Manufacturing Boom shifting from China to Mexico
In a recent report by Phil LeBeau aired on CNBC, four reasons were highlighted on how and why Mexico has become a world wide manufacturing power earning them great recognition.
Those companies manufacturing in Mexico confirm that Mexico’s youthful, quick, agile, and stable workforce, earning a significantly lower wage rate than many nations, has positioned Mexico as a worldwide competitive player. Mexico is proving to be very beneficial and attractive for relocation or expansion with its proximity to the North American market.
Mexico advantage in lower transportation cost for deliveries to anywhere in the United States adds to the saving benefits of any manufacturer. Among the four main reasons that Phil shares for the shift in China’s manufacturing boom of the 90’s, is Mexico’s cheaper natural gas and electricity.
Mexico has aggressively positioned their country for this boom by negotiating over forty Free Trade Agreements with other nations, more than any others including the USA.
Video transcript:
A lot of people want to compare Mexico with china and i’ve got four reasons why mexico’s manufacturing base is not only catching china but in many cases passing it up.
First off with shipping costs. We’re talking about a 40 foot container going to the East coast of the united states, three days, $3500 from Mexico, compare that now with 21 days and almost $4700 from china.
That’s reason number one. The second reason, and they’re seeing it here at the auto parts plant, trade agreements with 45 countries, including brazil, as well as the united states, maybes it more effective shipping out of here and then you have the third reason, Mexico has cheaper natural gas and electricity costs than in china.
And finally, the labor force here is paid a significantly lower wage rate and it’s also a youthful wage or youthful labor force here. Mexico is not competing within Mexico.
Mexico is competing with the rest of the world. if you want to compete with china and India and Thailand, the younger work force they’re using you have to have the same kind of speed and agility in delivering the product and the younger force helps us. keep in mind the average age of the worker here at this plant, 24. 24 years old. and when we talked with the coo he brought up one more point he’s been in this industry almost 20 years, he has seen a lot of booms and he compares what they’re seeing here in Mexico to what you saw in china in the ’90s.
