First on the list was to highlight the ties between Mexico and the Us and to gain a deeper understanding of how the two countries are tied both culturally and economically. Building economic growth between the US and Mexico has become a focus recently as leaders from both countries recognize the benefits of a strong cross border relationship.

As the white house blog on this subject reports “Business representatives offered strong support for measures intended to facilitate global and hemispheric trade, such as the Trans-Pacific Partnership. They highlighted the growing importance of the energy sector throughout the Americas and the need for infrastructure improvements to facilitate cross-border trade.” This is good news for those who depend on the border region for jobs, and trade. Calibaja Manufacturing is a part of the cross border infrastructure that will benefit from conversations like these. A strong understanding of how Mexico and the US compliment each other will be the binding agent that will facilitate a healthy future for business on both sided of the border.

It is important that the US and Latino leaders are making cross border commerce and cultural understanding a focus of the future of both Politics and business between our two nations. This will further job creation in Mexico as well as the United States and bring new opportunities to our shores. Working together we can compete globally while benefiting our local economies.

To read the White House Blog click here 

While the news media has glorified the violence across the border and with some justification as there are unsafe locals across the border;  rest assured Mexicali is not one of them!

While Mexicali does have it’s share of petty crime it is just like any other large city with a population of over a million people. There will always be some portion of the population out to cause trouble but just like visiting New York or Los Angeles the danger zones can be avoided quite easily.

The overall population of Mexicali is educated, mostly middle class, and not transient. There are multiple Universities in the city and an international flair to the cuisine.

The Los Angeles times reports that “There hasn’t been a bank robbery in Mexicali in 18 months, or a reported kidnapping in a year. Mexicali is considered so safe that top law enforcement officials from Tijuana raise their families here, and are seen visiting restaurants and movie theaters without the phalanx of bodyguards that usually follows them everywhere else.” in addition the  Los Angeles Times also states that, Mexicali has a homicide rate comparable to that of Wichita, Kansas.

Please take a moment to contact Calibaja if you have any additional questions or concerns on this topic.

Why is this important from a manufacturing in Mexico standpoint, well as the author states:

“From the food on our tables, to the parts in our cars, to the consumers for our products, to the drugs on our streets, Mexico… affects our everyday lives here in the United States.”

As our two countries continue to develop along side each other it becomes increasingly important to have a solid working relationship. While Mexico has a stable economy and a developing middle class the US relationship and NAFTA has enabled the Mexican economy as well as the US economy to prosper.

O’Neil goes on to say “Trade between Mexico and the United States is over half a trillion dollars worth of goods, [it's] one of our most vital partners,” O’Neil says. “Mexico is a far better partner than [China, Brazil, or the EU] for us, because we really make things together.”

What is important to take away here, especially from a manufacturing in Mexico standpoint is that; as products are assembled and produced in Mexico they are at the same time creating opportunity in the United States. The Materials and consumers for these products are often manufactured or sourced out of the US. This strengthens the global trade between our two Nations and created a strong partnership between Mexico and the US.

To view the complete transcript and podcast click here

Even though the Podcast is geared towards a Canadian Market it shows a great breakdown of the multiple ways a company or individual can Manufacture in Mexico. Brad Knight does a great job of taking his years of experience and translating them into an easy to understand interview full of pertinent information about how to choose the best option for Manufacturing in Mexico.

The Podcast starts by mentioning some of the benefits of Mexico as a manufacturing option, information such as the relative high education of the workforce as well as proximity to the large US consumer market ranks Mexico as an attractive option for a Manufacturing facility. “I think that one of the benefits Mexico brings is a substantial, well-educated labour base right next to the largest market in the world.” Brad goes on to mention the low cost of labor as an additional benefit to Manufacturing in Mexico; specifically “If labour is a significant percentage of your product cost, or you have a significant amount of labour involved in production, then I think you need to be thinking about lower-cost regions for that assembly” What he is saying here is that Mexico really becomes a viable alternative when you have a high labor assembly and can realize that savings in this labor market.

As the Podcast goes on the differences between the do it yourself model, Shelter services, and Contract Manufacturing are discussed. Brad uses examples from his own experience to show the differences between the different options and who they may be best suited for. “I think you really have two choices that are blatantly clear. One is you could build your own facility. Now – well, there’s three. You can build your own facility down there, you can employ a shelter corporation, or you can outsource your product’s manufacturing to somebody else.” In his own experience he mentions that building your own facility is most often cost prohibitive for small to medium size companies and is most often done by the large multinational corporations. Brad goes on to talk about the differences between a Shelter service and a Contract Manufacturing service. As is stated in the Podcast a shelter service is an excellent way to get started in Mexico if you have the resources to do so. “Well, there are companies in Mexico who will literally, say, own a building. They have infrastructure, power, electricity, sewer, water. And you can come in and say I would like to rent 4,000 square feet from you. Maybe it needs to be air conditioned, I need 250 employees. And that shelter company will hire the employees for you, they’ll manage the employees, they’ll manage the facility infrastructure. You bring in your technical competence and your product, and perhaps your capital equipment, and you have a ready-made facility sitting there for you. It’s a nice stepping stone to getting into your own facility. So some big companies even use a shelter company as a way to enter a market. Because in the end, if it doesn’t work out for you, really all’s you owe is a long-term lease to the shelter company.”

