Mexico as the New China

Mexico is gaining ground in the realm of global manufacturing and assembly. Everyday Mexico is moving closer to competing with China and even surpassing Asia for some manufacturing and assembly processes. Could Mexico become the new China for North America? An opinion piece in the New York Times thinks Mexico can:

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.”

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