#1 Near-shore Choice Remains: A Manufacturer In Mexico
While 35% of C-level executives still prefer U.S. as the best choice for manufacturing, nearly half still choose a Manufacturer in Mexico as the first choice in near or off-shore destinations, according to AlixPartners annual survey. This is consistent with last year’s survey as well, where Asia remains less attractive due to rising labor and shipping costs from China and other distant manufacturing hubs. The survey further suggested (34% of executives) that rising domestic demand in emerging markets like China, where internal consumption instead of exports is on the rise, make a manufacturer in Mexico look more advantageous to near-shoring or re-shoring. AlixPartners’ managing director, Foster Finley, also commented that “a lot has been written of late about America’s manufacturing rebound, and there certainly has been a very impressive rebound; however, Mexico still remains the near-shoring locale of choice for companies looking to overcome the higher costs of doing business today in places like China.”
Time and expense also play a role. The survey further suggested that companies don’t want to wait three to four weeks for goods to travel the oceans (31%), not to mention the increased expense (34%). With a manufacturer in Mexico, both speed-to-market and costs are dramatically reduced due to proximity to U.S. markets. And while security remains a concern, 43% of executives indicated that they expect ‘modest improvement’ for a manufacturer in Mexico. Plus, with help from security consultants and advisors, risks can be effectively managed and minimized.