Logistics and Labor Costs Remain Key Advantages of Manufacturing in Mexicali

Mexicali is arguably one of the most strategic locations for foreign companies interested in Mexico manufacturing. It has several regional benefits as a thriving industrial hub and is known for fostering innovation in the aerospace, automotive, medical device, and electronics sectors.

Though every manufacturer has its own criteria when choosing a site to set up production, here are the main reasons why Mexicali continues to top the list.

Logistics Lead the Way

A strong local manufacturing presence has ensured access for U.S. and other foreign manufacturers to receive the resources they need to launch and scale production. Included in this broad category of logistics are three specific advantages: proximity, supply chain stability, and transportation.

Proximity

Mexicali is conveniently located along the California border which provides quick access to U.S. and Canadian markets. It’s also easier for production managers to schedule site visits, enhancing quality control and ensuring all processes are running smoothly.

Supply Chain Stability

With the history of success of manufacturing in Mexico in this border city, there is a steady and diverse stream of suppliers that cater to different sectors. Additionally, with the adoption of advanced manufacturing technologies, innovation in these areas continues to grow and remain competitive.

Transportation

The close proximity to the U.S. market reduces transportation costs and lead times. These savings can then be poured back into other areas of growth and improvement. Furthermore, Mexicali is also situated close to major ports, helping to facilitate the convenient import and export of goods to other countries as well.

Reduced Costs in All Areas

The high demand for manufacturing in Mexicali and other regions of Mexico is also due to competitive labor costs. Furthermore, when working with a shelter company, U.S. and other foreign manufacturers also receive specific tax-savings benefits as well.

Lower Labor Rates

Compared to the U.S. and other countries, there are lower labor rates in Mexico without the compromise of quality and availability of workers. For decades, Mexico has invested in its technical talent and graduates tens of thousands of engineers every year.

Also, many of the country’s universities and technical schools collaborate with foreign manufacturers to set up training programs for skill level and job role fulfillment needed for production.

Tax Exemption

Mexico also offers the unique advantage of working with a shelter company. A shelter company handles all administrative responsibilities necessary for setup. Plus, manufacturers that partner with a shelter automatically receive a 16% value-added tax (VAT) exemption on all temporarily imported goods, and materials, representing significant cost savings.

Trade Benefits

Meanwhile, USMCA rules provide incentives for those operating within the North American trade bloc, which also streamlines regulatory procedures and fosters a collaborative environment for business growth.

Adding a Shelter Partner As Part of Your Strategy

Overall, manufacturing in Mexico provides numerous advantages for international companies wanting to expand production. Mexicali is just one of the many established areas to choose from that has the infrastructure manufacturers seek.

By partnering with a shelter service provider, manufacturers gain local insight and expertise regarding manufacturing best practices to save time and costs without compromising quality or ownership.

To learn more about Mexico manufacturing and which area would best suit your production needs, contact IVEMSA today.