Companies Manufacturing In Mexico Press Chinese Dominance

In the main, Companies Manufacturing In Mexico are experiencing a tipping point juxtaposed against the previous 20-year dominance by Chinese exports.  Where once Mexico manufacturing was hard hit by China’s cheap labor, that is no longer the case.  In fact, strong economic growth fueled in part by rising per capita incomes in China has included wage increases, with a staggering 22% in 2011 alone.  This shift results in a dramatically smaller wage differential of only 15% between the two countries.  Combine wage increases with higher oil prices and significant distances Chinese products have to travel, companies manufacturing in Mexico offer ever greater competitive manufacturing advantages.

Additional factors elevating the Mexican advantage over Chinese manufacturing is the substantial development of more sophisticated production within Mexico.  This is particularly true in the maquila industrial sector, which is now focusing on technologically advanced production.  Companies like Goodrich and Bombardier, among numerous others, are currently expanding manufacturing investments along the border corridor between the U.S. and Mexico.  Companies manufacturing in Mexico still have their challenges, however.  Security is one such challenge, real and perceived, as well as insufficient border crossing capacity that often slows the $1 billion worth of goods that experiences long waits into the country.  Still, progress has been made most recently in the U.S.-Mexican trucking agreement reached, which should ameliorate some of the transport problems.

Source: http://blogs.cfr.org/oneil/2011/11/29/signs-of-mexico%E2%80%99s-ascendance-versus-china/


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