Why Automotive Manufacturing In Mexico Will Continue To Thrive

In 1995, Newsweek claimed that the Internet was just a fad. “No online database will replace your daily newspaper,” the article boldly claimed. But you know what happened. Now, most people won’t go a single day without the web.

We bring this up because many say the same about manufacturing automotive parts in Mexico. We’re here to tell you that the great prices, reliable labor, and close proximity to the US isn’t going away either. Manufacturing in Mexico has the potential to change the industry. Here’s why:

1. Skilled, Affordable Labor

Did you know that Mexico has more engineering, construction, and manufacturing degrees per capita than the US (not to mention most countries in the world)? The pool of skilled laborers in Mexico is growing every year as more vocational and technical school grads flood the Mexican job market. In fact, many automotive and aerospace manufacturers have and are continuing to build facilities in Mexico, indicating growing skilled labor.

Considering the quality of highly-trained workers, it’s almost unbelievable that Mexico’s labor costs are 20% lower than Chinese labor costs. Mexico’s labor costs haven’t grown very much over the last 20 years, which isn’t the case in many other manufacturing countries.

2. Fast And Affordable Shipping

Shipping a container halfway across the world isn’t what we’d describe as “cheap.” Yes, per-piece manufacturing can be cheaper in certain Asian countries, but trans-oceanic shipping prices are not only expensive but also expected to grow over the coming decades.

A full container from China can take up to six weeks to arrive on US shores. Shipping from Mexico, on the other hand, is much more affordable and can be packaged in smaller volumes. This allows you to ship only what you need when you need it. Plus, your products could reach you in as little as one day from Mexico. (Check out this graphic for a visual on how long it takes to move freight.)

3. Labor-Friendly

In some Asian manufacturing countries, long hours and substandard working conditions are considered normal. That means companies that decide to manufacture in the East are on the hook for harsh backlash and criticism, just like Beyonce’s Ivy Park clothing line. Chinese manufacturers also sometimes use tainted raw materials, which leads to recall and part failures.

The US, Canada, and Mexico are all on the same page when it comes to social responsibility. Mexican environmental and labor laws are similar to the ones in the US, with a 48 hour work week, strict worker regulations, safety practices, and child labor laws.

4. Intellectual Property Protection

Did you know Chinese companies are responsible for 50-80% of all US intellectual property theft? This results in billions of dollars in lost revenue for US companies.

Mexico’s legal system and courts have a long history of honoring intellectual property rights. In fact, Mexico and Canada are similar in terms of intellectual property protections, according to the Global Intellectual Property Center.

5. Pro-Business

Did you know Mexico has 12 free trade agreements with 44 countries? (We touch on NAFTA in this article.) That makes Mexico one of the most open countries in the world in terms of infrastructure and economic policies. US-based companies also face few hidden charges when partnering with Mexican manufacturing facilities, largely thanks to Mexico’s history of transparency, consistent regulations, and democratic values.

6. Proximity

It takes 13 hours and 20 minutes to fly from JFK in New York City to Beijing, China. When flying to Mexico City that time is cut to less than five hours.

Yes, proximity matters, especially when you want to look at facilities, meet in person, discuss orders, or review product issues. When flying to Mexico, you won’t have to worry about crippling jet-lag that might render your trip a cloudy memory.

7. A Growing Trend

For all the reasons above, companies are moving operations to Mexico, either partnering with existing manufacturers or building their own factories. When you consider that Mexico is on track to be one of the world’s largest manufacturers, it might be time for your business to move operations sooner than later!