As for Contract Manufacturing in Mexico; Brad breaks down the main difference between  a Shelter operation and a Contract Manufacturing Operation. ”

But with the contract manufacturing solution, they price by unit price. They come back and say your handset is a hundred dollars if you buy 10,000 of them, it’s 97 cents if you buy a hundred thousand of them. So it’s much easier for you to run your business with the known variables of cost per product than it is the unknown variables of infrastructure.” Essentially the way the costs are calculated is the main difference, as Brad mentioned the variable costs are the defining factor for some companies when making their decision.

Mexico and it’s manufacturing options offer a wonderful alternative for a globally competitive  labor source with a location that can serve all of North America as well as the rest of the world. With these three options there is a way to bring your high labor manufacturing operation into Mexico and start realizing savings immediately.

For the complete version of this Podcast please click here

The article titled ” Mexico the New China” Takes a look at  how one company’s  foray into Mexico just may have catapulted them into the global Marketplace. The article highlights how Mexico emphasizing Tijuana can in fact compete with China. For instance; where does a company go to have their product manufactured in such a way that they can compete in the world market? As of right now the luster is wearing off Asia more specifically China. North America needs a location that is closer and provides low enough wages to compete globally. As the article states

“But my company, like many manufacturers, is faced with a familiar challenge: its main competitors are Chinese companies that have the dual advantages of cheap labor and top-notch engineering. So, naturally, when we were raising a round of investment financing last year, venture capitalists demanded a plausible explanation for how our little start-up could beat its Chinese rivals. The answer was as much a surprise to the investors as it had been to me a few years earlier: Mexico. In particular, Tijuana.”

In addition to location and low wages Mexico is also competing on a global scale in that the country is moving forward educationally as well

“The notion that Mexico offers only cheap labor is just plain off the mark. Mexico graduates some 115,000 engineering students per year — roughly three times as many as the U.S. on a per-capita basis. One result is that some machine specialists are typically easier to find in TJ than in many big American cities. So, for that matter, are accountants experienced in production economics and other highly skilled workers.”

With a large percentage of engineers as well as other manufacturing support positions easy to dill Mexico is fast becoming the answer to North America’s need for low wage, and  high skill manufacturing and assembly.

As the article goes on a new term emerges for the push of Mexican border manufacturing “quickshore” While it is known throughout the global manufacturing Marketplace that China can produce; what is often overlooked is the amount of time it takes to receive product. Cut out the long lead times, Chinese New Year shutdown, and overseas shipping and you are left with a streamlined answer to many manufacturing conundrums. The border region of Mexico with cities such as Tijuana and Mexicali is poised to capitalize on the growing desire to produce products in Mexico as well as gain from the close proximity to the US cities of both San Diego and Los Angeles. All the while saving time….and we all know time = money.

As the globe becomes smaller and more intertwined it is necessary that manufacturers take a long look at how Mexico compares to China. For too long China has held the reins in the global market place for manufacturing, however, as wages in China grow and the cost of doing business half way around the world rise North America and the world should take a good look at Mexico as a viable option. The article mentions the changing labor rates and how coupled with a short supply chain, short lead times, proximity of the manufacturing plant, and access to a cross border workforce is rapidly changing the global manufacturing picture.

“In the land of the long supply chain, meanwhile, things are changing, too. Inflation-adjusted labor costs in China have more than tripled in the past decade. Wages in China’s southern cities are approaching $6 an hour, roughly what they are in Mexico.”

For the complete article please visit http://www.nytimes.com/2013/01/27/opinion/sunday/the-tijuana-connection-a-template-for-growth.html?pagewanted=2&_r=0

]]> http://calibaja.com/mexico-as-the-new-china/feed/ 0 http://calibaja.com/benefits-of-manufacturing-in-mexico-vs-china/ http://calibaja.com/benefits-of-manufacturing-in-mexico-vs-china/#comments Thu, 10 Jan 2013 22:27:49 +0000 CB-01 http://calibaja.com/?p=939 What are some of the benefits of Manufacturing in Mexico vs China?  If you have ever thought about having a product manufactured you may be asking yourself that question right now. Manufacturing in Mexico has many benefits; some you may already know and some may be new to you. What Calibaja manufacturing can help you do is determine why Manufacturing in Mexico vs China may be the right option for you. While both locations offer competitive low cost global manufacturing options they are vastly different in their own right.

