Mexico presents advantages for manufacturing companies in 2021
Last year (2020) was a tough one for all industries, including the manufacturing industry, as they had to lead with a significant reduction in income and sales and which led to many changes and need to adapt. Among the top industries affected are the automotive and aerospace industry, and service industries such as restaurants, hotels, etc.. Nevertheless, 2021 is a more hopeful year for most industries, including manufacturing.
The opportunities for the manufacturing industry in Mexico for this year
The pandemic challenged all industries, but it also presented an opportunity to analyze costs, ways of improvement, and to overcome changes. Which has led companies to search for alternatives, make better use of their resources and cut costs.
In which Mexico through its high skilled labor and competitive labor costs can play an important role.
Furthermore, the US and China trade conflict is still ongoing, as even though after several negotiations and that U.S. – China phase 1 trade deal was signed on January 13th, it cut some U.S tariffs on Chinese goods in exchange of China agreement to expand purchases of certain US good and services and address some U.S objections on intellectual property practices. But still, some of the imposed tariffs remain unchanged.
Therefore, additionally to the abovementioned, the challenges caused by Covid-19, the increased labor costs in China and the rising tensions in the South China Sea, have raised concerns about manufacturing goods in China and shipping halfway around the world, leading some companies to reconsider where to set up operational manufacturing facilities, and to look for other options including onshoring or nearshoring.
In addition to the fact that the current travel restrictions between U.S. and China due to pandemic have complicated the situation.
Mexico plays an important role in this field, as in 2019 and 2020, Mexico overcame China to become U.S. number one trading partner, and many foreign manufacturing companies have decided to invest in Mexico and establish manufacturing operations in the last years.
Companies have been considering establishing manufacturing operations in Mexico due to the different advantages it offers such as:
- Competitive labor costs
- Highly skilled labor force
- Proximity to US, which due to a similar time zone facilitate communication and travel and which leads to lower shipping costs.
- 13 Free trade Agreements with 50 countries
- Foreign Trade and Tax Incentive Programs, such as the IMMEX Maquiladora Program.
The above-mentioned are some of the advantages Mexico has been offering for manufacturing companies in the last years and which will remain in 2021. These are some of the benefits that had led manufacturing in Mexico to rise in popularity in the last 2 decades.
Are you looking to capitalize on the advantages of manufacturing in Mexico in 2021?
If you are looking to take advantage of the benefits Mexico offer for manufacturing companies, Mexcentrix can lead and support you in the complete process for establishing manufacturing operations in Mexico. Our shelter service offers full administrative and operational support including human resources, payroll, tax and accounting, foreign trade, customs, management IMMEX Program among others. Through our shelter program, our clients can focus on what they do best (production, quality, materials) and let us do what we do best.
Through Mexcentrix services, we ensure 100% compliance with Mexican law and regulations, and our clients can avoid unnecessary problems and costly mistakes. In addition, we offer ongoing consulting to keep our clients updated about any changes in applicable laws and regulations.
Furthermore, our specialized and highly qualified teams have helped our clients during these difficult times due to the pandemic, to implement measures designed to decrease the impact of the economic crisis in their operations and to be able to adapt in the most effective way.
For additional information regarding our services or if you need a cost model for your operations in Mexico, contact us.