Mexico Labor Rates Offer Huge Cost Savings

For years, Mexico has attracted foreign businesses mainly because of its competitive labor rates. For example, the average hourly wage for production operators in Mexico is about $4.90 (USD) per hour. Even skilled laborers, like production engineers, receive a much lower income compared to the U.S. because Mexico’s cost of living is lower. IVEMSA has found that, on average, businesses see a 40 – 50% savings in labor costs in Mexico.

What Makes Mexico's Labor Rates Competitive

Mexico has long offered competitive labor costs, especially compared to the U.S., but what’s remarkable is that labor rates in Mexico have stayed relatively low while the quality and complexity of the products manufactured there has increased. Plus, because Mexico has a 48-hour work week (before requiring overtime pay), productivity is generally higher than in the U.S.

Average Wage in Mexico

The average base salary for an entry-level manufacturing worker in Mexico is approximately $4.90 (USD) per hour, well below the average federal U.S. minimum wage of $7.25 (USD) per hour. Additionally, for skilled workers like machinists and welders, Mexico is approximately $7 - 8 (USD) per hour, compared to an average of $20 - 22 (USD) per hour for similar positions in the U.S. Because Mexico’s average cost of living is lower than the U.S., it’s a win-win all around.

Labor Rates in Mexico Mean Lower Operating Expenses

The cost savings keep adding up when you figure in the lower expenses for rent and utilities. Undeveloped sites are available throughout Mexico, but because manufacturing has been such a major part of the economy for so long, there’s more than enough industrial facilities to go around. Most of these are Class A facilities that are in gated industrial parks or secured, stand-alone buildings.

Leasing rates range from $0.45/square foot to $0.70/square foot, depending on the class of the building (Class A, B, and C are available) and its location.

What Is a Mexico “Shelter”?

The shelter program in Mexico is designed to reduce risk and liability for foreign companies. Instead of setting up your own legal entity in Mexico, you can run your manufacturing under one owned by IVEMSA. We’ll handle all the permits and licenses, lease your facility, and take care of administrative responsibilities like HR and accounting. You get to focus solely on manufacturing and will maintain complete control over your processes and production.

 

Learn more about IVEMSA’s shelter program >

DID YOU KNOW?

Businesses can save up to 30% on labor costs by manufacturing in Mexico?

Download our free Mexican Manufacturing Cost Fact Sheet to learn how much you can save on labor, real estate, utilities and more.

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Reduce costs.
Retain quality.
Gain peace of mind.

Contact us today and see how we can help you take advantage of all the benefits of manufacturing in Mexico - without the hassle.