Mexico is a manufacturing hub – not just for the US, but for companies around the world. In fact, the country’s recent 3.9% increase in industrial activity can mainly be attributed to this industry7, which offers superior, cost-effective capabilities across many sectors.
The IMMEX programme, which was established in 2006, means companies that manufacture in Mexico are exempt from paying certain taxes – including import duties and VAT – on raw materials entering the country.
Manufacturing capabilities in Mexico have evolved considerably since the pre-NAFTA days. Mexico now has a skilled workforce and boasts first-rate capabilities, with an abundance of expertise, especially in the automotive sector8. Aerospace, medical equipment and appliances are also highly successful industries.
Labour costs are low – in many industries the unit cost per labour is less expensive than China – but the workforce is skilled and experienced, offering high-quality production capabilities.
Working capital cycles here are short and small batch production is often utilised, resulting in agility and the ability for goods to make it to market quickly.
Meanwhile, shipping issues and costs are often eliminated as North America can be easily reached with ground transport. Goods shipped from here benefit from supply chain diversification, too, as transit times are cut, and risks are reduced.