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An overview of Mexico's consumer electronics manufacturing sector

An orange robotic contraption stands inside a manufacturing facility in Mexico.
22 Jan 2015

It is no secret that foreign companies are investing heavily in setting up manufacturing operations in Mexico. The country has positioned itself as clear competitor to China and a prime offshoring destination for foreign companies. Manufacturing in Mexico has grown significantly over the years. Starting with the success the automotive industry found in assembling vehicles in the country, other companies began to take notice.

Now, there are a number of organizations across a wide range of industries that have either built their own factories in Mexico, are operating through a shelter company and having products assembled using the maquiladora model, or are in the process of exploring both options to decide which would fit their needs best.

The North American Free Trade Agreement is one of the many attractive advantages to manufacturing in Mexico. Currently, the country has partnerships with as many as 44 different nations. This means that a company doing business in Mexico can import raw materials and other necessary components used to produce goods, and then ship finished items out to be purchased by consumers in different markets, all tariff free.

In addition, Mexico's government has invested heavily in providing an ideal infrastructure that makes the country an attractive option for doing business. Mexico has placed increased emphasis on educating its citizens in developing the technical aptitude and precision necessary to manufacture a wide range of products. Those living in the country also take pride in their work and have a commitment to quality that foreign companies enjoy and consumers can be satisfied with.

Lastly, the cost of manufacturing goods in Mexico is relatively low in terms of labor and the price of necessary utilities like gas and electricity. All told, it is no surprise that manufacturing in Mexico has grown significantly over the years.

A young lady is looking at different consumer electronic goods, such as computers, at an electronics store.  Many of the consumer electronics sold around the world are now being manufactured in Mexico.

Mexico's consumer electronics production on the upswing

Currently, there are more than 92,000 people who live in Mexico working in the consumer electronics manufacturing industry.

McCain Inc. wrote in a blog post on its website that for decades, China was at the head of the class when it came to the manufacture of consumer electronic devices. However, as Mexico's workforce has become more skilled through the assembly of other items related to the aerospace, automotive and medical device industries, consumer electronics companies began exploring the country as an alternative to having their goods made in China.

Today, Mexico is rated far ahead of China in offering aftermarket services and the manufacturing of prototypes. As a result, the country now stands as the second largest electronics supplier to the U.S., with mobile technology - tablets and smartphones - being the top export. From a global perspective, Ryder wrote in its Exchange blog that Mexico currently boasts the world's sixth-largest electronics industry, and the items shipped to the U.S. represent 30 percent of the country's total exports.

According to a Business Monitor report, between 2013 and 2014, revenue generated from consumer electronics products manufactured in Mexico grew from $13.1billion to $13.9 billion. This growth represents a 5.7 percent increase. While this figure is modest, manufacturers who have been consistently satisfied with the level of quality of their products assembled in Mexico are beginning to invest more heavily in the sector.

Understanding the growth of the consumer electronics industry in Mexico
According to Maquila Reference, the Baja California region of Mexico has been the epicenter of the consumer electronics manufacturing industry in the country, specifically, and North America in general, over the last 30 years. Baja California has a well established reputation for making intellectual property protection a priority. As a result, foreign companies have invested as much as $500 million in Mexico's electronics distribution market and $5 billion in the components market.

Currently, there are more than 92,000 people who live in Mexico working in the consumer electronics manufacturing industry. In addition, as many as 200 well known companies such as Samsung, Bose, Sony and Panasonic have a presence in the country.

Items such as smartphones, tablets and high-definition televisions are produced in Mexico, as well as smaller components necessary for their operation such as circuit boards, semiconductors and microchips.

Maquila Reference stated that of the consumer electronics organizations currently operating in Mexico, 33 percent specialize in the manufacturing of items necessary for use in the information technology sector, while 30 percent are experts in producing audio and video components.

Over time, all of Mexico's manufacturing industries are expected to expand significantly. Ryder wrote that in July of 2013, the government developed a $346 billion national infrastructure program. As much as $16 million has been earmarked for highway improvements and $17 million to better the country's railway, seaport and airport systems.

These initiatives will only encourage more companies to shift large portions of their manufacturing operations to Mexico as the country seems committed to being a world partner when it comes to the production and assembly of consumer goods.

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