Mexico: Near-Shore Advantage

ImageThe winds of manufacturing continue to shift, as companies seek manufacturing sites that offer the best of all worlds: low labor costs, high quality, good infrastructure, access to markets, reduced shipping time and costs and educated, skilled work forces. In the past China excelled at providing low manufacturing and material costs, but always fell short when it came to speed to market (freight and delivery), taxes and customs duties. Mexico’s proximity to the U.S. and Latin American markets reduces freight expense and minimizes supply chain disruptions; ensuring goods make it to the market faster.

Until recently, Mexico’s economy was based on low-paying, labor-intensive industries like textiles. Now Mexico is growing in industries, like autos, aerospace, and technology with the increase in the country’s educated workforce. Manufacturing in Mexico continues to display signs of positive growth; the country posted an increase in their Manufacturing Purchasing Managers Index (PMI) for the final month of 2012.

The U.S. is Mexico’s largest trading partner, accounting for approximately 80% of their exports. Mexico’s maquiladora program makes it possible for companies to bring in components and materials duty-free, which can in turn be exported for sale to the U.S. and Canada; even Chinese companies are moving to Mexico to take advantage of the North American Free Trade Agreement (NAFTA) commercial and fiscal benefits. Although the U.S. and Mexican economies have started to recover, it is still sluggish as the growth rate in Mexico is projected to slow down this year but remain at 3.5%.

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US Census Data

Find new buyers for goods and services in Mexico-U.S. supply chains and new sources of supply in Mexico with PIERS Mexico Cross-border Trade Information. Contact us today to have a PIERS solutions expert show you more.

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