3 Fundamental Areas Driving the Growth of Nearshoring

Nearshoring to Mexico plays an important part in a successful business strategy for U.S. manufacturers. According to the United States Trade Representative, Mexico was the second largest goods export market in 2019 for the U.S., totaling $256.6 billion.

As foreign investments continue, maintaining a strong industrial workforce will prove beneficial for both countries. There are three key areas that have supported the consistent growth of manufacturing in Mexico over the years:

• Diversity of the industrial base in Mexico
• Country’s investment in education and specialized training
• Experience and expertise with implementing modern technology

These factors create a competitive landscape that allows U.S. manufacturers to receive high-quality production at a cost-effective labor rate in a time-efficient manner.

Diversity of the Industrial Workforce

The roles required for manufacturing jobs across all sectors, including aerospace, automotive, and electronics, among others, require a base of industrial workers just as broad. Nearshore services roles range from skilled operators to production supervisors to QA engineers, each calling for a specific skill set and training.

To get an idea of the cost savings of labor compared to similar roles in the U.S., a competitive rate for a skilled operator is $1,105 per month or $5.31 per hour. This amount reflects a fully burdened salary, including mandatory and competitive market benefits and taxes. A production supervisor takes home a monthly salary of $3,132, which breaks down to $15.06, and a QA engineer expects to make approximately $4,200 per month or $20.20 per hour.

As manufacturing research and development continues in the U.S. for new product lines, such as electric-powered vehicles and AI-based electronics, the demand for well-trained industrial workers in Mexico will continue to be a factor in expansion.

Read more: Why companies are reshoring to North America.

Mexico’s Investment in Advanced Education and Specialized Training

The link between the industry, academia, and government supports the rise in demand required to fulfill production needs. Mexico’s industrial base nearly doubled from 2009 to 2015, increasing graduate numbers from 60,000 to almost 114,000. Now, on a yearly basis, over 110,000 new graduates in the manufacturing and engineering fields enter the workforce. The consistent number means there’s a steady pool of workers to choose from as manufacturers continue to expand.

Many global companies have manufactured in Mexico for years with great success, and more are considering this as a viable option headed into the future. Whether it’s diversifying their portfolios to limit trade with China or setting up an operation for the first time, there are plenty of advantages of nearshoring to Mexico, the availability of a reliable, skilled labor force is only one of them.

Read more: Top reasons companies choose Mexico manufacturing.

Experience and Expertise with Using Modern Technology

New technology is a major factor shaking up the manufacturing industry and driving its growth. Automation, robotics, and the Internet of Things (IOT) are a few of the main changes allowing companies to streamline their supply chain and provide information more swiftly and accurately. In order to maintain a high level of quality assurance and keep up with the demand in a timely way, knowing how to implement and optimize these technologies has become essential among workers at all levels.

Manufacturing teams that can run without interruption in a seamless manner become a crucial element in the success of manufacturers’ ability to get products to market and maintain their place among their competitors. The skilled diversity of and investment in Mexico’s industrial workforce combined with its up-to-date experience with the newest technology to improve workflows show how manufacturing in Mexico continues to thrive and evolve.

Nearshoring to Mexico is not a new concept, but it’s one that has advanced and adapted to changes to remain a crucial business strategy as production demands have increased.

For more information about the advantages of nearshoring to Mexico, contact IVEMSA today.

Source:
https://ustr.gov/countries-regions/americas/mexico