Manufacturing in Mexico vs. China

Mexico vs. China

For many companies considering the offshoring advantages of various locations, China is the first country to come to mind. However, China is quickly losing steam as an offshore manufacturing destination and Mexico is taking its place. There are a handful of differentiators that will make the decision process easier:

1. Cost of labor

According to the Boston Consulting Group, average manufacturing labor costs in Mexico are projected to be 19 percent lower than in China. This is part of the reason manufacturing in Mexico is so accessible, because overhead is significantly lower. It is also important to note that despite the low cost, workers in Mexico are highly skilled and educated in the technical trades.

2. Supply chain

Today, many auto manufacturers are moving part of their production from Asia to North America due to increased production costs and the complexity of supply chains between the two regions. Manufacturers in Mexico have the advantage of the country's participation in the North American Free Trade Agreements, it's 44 free-trade agreements and strategic location next to the U.S. This means a reduction in the costs of trade, faster speed to market and overall, more simplified supply chain logistics.

3. Relationship with the U.S.

Mexico has a healthy relationship with the U.S., as the economic prosperity of each has a positive impact on the other. Many of the manufactured goods in Mexico end up in the U.S.. Further, the U.S. recently approved limited crude oil trading with Mexico, which will help create fuel efficiency in both countries.