Are Labor Rates in Mexico Still Competitive for Manufacturers?
02.19.25Labor rates in Mexico are where U.S. manufacturers can save the most, which is why nearshoring continues to be an impactful part of their global strategy. Though labor rates have slightly increased over time, compared to the U.S., the cost-effectiveness remains. The current hourly breakdown of Mexico labor costs for main production roles is:
- Non-Skilled: $6.29
- Semi-Skilled: $6.96
- Skilled: $8.22
- Line Leader: $9.65
- Production Supervisor: $22.02
- Process Engineer $25.08
- Buyer: $26.61
- Quality Engineer: $30.64
- Production Manager: $59.01
Based on this spectrum of savings, companies focused on making technical products, such as those in the medical device sector, aerospace, plastic components, metal fabrication, and electronics, benefit the most. Whereas, U.S. manufacturers requiring non-skilled workers for an industry like textiles or basic assemblies may find it less expensive to outsource production to China or try to fulfill the roles at home in America.
As part of a comprehensive scope of shelter services, IVEMSA can help manufacturers evaluate their labor costs in Mexico vs. the U.S. to determine a recruiting strategy that is most effective.
However, it’s not only the cost of labor in Mexico that should be considered when taking into account the value of nearshoring. Labor availability is also a factor to consider to determine whether it’s a viable, sustainable solution.
Availability of Skilled Technical Talent Provides an Extra Advantage
U.S. manufacturers are losing an entire generation of workers to retirement without adequate replacement from incoming talent. Research shows up to 3.8 million new manufacturing jobs may be needed in the U.S. over the next decade, with half going unfulfilled due to a lack of technical skill and a lack of employee interest from a younger generation.
Whereas, Mexico continues to provide a steady stream of industrial talent to fulfill the necessary roles needed for production. Data shows occupations with the highest number of manufacturing workers in Mexico include industrial machinery operators, assemblers and transport drivers, as well as supervisors of industrial machinery operators.
Plus, the average age of manufacturing workers is 35-years-old, helping companies build and maintain a strong, capable workforce to support all sectors. As an example, foreign direct investment in the automotive industry in Mexico has reached 7 billion USD with continual growth expected due to the rise of the global electric vehicle market. These types of technological advancements require technically skilled workers to meet the demand.
Consult IVEMSA for a Labor Cost Analysis
IVEMSA works with U.S. and other foreign manufacturers to determine estimated cost savings to help business leaders make informed decisions. This includes an analysis of labor and industrial leases, as well as the added value the set infrastructure of a shelter company provides.
While labor rates in Mexico remain competitive for manufacturers, factors such as a company’s size, workforce requirements, type of production or product being manufactured, and cross-border logistics all play a significant role in determining whether Mexico is the right location for your company. IVEMSA can assist in this evaluation and facilitate the due diligence process.
For more information about receiving a cost analysis and to explore the extent of the shelter services IVEMSA provides, contact our team today.
Sources:
https://www.economia.gob.mx/datamexico/en/profile/industry/manufacturing
https://www.statista.com/topics/7249/automotive-industry-in-mexico/