According to the website manufacturing.net “Mexico’s strengths tend to favor companies that manufacture highly customized products that are particularly sensitive to shipping costs and lead times.  Production in Mexico will also tend to favor bulkier, heavier products that are destined for consumption in North America.”

While this may be an obvious benefit to those of you seeking manufacturing of larger bulkier items some of you who may not have considered the added bonus of customizable products available in a location close to the US market.

This same website also mentions the relative ease of working with the Maquiladora industry in Mexico vs Manufacturing in China

“No matter the industry, U.S. and Canadian companies that operate in Mexico have a significant advantage over operating in China to efficiently address engineering changes and other quality control issues, especially when those issues necessitate the direct attention of North American management.  Geographic proximity and a more than 40-year track record of the maquiladora industry allow Mexican operations to consistently perform at U.S. levels of quality and safety. ”

This is an important yet often overlooked aspect of Manufacturing in Mexico vs China. Quality;quite possibly one of the most important aspects of your product; Not only can Mexico produce your product at a globally competitive rate it can do so with almost the same consistency as companies operating in the US.  Couple this with the other logistical advantages of manufacturing in Mexico and you have a recipe for success!

For more information related to this topic please visit http://www.manufacturing.net/articles/2008/06/mexico-vs-china

In 2007, I was hired by Calibaja Manufacturing as a Sales and Marketing Director of manufacturing services, engineering, assembly and Industrial Space in the city of Mexicali Mexico, Baja California.
Over the next two years I lived and worked in Mexicali; one of the fastest growing cities in North America and a heavyweight in North American manufacturing. There are a vast array of American companies producing products in Maquiladoras due to both the close proximity  to the US and a large base of a skilled workforce located within the city.

Mexicali is located in a gigantic valley which, coupled with the rapid growth rate, pushes new development out, not up like many cities of comparable size. An hours drive from the center of the city leads you to the poorest and most disadvantaged areas. In my second week on the job I arrived to find an employee sponsored collection and fund raiser for impoverished students in a neighborhood near the edge of Mexicali.The operations Manager organized the project and numerous employees and management from the top down to the newest assembly person all brought food, toys, and school supplies. I was invited to ride along  to drop off the goods. After unloading the cars we met the families and played soccer with the kids. Driving home I felt so grateful to have seen and been able to participate in the event. Beyond that I gained such a respect for the generosity that so many people, people who were far less fortunate than I, had shown. It was the first of many occasions I witnessed this generosity from my friends down south.

Calibaja Manufacturing’s variety of services enabled me to meet and work with a large number of engineers, designers, techs and assembly workers. While it was an education in modern manufacturing, easily my favorite aspect was the people who live and work in Mexicali and especially those from Calibaja Manufacturing.

By: Nick Caras

Former Calibaja Employee

We can now pickup your raw materials and deliver your finished products just in time as well as in a safe, effective, and green (almost 30 Mpgs!) way. Serving all of Southern California just got easier and more fun. With the addition of a vehicle wrap you won’t be able to miss the Calibaja Manufacturing Van headed down the highway.

Let Calibaja Manufacture your product in Mexico and rest assured that we will be able to deliver your finished goods in a timely manner. No more waiting for your overseas container ship to come in from China at the last minute (a MAJOR difference between manufacturing in Mexico VS China). For raw material pick up to finished goods delivery, our service level has just been bumped up a notch.

Despite certain disadvantages Mexico is poised to make something of a comeback in the world of manufacturing. The article bring this to our attention ” As Chinese wages continue to rise, Mexico looks the best-placed to benefit. Mexico, which exports more than all the rest of Latin America combined, was the least-expensive place outside the U.S. to manufacture for the U.S. market, according to a December 2011 survey by consulting firm Alix Partners.” Mexico has both short lead time to the US markets as well as the opportunity to ship large and bulky items at a relatively low cost compared with China.

One additional benefit mentioned by the Wall Street Journal is the direct correlation of increasing Manufacturing in Mexico to a strengthened US based supply chain. “ A return of business to Mexico also would benefit the U.S. American companies earn 37 cents for every dollar that Mexico exports because Mexican companies rely heavily on U.S.-made parts. The ratio is far lower for Chinese firms, which use mostly locally made inputs.”

To read the entire article click here

Andrés Rozental answers “ Studies show that the all-in cost for an average factory worker in a Chinese industrial zone is more or less equal to a Mexican working in a Maquilla near the U.S. border.”
Andres also states that the geographic location of Mexico is also a competitive advantage as well as it’s relativity stable political climate and the availability  of just in time sourcing.

The dialogue also mentions the fact that Mexico has a sophisticated manufacturing system in place and is poised to attain acceptable levels of growth as the US and Canadian economies recover.

For complete dialogue click here