Mexico Manufacturing: The Ups & Downs Of Outsourcing And Near-shoring
Mexico Manufacturing saw rapid growth in the early 1990’s and again in recent years. Benefits in outsourcing and near-shoring have continued to increase for small, mid and large sized corporations looking to trim costs and increase profits. Mexico manufacturers can offset other cost factors for U.S. companies, thereby increasing profits. Common benefits include:
- Lower taxes, reduced labor costs resulting in overall cost reduction
- Faster time to market
- Risk mitigation
- More efficient capacity management
While American sentiments are conflicted about the business practice of ‘foreignization’ or outsourcing, it is likely the trend will continue for functions that benefit certain services.
At what price and under what conditions will Mexico manufacturing continue the heretofore growth in the face of some perceived and actual economic shifts? Concerns in the following categories, should be taken into account when conducting any cost/benefit analysis for an outsourcing strategy:
- Proximity and time zone issues
- Security issues
- Service quality
- Cultural barriers including language
- Imposed governmental policies or restrictions
Since the advent of ‘cloudsourcing’ and with some companies operating and/or outsourcing services such as manufacturing and call centers, etc. and with a public perception issue that is mixed, it is likely there will be some cooling of the trend. Additionally, as the global economic environment continues to create greater equities between countries, the benefits may stabilize in favor of a ‘return home’ practice scenario. Yet near-shoring is likely to increase in Mexico manufacturing as long as return on investment reaped from cheaper labor, time-to-market savings, and efficiencies of scale remain advantageous.