Contract Manufacturing – Mexico Vs East Asia

People often associate international contract manufacturing with China and other east Asian countries. The truth is that there are many other countries with reputable contract manufacturers. For example, Italy, the United Kingdom, Spain, and Mexico.

Many people would agree that Mexico is a prime manufacturing location for a number of reasons. It’s quickly becoming a manufacturing hub very much like east Asia. If you’re an U.S. or Canadian auto parts distributor that’s trying to decide between Mexico and an east Asian country as your manufacturing location, you’ll benefit from this comparison guide.

We’ll discuss the 4 most important factors to consider when looking for a contract manufacturer and then see how Mexico and east Asia stack up against each other as the world’s biggest manufacturing hubs.

1. Proximity

Mexico is located in North America, of course. When you nearshore your manufacturing, that comes with a lot of advantages, including:

Shipping Time

Ground shipping is much faster than trans-oceanic shipping. When you contract with a manufacturer in Mexico, you can choose from several different types of ground shipping: truck, train, or plane, none of which take long at all. In fact, our U.S.- and Canada-based clients often get their orders within a few days.

The same cannot be said about trans-oceanic shipping. Not only does it take a while for a boat to cross an ocean, but there’s also additional inland shipping and a lot of red tape involved. Documentation and customs clearance can add three to five weeks to your total shipping time. It’s not uncommon for a company to wait several months for their order from an east Asian manufacturer.

Order Size

Because overseas shipping is a long process, many overseas manufacturers require a large minimum production run size in order to fill a whole container. This isn’t a feasible arrangement for a company that’s looking to place a small order. Due to Mexico’s proximity, many Mexican auto parts manufacturers allow you to order parts by the pallet rather than the container.

Supply Chain Interruptions

There are a million things that could go wrong during the shipping process. It’s not uncommon for cargo to get lost at sea, for example. The more interruptions that impact the supply chain, the higher the costs and the longer it will take for you to receive your order.

Cost

Ground shipping from Mexico is a lot cheaper than trans-oceanic shipping from a country halfway around the world. Some east Asian manufacturers offer low manufacturing rates per part, but shipping will cost a lot of money. Ultimately, you’ll save a lot of money on shipping alone by contracting with a manufacturer in Mexico.

All the cost savings will add up over time, and you’ll end up saving a lot of money in the long run if you go with a contract manufacturer in Mexico as opposed to one in east Asia.

2. Productivity

Having a contract manufacturer in the same continent and/or time zone as you helps a lot in terms of productivity. You’ll get faster responses from your Mexican contract manufacturer because they’re working the same hours as you.

You also won’t lose a lot of productivity if you meet with your auto parts manufacturer on a regular basis and they’re located only a 2-3 hour flight away from you. If your manufacturer is located in east Asia, you’ll have to fly halfway across the world pretty frequently. And that really takes up a large chunk of your schedule. When you take into consideration how much your time is worth, the amount of time it takes to meet with your contract manufacturer matters a lot.

3. Labor

Labor in Mexico and east Asia are like night and day. Which one is more beneficial to you? Read on to find out!

Skilled Labor

Did you know that the labor force in Mexico is highly skilled? In fact, you’ll find more engineering, manufacturing, and construction degrees per capita in Mexico as compared to the United States and most other countries in the world. That means you’ll find highly skilled employees at good manufacturing facilities in Mexico.

Labor Costs

Not only is Mexico’s labor pool highly skilled, but the labor costs in Mexico are among the lowest in the world. The savings will be passed along to you, so you’ll likely save some money with a Mexican contract manufacturer.

Labor Laws

Mexico’s labor laws are stringent and similar to the labor laws in the U.S. and Canada. You can’t say the same thing about the labor laws in China and other Asian countries. Labor abuse is pretty common in Asia.

As far as socially responsible manufacturing goes, Mexico is clearly the better choice.

4. Intellectual Property Laws

Very much like labor laws, Mexico’s intellectual property (IP) laws are similar to the IP laws in the U.S. and Canada. Even better so, Mexico’s IP laws are written in the favor of foreign businesses. So if you contract with a reputable manufacturer in Mexico, you’ll have the peace of mind that your intellectual property is safe under Mexican law.

IP laws in Asia aren’t as stringent. In fact, a lot of U.S. or Canadian companies have had their IP stolen by east Asian manufacturers and not much was done to protect these companies.

Finding The Best Manufacturing Company In Mexico

Now that we’ve established that Mexico is a country that offers a lot of contract manufacturing benefits, let’s talk about how to find a good contract manufacturer in Mexico. Here are some important factors to consider while looking for a contract manufacturer:

• Quality certifications
• Experience
• Partnerships with other companies
• Continuing investment in equipment, facilities, and employees
• Environmental, labor, and intellectual property standards

This article covers each point in more detail.

The bottom line is that Mexico is a safer, more reliable, and more affordable manufacturing hub than east Asia.