Mexico Cheaper than China for Manufacturing Appliances

Commentary by Doug Donahue

For all the attention on Mexico as the world’s fastest-growing manufacturing location for the automotive and aerospace industries, it can be easy to overlook the gains other industries have realized through a transition to manufacturing in Mexico.

Appliance manufacturing, transportation goods, computers and electronics, and machinery are all sectors that have seen significant production gains in Mexico, according to recent research by The Boston Consulting Group (BCG), as reported in Appliance Magazine.

BCG research indicates that in 2012 the average manufacturing cost in Mexico, adjusted for productivity, became less than the corresponding cost in China. Naturally, this puts Mexico in a great position to benefit from the new economic world order, thanks to its status as one of the most open trading partners on the planet.

Because exports represent about one third of its GDP, this shift is positive news for Mexico. At the same time, it’s also good for the US, since Mexican-made products contain four times as many US-made parts, on average, as those made in China.

Manufacturing Growth
Appliance manufacturing is one of the industries that BCG predicts will see greater production in Mexico in the near future. Due to Mexico’s inherent cost advantage and proximity to North American and South American markets, production in appliance manufacturing could grow anywhere between 7-19%, according to BCG.

Industries like appliance manufacturing have relatively high labor content, strict logistical requirements and solid existing manufacturing clusters in Mexico, according to BCG.

Source: Appliance Magazine

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