5 Smart Reasons To Do Business In Mexico

Outsourcing to Mexico is an increasingly popular decision among U.S.- and Canada-based auto parts businesses. In fact, about 12% of the parts and components in the average U.S.-built car came from Mexico.

Why are many auto parts businesses – as well as many Fortune 1000 companies – moving their manufacturing to Mexico? Ask any business that has made the big move to Mexico, and they’ll rattle off a solid list of reasons. Here are the five biggest benefits of outsourcing to Mexico.

1. Mexico Has A Short Supply Chain

As the southernmost part of North America, Mexico is ideally situated to support US and Canadian companies, as the supply chain is much shorter compared to anywhere in east Asia. A short supply chain comes with many advantages, including:

• Shorter shipping time: Mexico’s proximity to the U.S. and Canada allows for a shorter shipping time, sometimes even as short as one day. It’s a huge advantage for any business that requires orders to be fulfilled as quickly as possible.
• Lower shipping costs: Ocean shipping costs are skyrocketing for a variety of reasons, so a lot of U.S.- and Canada-based businesses are turning to the closest manufacturing country: Mexico. When you do business in Mexico, you don’t have to worry about oceanic shipping and all the hassles that come with it (customs, cargo getting lost at sea, volume requirements, etc.). Instead, your orders will come by truck, plane, and/or train, all of which ultimately cost less than overseas shipping.
• Fewer interruptions: The longer the supply chain, the more interruptions there will be. Since Mexico is right next to the U.S. and Canada (as opposed to being overseas like many other auto parts manufacturers), the supply chain is shorter, therefore there are fewer disruptions to worry about.

2. Low Manufacturing Costs

The manufacturing costs are much lower in Mexico than those in the U.S., Canada, and many other countries for the following reasons:

• Labor: Mexico doesn’t just have a highly-skilled labor force, but Mexico’s labor costs are among the lowest in the world. And labor costs have remained steady (compared to other countries) since the 90s.
• Materials: Mexico has an abundance of readily available high-quality raw materials.
• Technology: Mexico’s manufacturers have long embraced automation, which has increased production without increasing costs.

3. Mexico Has Stringent Intellectual Property Laws

The intellectual property laws in Mexico are comprehensive, friendly to foreign businesses, and similar to the intellectual property laws in the U.S. and Canada. Many U.S.-headquartered companies experience intellectual property theft in other countries, especially China, where about 80% of their intellectual property thefts happen. Mexico, on the other hand, is known for strong IP protections.

4. Mutual Support

Did you know that 40% of the money U.S. consumers spend on Mexican-made products finds its way back to the U.S.? This is because the U.S. is Mexico’s top trade partner. Many Mexican manufacturers, including Intran, look to the U.S. first for raw materials, products, services, and more. The mutual support between U.S. and Mexican businesses helps sustain jobs in both countries.

5. Social Responsibility

Mexico is a conscious country, especially when it comes to workers’ rights and the environment. Mexican workers are entitled to many of the same benefits as US and Canadian workers. Any company outsourcing manufacturing to Mexico can have the peace of mind that they’re not participating in labor exploitation.

In Mexico, you’ll find strict environmental regulations in place, as well as rapid growth of innovative green technology. As a hub for green solutions, Mexico is seeing tons of competition in various environmentally-conscious industries, including manufacturing. That means you’d find some of the most cutting-edge green solutions in Mexico at competitive prices. You’ll be doing the environment a huge favor by enlisting green solutions during the manufacturing process.

The bottom line is that Mexico is a viable business location that’s worth looking into. If you have any questions about outsourcing to Mexico that were not addressed in this article, feel free to contact us. We’d love to chat with you!