Mexico Excels in Another Manufacturing Competitiveness Index

Commentary by Doug Donahue

Boston Consulting Group (BCG) recently released its latest Global Manufacturing Cost-Competitiveness Index, exploring the top 25 exporting economies in the world, which combine to also account for 90% of the global export of manufactured goods. The US and Mexico were labeled the study’s “rising stars,” fueled by stable wage growth, sustainable productivity gains, steady exchange rates and sizable energy-cost advantages. Indeed, in Mexico’s case, lower average manufacturing costs than in China are also a huge advantage.

As reported in Industry Week, the BCG study examines four key economic factors: wages, productivity growth, energy costs and currency rates. Mexico fares well across all factors, even considering that energy costs in Mexico are higher than those found in the US.

It’s important to point out that this study is based solely on cost competitiveness. It doesn’t factor in the aspect that makes Mexico arguably the most attractive manufacturing location in the western hemisphere right now – opportunity. With the most free trade agreements in the world, Mexico is the ideal hub for manufacturing products destined for export to not just North and South America, but also to Europe and Asia. That opportunity equates to growth prospects that other low-cost locations can’t match.

Importance of Regionalism

As BCG’s Harold Sirkin points out in the study, many companies are making manufacturing investment decisions based on a “decades-old worldview that is sorely out of date.” Of course there are expensive and affordable countries in nearly every region of the world now. Heck, there are high- and low-cost CITIES all over the world.  So the notion of being able to shift production to a single location for low-cost production to serve the entire world just isn’t reality anymore. Companies need multiple hubs in strategic, cost-competitive areas of the world.

Source: Industry Week

 

« Return To Library