and manufacturing per capita than the U.S.? That means many Mexican manufacturers, including Intran, have an easy time hiring the best talent in the industry, ensuring cutting-edge innovations and top quality production. When you contract with a reputable Mexican auto parts manufacturer, you’ll have access to a talented workforce that will produce top-quality auto parts for you.
6. Intellectual Property Protections
While many countries merely pay lip service to intellectual property concerns, Mexico takes intellectual property law very seriously. Not only are our intellectual property laws similar to those in the US and Canada, but they’re enforced in a way that makes them fair and favorable to foreign businesses. Foreign companies have recourse under Mexican law, and Mexican manufacturers take IP very seriously as a result.
7. Easy Factory Visits In Mexico
A face-to-face visit is one of the smartest things any company can do to get the best possible result from a contract manufacturer. Meeting face-to-face on the factory floor goes a long way towards building a relationship with a manufacturer, but that’s not all.
- If/when there’s a production issue, it’s great to be able to address the issue in-person
- Personal visits are more efficient than emailing and conference calls
- Design and engineering teams often benefit greatly from seeing parts in production, and that helps improve product quality and reduce costs as a result
If your company contracts a manufacturer in Asia, factory visits will be few and far between. Not only are these visits expensive, but they’re extremely taxing. Many of the people who visit Asia from North America will lose nearly a week’s worth of productivity due to jet lag and time changes, even with a short visit.
Visiting Mexico, on the other hand, is a day trip. Another great reason to manufacture in Mexico. (
Summing Up
Mexico is one of the world’s largest manufacturing economies for a reason – it just makes sense. US and Canadian companies can contract manufacturing in Mexico at a great cost, with no concerns about quality, long supply chains, or intellectual property.
If your company is looking for a Mexican manufacturer, contact us. We’re one of Mexico’s premier contract manufacturers, and we have sales offices in both the US and Mexico to make bidding as easy as possible.