Manufacturing in Mexico is becoming increasingly attractive for international companies for various reasons, including its proximity to the U.S. market, which allows businesses to drastically reduce logistics costs and increase responsiveness, as well as the tariffs savings, and legal certainty it offers for intellectual property. Other reasons are the availability of skilled personnel and affordable labor rates in Mexico, as well as mature supply bases and an established soft-landing culture.
Though companies in a wide range of industries are currently finding success manufacturing in Mexico, some of the industries with the most process capabilities and robust supply chains include: automotive and auto parts; medical devices; electronics and electrical equipment and components; aerospace; home appliances; plastics; textile and clothing; and furniture.
In this article, we will discuss:
The automotive and auto parts industry in Mexico has a long history and is currently one of the country’s largest and fastest-growing sectors. As the largest supplier of auto parts to the United States, the fourth-largest exporter of vehicles globally, home to 21 of the world’s leading automakers and over 600 tier-one suppliers, Mexico has well-developed supply chains with a wide range of processing capabilities located across the country.
In addition, provisions in the recently-enacted USMCA will allow auto parts to move more freely across North America and encourage the further development of more integral supply chains, making now the perfect time for companies in the automotive industry to establish or expand manufacturing in Mexico.
The aerospace sector, valued at US 6.22 billion, is another one of Mexico’s fastest-growing industries and currently represents nearly half of all foreign direct investment made in the country. Over the past 20 years, more than 300 companies in the sector have set up in Mexico, including key OEMs such as Honeywell, Cessna, Beechcraft, Textron International, Bombardier, and Airbus.
This growth has contributed to the development of aerospace hubs with the infrastructure and educational foundation to support maintenance, repair, and overhaul (MRO) projects. Soon, this industry will have the ability to make a final assembly line and take off an aircraft entirely made in Mexico. Mexico’s aerospace hubs are located in Chihuahua, Querétaro, Jalisco, Nuevo León, Baja California, and Sonora. They support various processes and the ability to manufacture nearly every component of a plane, including turbines, fuselages, wire harnesses, seats, and lighting solutions.
In 2020, Mexico’s production of medical devices was valued at US 14.6 billion and growing, making it the leading exporter of medical equipment and devices to the United States and the seventh-largest in the world. The industry is expected to continue increasing due to the ongoing trend to make supply chains more agile, diverse, and less dependent on China. Thanks to USMCA provisions, processes for importing medical and pharmaceutical production are becoming more streamlined and regulatory compatibility more harmonized.
Mexico’s proximity to the U.S., one of the largest consumers of medical devices globally, allows firms to respond quickly to changes in demand and reduce inventory costs. In addition, Mexico already has standards that are very closely aligned to those in the U.S., as well as a solid supplier base in the sector, especially in the states of Nuevo León, Coahuila, and Chihuahua.
There are many reasons to start looking at the advantages manufacturing in Mexico can have for your company in many industries. If you would like to learn more about specific capacities, Mexico labor rates, or industrial real estate Mexico, contact American Industries and look out for part II where we will discuss the electronics and electrical equipment and components, home appliances, plastics, textile, and clothing, and furniture sectors.