For U.S. manufacturers, the benefits of manufacturing in Mexico are threefold:
reduced labor costs
different, usually more lax environmental restrictions
access to a motivated labor force
Manufacturing labor costs in Mexico are significantly less than what they are in the States. In 2016-2017, the average manufacturing wage in Mexico has remained well under US $3/hour. It’s no surprise, then, that manufacturing in Mexico has broad appeal to labor-intensive manufacturing operations. However, what manufacturing companies fail to realize is all the hidden costs that go into COGS. A quick consultation with our operations consultants can help quantify these costs, and help you determine whether you might benefit from moving your manufacturing operations to Mexico. We’ll also discuss whether other solutions, like partnering with a shelter organization or purchasing individual shelter services, might be more beneficial.
Mexico’s environmental policies and laws are largely different than those in the U.S. Sustainable Governance Indicators assign Mexico a very low ranking (35) for its environmental policies. Additionally, despite a climate change law that went into effect in 2012, Mexico’s environmental policy ranking has declined since 2014. Although Mexico is already the second largest emitter of greenhouse gases in Latin America, manufacturers in the U.S. that face penalties in the U.S. for toxic waste have continued to look to Mexico for options.
The access to welfare, food stamps, free health care, and government-funded housing has risen dramatically in the U.S. since the mid-1980s. And, over the past 30 years, the social stigma of accepting government assistance in the US has eroded. Where once these free programs were a dreaded last resort, they now are commonplace. An estimated 52% of the US population receive some form of government assistance, up from 30% in 1983. American laborers have become accustomed to taking the easy way out, and look for handouts far more frequently than their Mexico counterparts.
The key to manufacturing in Mexico is management of that workforce. An experienced operations consultant like North American Operations Consulting can help you with that. Give us a call to find out how.
We have worked in all types of manufacturing organizations in Mexico: low mix, high mix, heavy union environment, low key union environment, metals, automotive, electronics, consumer goods, industrial goods, border area, interior areas, US based, Mexico based, Europe based, etc.
Let us be your boots on the ground, working with your local teams to drive improvement. We are partners, implementers – providing the helpful link between corporate and the plant.
Ask about our vast array of services to help your facility in Mexico. Please write to us to let us know what is on your mind. Where do you need assistance?