Exploring Mexico’s Solutions for U.S. Industrial Labor Demands

Lack of qualified industrial labor continues to plague U.S. manufacturers. With the influx of production demand due to the CHIPS and Science Act, as well as the Inflation Reduction Act, there are a rising number of opportunities available, though not enough employees to fulfill them.

Labor shortages have been a hurdle for U.S. manufacturers for the past several years. The Bureau of Labor Statistics reported over 450,000 manufacturing job openings as of October 2024. And, according to the National Association of Manufacturers, more than 71% of surveyed manufacturers cite an inability to attract and retain employees as their primary challenge.

The decline in industrial labor availability is partially due to a demographic of manufacturing workers who have retired without replacement. Moreover, with the shift toward the automation of repetitive tasks, it makes the demand for employees with an enhanced skill set even greater.

Without an adequate workforce with the skills necessary for the industrial roles waiting to be filled, many U.S. manufacturers have begun to look to Mexico for solutions.

Mexico’s highly skilled, cost-competitive labor force

Mexico has a long history of investing in the manufacturing industry. Through specialized education and collaborative training programs, it maintains a steady pipeline of engineering graduates and industrial employees.

Furthermore, with the proximity to the U.S., as well as the cost-competitive labor rates, hiring labor in Mexico has become part of a long-term growth strategy for manufacturers. However, increased demand has also resulted in increased competition, which U.S. and other foreign manufacturers must prepare for accordingly.

Edging out competition to hire top-level workers

The availability of industrial labor in Mexico is a valuable resource for U.S. manufacturers needing to fulfill important roles. To obtain top-level talent, there are a few best practices to keep in mind when recruiting and retaining workers. These include:

1. Evaluate wage and benefit expectations: Though hourly wages are lower than what’s reflected in the U.S., the common benefit package employees in Mexico expect exceeds the typical standards of U.S. employers. These include but aren’t limited to productivity bonuses, paid vacation days (in addition to standard paid time off), Christmas bonus, and company events, as well as other meal and transportation stipends.

2. Gain clarity regarding severance: Severance is also handled differently in Mexico than in the U.S. For instance, there is a 90-day severance that applies when an employee is fired without justification. It’s important to work with the HR leader on gathering the needed evidence to prove the reason(s) for termination, such as a lack of performance or discipline assistance, to name a few. This process needs to be handled correctly so you can have a strong case against the employee.

3. Partner with a shelter company: A Mexico shelter company has experience working with the local labor market to know what’s necessary to attract and retain top talent. Shelter services also extend to include other administrative tasks, including HR and payroll, as well as taxes, accounting, and trade compliance.

Fulfill Production Roles with Shelter Company Support

The cost-competitiveness of industrial labor in Mexico has been an alluring factor for manufacturers for decades. To compete with growing demand, a Mexico shelter company can help companies fulfill their employee needs and scale for growth.

Learn more about how shelter services in Mexico can benefit your business goals. Contact IVEMSA today.

Sources:
https://www.bls.gov/news.release/pdf/jolts.pdf
https://nam.org/wp-content/uploads/2024/01/Outlook-Survey-December-2023-Q4.pdf