Mexico Manufacturing Gains From Chinese Labor Costs
Mexico Manufacturing continues to gain from Chinese manufacturing’s rising cost to world markets. As China stimulates wage increases in an effort to grow its middle class,Mexico manufacturers have stabilized or reduced wages while increasing skilled labor capacity. What’s more, it is expected the secular trend in China will continue to invigorate Mexico’s attractiveness for the U.S. and Latin markets for years to come as Chinese wages increase by 5 – 7% annually through at least 2012.
Other factors elevating Mexico manufacturing’s profile include an ever stronger automotive production capacity, among others, along the U.S.-Mexican border. The Maquiladoras that previously were associated with low cost, low skilled production now have upped their value game to such a degree that Volkswagen will produce its Jetta model exclusively from their Mexican plant. Factor in negatives of high oil prices and higher duty expenses from China (and Brazil), in combination with NAFTA’s more streamlined customs process, Mexico will continue its increase in value chain benefits when compared to rising Chinese overall costs.