Why Near Shoring Makes Sense for the Mexico Manufacturing Industry
By Doug Donahue
Rising fuel costs are just one of the reasons that manufacturing in Mexico is becoming more attractive to the aerospace and other industries. Steadily rising and unstable fuel costs are making Mexico desirable for manufacturers that want to take advantage of proximity to the US market and its supporting supply chain.
With fuel costs – equalized for inflation – rivaling levels not seen since the Mideast oil embargo of the 1970s*, it’s no surprise that manufacturers are seeking alternatives. Companies hailing from industries as diverse as aerospace, automotive, medical devices and many more are taking advantage of geography by opting for manufacturing in Mexico. By choosing Mexico for their nearshoring of manufacturing, they are softening to some extent the effects of fuel prices that are not only rising but can be highly volatile.
In comparison to offshore locations in Asia, for example, companies preferring manufacturing in Mexico are benefitting from established port, road and rail distribution networks into and out of North America, helping mitigate the effects of ever-rising fuel prices. Entrada’s Mexico manufacturing location in Fresnillo, for example, is close to the US and Canadian markets and in the center of the Mexico manufacturing heartland. Located within a 6-7 hour drive to Laredo, Texas and the US/Mexico border, Entrada’s nearshore manufacturing facility brings clients within direct proximity to American and Canadian end-consumer markets. It’s also a short flight from large US cities and Mexico City.
Further, the country’s stable government and tradition of longstanding democracy also contribute to making nearshore manufacturing in Mexico attractive for companies, whether they are situated in the US, Canada or Europe. Stable governments mean stable markets, whether for fuel or labor or transportation. This gives Mexico, and companies setting up locations there for manufacturing, a competitive advantage in the race to keep transport costs down.