Central Mexico Ideal Location to Produce for Growing Mexican Market
Commentary by Doug Donahue
I thought this recent blog post in The Economist did a good job of drawing attention to the growing Mexican middle class, which is less likely to feel the need to emigrate northward in search of prosperity due to growing opportunity at home.
While I agree the growth of Mexico’s middle is an important trend, I also want to elaborate on an additional point the author failed to mention in the post, with respect to Mexican manufacturing. As a result of Mexico’s growing middle class, the country is now more desirable as a market for foreign manufacturers who set up operations locally. It’s a perfect example of the motivation for both OEMs and suppliers to transition to manufacturing in Mexico – they make the move here not just for low-cost labor but also for the opportunity to penetrate new markets and realize topline growth.
I’ve seen this myself from the clients and prospects of Entrada Group, who see a transition to Mexico manufacturing as a win-win: cost-competitive manufacturing and the chance to win new business in the local market. Further, central Mexico in particular is desirable due to its strategic location in the heart of the country, proximity to large population centers and abundance of low-cost labor.
Mexican Middle Class Has More Options Now
Our prospects who visit central Mexico for tours often ask me where is the best location to setup operations. That depends on many factors, of course, that are too numerous to get into here. But one thing I’ve noticed in the past 5-10 years is that places like Querétaro and Leon are getting more business and seeing more investment because they are more pleasant and livable. Middle class Mexican workers seeking opportunities don’t have to automatically go to the border or Mexico City to get a job and have a good standard of living. It’s eminently possible to live a pleasant, middle-class life away from those locations as opportunities are more abundant in the interior. Twenty years ago, that wasn’t the case. Middle class workers seeking opportunities first had to go to the US for work. Then the jobs transitioned to the border on the Mexican side. But now, good, middle-class jobs can be found throughout the interior.
Source: The Economist