For years, Mexico has been one of the primary manufacturing hubs of the world. From trade agreements with over 50 countries to decreased shipping costs within North America, Mexico has cemented itself as a global leader in the manufacturing industry.
Why is Mexico one of the world’s most popular manufacturing supercenters? The decision to move manufacturing across the border can bring multiple benefits for some businesses. While this will not be the right choice for everyone, there is no denying the importance of Mexico in global manufacturing.
Why is Mexico a leader in the global manufacturing market?
Trade Agreements & Tax Benefits
As of July 1, 2020, a new agreement called the United States-Mexico-Canada Agreement (USMCA) aims to rebalance trade in North America to be mutually beneficial for all three countries. The agreement includes increased wages for manufacturers in Mexico, which helps them compete with the costs of production in the US and Canada.
According to Claude Mas, Executive Director of International Business at Gardner Business Media, Inc., 75% of all parts manufactured in a vehicle must be manufactured in either Mexico, the US, or Canada, to remain tax free. This helps boost not only the Mexican economy, but the economies benefiting from the tax-free agreement. Vendors in the manufacturing industry are flocking to Mexico because of this new trade agreement due to the benefits it offers all involved.
Abundance of Skilled Laborers
Manufacturing plays a critical role in Mexico’s economy. Since it is so crucial, there is an abundance of skilled workers who can perform highly specialized roles. Unlike in the US, there are a variety of training programs available in Mexico that combine technical training with hands-on experience. With a large, highly skilled labor force, manufacturing in Mexico produces some of the highest quality items in North America.
Affordable Shipping Costs
The United States is Mexico’s largest trade partner. Given the proximity, it makes sense that shipping rates would be lower than shipping from across the Atlantic or Pacific. For example, according to a Tetakawi infographic, a 40-foot container can be shipped from Mexico to the United States in one week for $1,800 in shipping costs. That same 40-foot container would take five weeks and $4,300 to ship from China.
Access to Global Markets
The geographic location of Mexico makes it invaluable when it comes to accessing global trade. Not only does it serve as a gateway to South America, it also has multiple deep water ports and international airports. Mexico has trade agreements, including reduced tariffs and import quotas, reaching into over half of the continents on the globe.
Since the cost of living in Mexico is lower than the United States and Canada, many manufacturers choose to base their businesses there. Combined with the abundance of skilled laborers who can perform sophisticated technical tasks, Mexico has become a massive hub for international manufacturing.
The UP! Network Expands to Mexico
UP! recently expanded our revolutionary network to Mexico and Canada, covering the entire North American manufacturing market. We are excited to begin helping manufacturers in our neighboring countries find fast, reliable help for all of their machine tools needs. Read more about our expansion here.
If you’re interested in learning more about UP!, don’t hesitate to contact us and download the app today.