If you need to expand your manufacturing capabilities, nearshore manufacturing offers several key benefits when compared to domestic manufacturing. Nearshore manufacturing also eliminates many of the risks of manufacturing in China. So, is nearshore manufacturing in Mexico superior to domestic manufacturing? Read on to learn about reasons you may want to consider supplementing your current production or outsourcing your production to our neighbor to the south.
Mexico Has a Large Pool of Experienced Manufacturing Employees
As many as one in four Mexican workers are employed by industrial manufacturers. By contrast, according to the Bureau of Labor Statistics, only 9% of U.S. workers are employed in domestic manufacturing. This means that there are millions of experienced employees that your company can recruit if you choose to move your manufacturing to Mexico. Experienced employees also help prevent delays, backlogs, and quality issues.
Perhaps more notably, the U.S. has been undergoing the “great retirement.” Labor shortages continue to plague the domestic manufacturing space. The shortage is so severe, that the National Association of Manufacturers has predicted that labor shortages in the U.S. may lead to as many as 2.1 million unfilled jobs by 2020. Domestic manufacturers continue to report that it is much more difficult to attract reliable workers than it was just a few years ago. Moreover, more than 75% of domestic manufacturers predict ongoing difficulties in filling positions for the long term.
Finally, of note is the median age difference between the U.S. and Mexico, particularly as it relates to the future workforce. The median age in Mexico is nearly ten years younger at 29.2, compared to the median age of 38.1 in the U.S.
You’ll Save a Small Fortune in Labor and Materials
The cost of living in Mexico is much cheaper than in the U.S. As a result, wages are lower in Mexico than in the U.S. Likewise, many materials are cheaper in Mexico than they are in the U.S. The combined savings on labor and materials is a leading reason U.S. companies opt for nearshore manufacturing.
The maquiladora program offers U.S.-based businesses that engage in nearshore manufacturing in Mexico unique tax breaks. These include the elimination of the Value-Added Tax (VAT) on temporarily imported machinery, equipment, and material.
The maquiladora program also allows for expedited production start-up and greater production flexibility. When nearshore manufacturing with a maquiladora, U.S. manufacturers can also benefit from low shipping costs, simplified corporate income taxes, and payroll taxes.
Learn More About Nearshore Manufacturing Just Minutes from the U.S. Border
If you’re interested in learning more about the potential benefits of nearshore manufacturing, Coastline International can help. For 40 years, we’ve served as a trusted contract manufacturing partner for the medical device and electronics industry. Our 50,000+ square feet of operational capacity for manufacturing in Tijuana, Mexico qualifies for the maquiladora program. We welcome your questions and interest at 888-748-7177. You may also send us a message for a free estimate, or cost-benefit analysis.