Is every type of manufacturing recommended in Mexico?

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If you are looking for skilled labour to counter the labour shortage in Canada, and you want to start manufacturing in Mexico, you don’t need to ask yourself “Is every type of manufacturing recommended in Mexico?”

Instead, you must ask yourself, “Is my type of manufacturing recommended in Mexico?”

If you are considering expanding your business to Mexico; whether by using a shelter company in Mexico, or by starting your own operation, be it contract manufacturing, joint venture, etc. Mexico has a wide range of industries, 6000 manufacturing centres to be precise, and some of them even manufacture and export entire plane parts!

And yes, some of them are 100%, foreign owned.

It depends on the purpose of manufacturing in Mexico, and, what you want to gain by doing business in Mexico.

Yes, Mexico ranks as Canada’s second largest supplier of motor vehicles and auto parts and of agricultural and fishery products, as well as its third largest supplier of electronic equipment and parts, as well as the fourth largest supplier of chemical, plastic and rubber products.

Is your company a part of these sectors?

Also, if you’re looking for low costs, then you must consider the following:

Is your type of manufacturing labour intensive?

If you are interested in integrating Mexico into your supply chain for strategic purposes, and you are part of the automotive or aerospace industry, then logistics can become extremely important to address:

  • Are you going to do a milk run?
  • Do you have several clients in Mexico or not?
  • Do you need to be close to the border?
  • Where are your potential suppliers located?
Map with Mexican port connection
Source: “TMEC Investing in Mexico” Secretariat of Economy, 2021 (link below)

If you’re Low cost, and low mix and high volume.

You’re doing stuff that has very, very low added value, in the manufacturing process; then you just compare Mexico with another country.  And yes, that’s a very “consultant” answer; but it really depends a lot on what you’re doing.

For those kinds of manufacturing operations that are low volume, high mix; it definitely makes sense. However, you need to balance the logistics cost, versus the cost of labour, versus the cost of utilities; but let’s say, in terms of skilled labour, Mexico is well prepared for almost all kind of manufacturing.

I mean Mexico has industries that produce complete airplane parts, for instance, all the way to really labour-intensive operations.

And to be completely honest, it depends on every business case, but Mexico has the skilled labour and the numbers; In fact, in 2020 more than 126,265 engineers graduated!

Let’s be real. You are not interested in every type of manufacturing. You don’t need to know if you can manufacture electronics in Mexico, if you what you really want, is to manufacture swimming pools, so that you can attack the southern markets of the US.

For example, Allied-shoring in Mexico, is recommended for Canadian companies if;

  • You are into high mix-low volume
  • Are sensitive to long lead times
  • Are part of sensitive industries for the US
  • Are into design & engineering

So, what is it that you really want to know? 👇 Contact us!

Sources:

“TMEC investing in Mexico” Secretariat of Economy, 2021

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