3 Things to Consider when Manufacturing in Mexico

September 26, 2014

By 2015, manufacturing in China will lose its edge due to rising labor and transportation costs. According to the World Bank, China will be just as expensive to manufacture as the U.S. and other pricey nations if their inflation remains at current levels. Many industries are now looking for alternatives for their manufacturing operations. For several organizations, this imminent development has made nearshoring a subject of keen interest, specifically nearshoring to Mexico.

As China’s fuel costs and wages continue to rise, nearshoring is gaining awareness and rising in popularity. While United States shippers strive to save on expenses, the idea of nearshoring manufacturing to Mexico offers shorter transit times to key U.S. markets as well as reduced operating expenses. Beyond just reducing freight costs, Mexico manufacturers and others in their supply chains will likely attain other logistical improvements, such as fewer disruptions concerning supply, reduced inventory costs, and quicker time to market.

Along with these important aspects, Mexico manufacturing can benefit in many other ways, including a number of trade agreement advantages, steady quality control, and a well-educated, intelligent workforce.

When you look to manufacture in Mexico, it’s vital to evaluate your future goals in addition to the present state of your supply chain. If any nearshoring challenges appear to overshadow any long-term advantages, there are key steps to follow to tip the scales in your favor. Consider the following:

1. Adjust

Social, environmental, economic and even natural disasters all impact Mexico’s trade industry. The adaptable nature of Mexico needs flexibility in order to quickly adjust as certain conditions change. Incorporate the flexibility you require to rise above these kinds of circumstances that can potentially disrupt the supply chain of your business:

• Work only with trustworthy providers that understand the differences of Mexico.
• Carefully plan and create numerous contingency plans.
• Use innovative technology to enhance supply chain visibility and collect data.

2. Use Consolidation

Minimize potential risk along the border by consolidating. Frequently, a number of shipments in Mexico are more expensive, regionalized, and endure longer transit times because of Mexico’s custom regulations. Consolidation works to streamline accountability, limit touch points, and handle freight location problems to result in a less troublesome and better border-crossing experience.

3. Gain Knowledge

Learn the security repercussions of government programs like C-TPAT to enable the ease of cross-border freight. Regardless if the skill to adequately navigate CBP (U.S. Customs and Border Protection) security in Mexico requirements is available through an external solution or internally, knowledge is crucial for a worry-free customs interaction.

Again, today’s global market is somewhat uncertain for both Mexico’s and China’s future of manufacturing. Nearshoring is a plausible avenue for the evolving conditions of the market. Whatever you decide, be sure to implement a strategy with enough safeguards in place to get ready for whatever the future has in store.