Rising Costs Have Companies Moving Manufacturing Back to Mexico

March 22, 2013

Companies are making the move out of China,and back to Mexico in large numbers. Casabella Home and Commercial Cleaning Supplies president, Robert Moser, states in an interview with USA Today, “When you look at total costs, you’re pretty much at parity.” Many companies like Casabella are making their way out of China and into Mexico (a location that they left fairly quickly over a decade ago).

Prices and the cost of labor have been rapidly rising in China and many companies have responded by moving manufacturing back to Mexico. Transportation costs, salaries, and the Chinese currency are all rising, thus making products more expensive to import and ship.

The Mexican government is also taking this into consideration; with its current President, Enrique Pena Nieto, addressing changes to the country’s tax system that makes manufacturing in Mexico more attractive to global investors.

In addition to low costs, Mexico participates in over 40 free trade agreements. Mexico continues to be the ideal choice for those looking to manufacture abroad, especially with its residence neighboring the United States.

Manufacturing in Mexico isn’t only helping clients abroad with costs, but also driving the Mexican economy. Manufacturing composes about 20% of Mexico’s GDP, with a hopeful 3.5% expansion in 2013.

Mexico is continuing to make strides and has become a competitive domain after a decade of development (with a push from watching both the Brazil and China markets rise). Both small and large projects often go straight to Mexico, bypassing any other location due to its quality and deliverance.

As manufacturing in Mexico continues to prove to be the location of choice, it also is proving to be a place that the U.S. business sector can benefit from. Mexico is establishing its presence as a global, sophisticated manufacturing country and is clearly here to stay.