Guanajuato Region: High Production Capacity and Competitive Labor Costs
By Gerardo González | Guanajuato Regional Director at American Industries Group®
The Guanajuato region, located in Mexico’s geographic center, has long been at the heart of Mexican industry. Over the last few decades, its local supply chains have developed into a consolidated network that offers both high production capacity and responsiveness for a wide variety of processes in many industries. In addition, its location is privileged for Mexico manufacturing. The area provides easy access to both local markets, at only a few hours from the country’s two largest population centers of Mexico City and Guadalajara, as well as easy access to the main highways, rail, and airports for international trade.
The area’s logistical advantages and ability to depend on local suppliers allow companies to reduce transport costs, ensure the reliability and timeliness of deliveries, and lower logistics costs overall. Having an entire supply network within a single area and in a similar time zone to the United States offers companies engaging in nearshore or offshore manufacturing in Mexico, and specifically the Guanajuato region, the advantages of being more agile and responsive to changes in demand.
With many companies now focusing on consolidating supply chains as they increase production again after the losses experienced due to the pandemic, a greater focus is being placed on ensuring business continuity through managing and reducing risk. By starting up operations in Mexico, companies are well-positioned to reduce not only the risk of the supply chain and logistics problems plaguing global industry recently but also ensure the availability and costs of critical components. Over the past two years, the price of raw materials traded in USD increased by 50%. The ability to purchase these supplies and parts locally in the Guanajuato region that are well-established and already manufacturing in Mexico will avoid the risk of these types of significant price fluctuations.
All these advantages have attracted some of the world’s biggest OEMs to the Guanajuato region, making it the most consolidated area in the automotive industry in Mexico. All of the area’s advantages, in addition to the greatest concentration of OEMs in the country, have attracted four of the world’s largest automakers to the region: Mazda, Toyota, Honda, and GM.
Another reason starting up business in Mexico has allowed these companies to thrive and grow is the region’s ample, skilled, and affordable labor force. Labor costs in the area are competitive, even within Mexico, due to a large economically active population. In addition, its distance from the US border ensures it doesn’t compete with US labor prices, where the minimum wage has increased by 22%.
By partnering with a provider of shelter services in Mexico, companies gain the additional advantages of eliminating the learning curve (meaning savings of time and money) when starting up operations in Mexico. They get immediate access to a broad network of industry chambers, associations, government, and suppliers, as well as decades of on-the-ground experience in all administrative support services, including locating the right talent for their specific operations and retaining them through attractive benefits packages that are a win-win for companies and collaborators.
If you are interested in finding out more about the benefits and costs of expanding or establishing operations in the Guanajuato region for your company, reach out today to schedule your free business case analysis.