Running Manufacturing Operations in Mexico can Save You Money – Mexican Manufacturing Labor Cost Review

It has become common knowledge in the industry of manufacturing that labor costs in Mexico are lower than that of China. As of April 2015, Forbes reported “Average manufacturing labor costs in Mexico are now almost 20 percent lower than in China.”

For over 60 years Mexico has been a manufacturing center for companies from around the world.  The reasons for this are wide-ranging and include:

• » Access to an abundant, educated labor pool
• » A strong pro-business environment
• » Strategic placement of manufacturing facilities to better serve customers with direct access to North and South America as well as Pacific Rim countries

Derrick Johnson, vice president of marketing for UPS said, “Mexico has a very well-educated workforce, graduating 230,000 engineers every year, that have the expertise to produce more technical products, like the aerospace industry.”

Mexico is also the second-largest producer, after China, of goods considered to be “high-tech, high-value” such as computers, cell phones, and gaming consoles.

Productivity is generally higher in Mexico as well, with a 48-hour workweek being typical (before overtime is required) vs. the 40 U.S. hours per week. When compared to overall lower operational costs, and increased productivity, the labor rate is an even better value.

All reasons stated, one benefit stands out in particular: cutting costs in an increasingly competitive global economy.  The Mexican Manufacturing Cost Fact Sheet below outlines a number of the potential cost savings for manufacturers who are considering setting up and running operations in Mexico.

Labor Costs

Below is a general outline of average monthly wages for typical manufacturing personnel.  All numbers are in U.S. dollars.*

Is setting up a manufacturing operation in Mexico the right step for your company?  Only you can make that decision.  But if cutting costs or moving operations from Asia to a more strategic location is a factor in your growth, Mexico is an option that deserves to be considered.

For a more detailed analysis of cost savings in your particular situation, contact Rebecca Amroian raamroian@ivemsa.com.

*SEDECO Baja California