Mexico’s Labor Landscape: Top 6 Benefits for International Companies

Mexico’s affordable, available, and skilled workforce is one of the top reasons international companies are relocating or expanding their operations to the country. Recruiting and retaining talent, especially in the manufacturing industry, are top challenges for businesses today. Mexico offers a solution with its abundant pool of qualified workers. In this article, we will take a deep dive into the benefits of doing business in Mexico in relation to its workforce and give valuable insights that will allow you to better understand the world of human resources in Mexico.

Benefits of Mexico’s labor force

1. Productivity:

Over the past 50 years, Mexican workers have consistently demonstrated high levels of productivity. The country’s manufacturing sector has thrived due to the efficiency of Mexican workers and many multinational companies have established manufacturing facilities in Mexico to take advantage of its high productivity.

Several factors contribute to this superior productivity, including Mexicans’ strong work ethic, emphasis on collaboration and teamwork, and high adaptability. Their collaborative mindset often results in improved output and effectiveness. They are also diligent, committed, and willing to put in the necessary effort to meet deadlines and quality standards, quick to adjust to changing circumstances, and are resourceful in finding creative solutions to problems.

This advantage has led to an increase in exports and foreign investment. One of the industries that has benefited most from the efficiency of Mexican workers is the automotive sector. Its productive workforce has contributed to substantial growth in recent years, making Mexico one of the world’s largest automobile producers.

Overall, Mexican workers’ productivity levels are commendable, making it an attractive destination for businesses looking to streamline operations and maximize the use of resources.

2. Industrial culture

Part of this culture of productivity is tied to Mexico’s deeply-rooted industrial culture, which is especially prevalent in northern Mexico. This, added to the logistics advantages of its proximity to the United States, makes the region ideal for international businesses looking to establish their presence in Mexico. Northern Mexico’s industrial culture is supported by strong supplier networks, and local suppliers play a crucial role in providing raw materials, components, and services to businesses in the region.

Due to these advantages, northern Mexico has long been known as the country’s manufacturing hub, with a high concentration of manufacturing facilities in various sectors, including automotive, aerospace, electronics, and medical devices. The industrial culture in Northern Mexico is heavily influenced by the presence of these industries, which contribute significantly to the regional economy and have allowed for the development of a robust regional supply chain ecosystem. In addition, the maquiladora industry also plays a significant role in the industrial culture of Northern Mexico. The presence of maquiladoras has led to the development of over three generations of a skilled workforce with expertise in manufacturing processes and technologies.

The industrial culture in northern Mexico reflects its high degree of cross-border collaboration with the United States. There is a strong focus on quality, efficiency, and innovation to meet the demands of international markets, and businesses strive to optimize their processes, reduce costs, and deliver high-quality products in a timely manner. Lean manufacturing principles and continuous improvement methodologies are commonly implemented to achieve these goals.

3. Stability

Mexico’s turnover rate in the manufacturing sector is around one-third less than that of the United States, which is beneficial for businesses in terms of continuity and consistency. A stable workforce allows companies to build long-term relationships with their employees, fostering loyalty and commitment. This stability can result in improved productivity and a higher quality of work.

Mexico also has a history of strong labor-management relationships, focusing on open communication and collaboration. Collaborative labor-management relationships also encourage employee engagement and job satisfaction, fostering long-term stability within the workforce.

In addition to this, Mexico has a comprehensive legal framework in place to regulate labor relations and protect the rights of both employees and employers, providing stability and clarity for businesses and minimizing potential labor disputes.

The stability resulting from low employee turnover, collaborative labor-management relationships, strong legal framework, and union presence provides international businesses with a reliable and committed workforce, enabling them to establish a strong presence and succeed in the global market.

4. Labor effectiveness

One of the key advantages of doing business in Mexico is cost competitiveness and maybe more relevant is the quality of skills of the people in Mexico starting from operative and technical levels and of course professionals.

5. Availability

Mexico has a population of over 60 million economically active individuals, a median age of 28 years (compared to around 40 years in the U.S.), and, as of the first quarter of 2023, an unemployment rate of 3.0%. These statistics reflect the availability of a sizable pool of young and potentially skilled workers entering the job market. This demographic advantage means companies can gain access to a dynamic labor force that possesses specific skill sets, can be trained, and developed to meet specific industry requirements, and offers potential for innovation, creativity, and adaptability in the workplace. Overall, Mexico’s large and diverse labor pool provides international companies a valuable resource to support their business growth and competitiveness in the global market.

6. Highly skilled

Thanks to Mexico’s triple helix cooperation model between government, industry, and academia, workers and companies can access specialized technical training and education in engineering, IT, and logistics fields. The strong educational infrastructure in Mexico plays a vital role in shaping the productivity and success of the Mexican workforce. It ensures that companies have access to a qualified workforce with skills that match industry’s needs.

Mexico has several prestigious universities and technical institutes that offer engineering programs across a wide range of disciplines, including civil engineering, mechanical engineering, electrical engineering, chemical engineering, industrial engineering, and more. Many also strongly emphasize English language proficiency, meaning engineering graduates are equipped with the theoretical knowledge and practical skills necessary for their respective fields.

In addition to traditional universities, Mexico emphasizes technical and vocational education to bridge the gap between education and industry. It offers programs that provide specialized training in trades and technical skills and practical knowledge directly applicable to the workforce.

Furthermore, the Mexican government offers various workforce development programs to enhance the skills and employability of its workforce. Initiatives such as apprenticeship programs, internships, and collaboration between educational institutions and businesses aim to foster industry-specific skills and innovation, contributing to the development of a skilled and adaptable workforce.

In conclusion, Mexico’s combination of competitive, available and skilled labor force provides international businesses with a cost-effective solution without compromising the quality of work. Expanding your business to Mexico can be a complex and overwhelming process, especially when it comes to understanding the intricacies of foreign labor laws and regulations, making partnering with an experienced shelter provider like American Industries especially helpful. They will eliminate the learning curve related to adapting to a new set of labor laws, practices, and culture, ensuring companies can leverage the skills and productivity of the Mexican workforce to achieve their goals.