For years, everyone looking for great rates on manufacturing would look to China and other Asian countries, and for a while, it worked. There were more affordable labor costs overseas which meant that the manufacturing production costs could drop – and as a result increase overall profits. Offshoring just made good business sense.
As time has moved on, Mexico has made its way into the playing field – and has made nearshoring the go-to solution. But what is it about Mexico that makes it so enticing? Here are 5 reasons to consider moving your manufacturing from Asia to Mexico.
Reason #1: Reduced Shipping Costs
Mexico is closer. There are no international waterways that need to be crossed or large cargo ships that need to be used. Shipping from China (and other Asian countries) to the United States can be very costly. And, if we are being honest, it takes quite a while. There is no such thing as fast and affordable shipping between the two continents.
Shipping from Mexico is much easier, much faster, and much more affordable. Generally speaking, an entire container can be shipped in less than one week from Mexico to the U.S. – and the same thing would take 5 weeks from China and cost over twice as much. Ground freight shipments from Tijuana are often on next day delivery terms.
Reason #2: Affordable, Highly Trained Workforce
As a manufacturing professional, you know that there is a difference between a cheap workforce and affordable, quality workforce. When contract manufacturing in Tijuana Mexico, you will find the latter. While wages in Mexico are drastically lower than the US, the rates are quite competitive in relation to living costs, i.e., wages are good, especially in Tijuana. Manufacturing workers are making a living and also have steady work. It is simply a win-win to reduce cost by accessing labor rates in Mexico while also leveraging a highly skilled and reliable workforce.
We all know that keeping employees happy means they provide satisfying work. And that is what you will find with nearshoring. Time and effort is spent on training the workforce to meet a certain standard of quality while also maintaining efficiency.
Reason #3: A Solid Supply Chain
In order to get the raw materials that are needed for manufacturing products, there must be an established and reliable supply chain. This is especially true if they intend to meet the needs of many different industries (especially essential industries such as medical devices). While China and other Asian countries may have vertically integrated supply chains, they are often not as nimble or transparent as Mexico. Mexico, on the other hand, has an established and efficient supply chain and has the ability to support even the most complex industries with the raw materials and component parts needed.
Mexico contract manufacturers are able to provide flexibility, options, and most importantly, transparency based on location and business models. Communication and trust are critical to a robust and reliable supply chain and all of which contributes to quality and on-time delivery.
Reason #4: Tax Incentives
Working with companies in Mexico that are registered under the IMMEX and IVA program (such as Coastline International) can benefit from incredible cost savings. It allows those companies that manufacture in Mexico and export their goods relatively quickly to avoid paying the 16% value-added tax on the items. This is a government program that is being used to give a little boost to both sides.
There are also many additional duty-free benefits through the USMCA (formerly NAFTA) agreements when working with a Mexico contract manufacturer.
Reason #5: The Geographical Proximity
Aside from shipping costs, there is another benefit to being close to where your manufacturing is taking place. If there are questions about the process, phone calls that need to be made, or a visit to the factory that is warranted, it can easily be done.
Mexico’s time zone is equivalent to those within the U.S. And, traveling to and from Mexico can be done in a day from nearly anywhere in the country. This is not only convenient, but it reduces the need for extended global travel that is often required to visit manufacturing facilities in Asian countries.
Move Your Manufacturing with Coastline International
If you are ready to learn more about moving your manufacturing from Asia to Mexico, then Coastline International can help. We specialize in the nearshore manufacturing of medical devices and electronics with extensive experience in the aerospace, industrial, and consumer goods sectors.