Wiring Harness News 2013: All Bets on Central Mexico for Manufacturing
This Wiring Harness News article featuring Entrada Group’s Doug Donahue looks at the particular benefits companies are seeing by transitioning to Central Mexico manufacturing.
There’s no doubting that wire harness manufacturing is an incredibly cost competitive industry. Low barriers to entry have encouraged a host of new market competitors coming from all corners of the globe. With margins tight and a significant amount of physical labor necessary in order to produce, wire harness manufacturers are sharply focused on keeping costs down in order to realize profits.
Unsurprisingly then, many have established operations in low-cost labor markets such as Honduras, Asia and Mexico. Mexico in particular has been a location of choice thanks in great part to its proximity to North America. But whereas in the early years large wire harness manufacturers flocked to Mexico’s Border States, midsize and smaller players are increasingly exploiting the higher cost benefits, less competitive labor environment, and lower turnover offered in the country’s interior.
US-based Entrada Group has been supporting overseas firms looking to establish a footprint in Mexico for the past decade. As a shelter provider with a 60-acre manufacturing park in Fresnillo, Zacatecas, located in Central Mexico, Entrada enables manufacturers – no matter their size – to setup shop without establishing a direct, in-country presence. What’s more, they are able to help their clients do this in as little as 10 weeks.
Once up and running, Entrada’s clients achieve lower year-over-year costs. Entrada offers key support services delivered through a shared services model, which allows manufacturers to further reduce and control indirect costs – both overhead and administrative – through economies of scale gained because they are all located in the same industrial park. This is good news for smaller operations; even if their Mexico operation only requires a dedicated workforce of 50-100, they can still enjoy the leverage of a 1,500 person operation.
“When small and midsize firms commit to establishing an operation in Mexico, they’re looking to secure mid- and long-term cost advantages. They want to be competitive today and in ten years’ time. That’s why Zacatecas is so attractive,” explains Doug Donahue, Principal and Vice-President Business Development. “In our experience, an efficient, well-managed wire harness operation that is leveraging Entrada Group’s service structure can achieve total Mexican operating costs as low as $4.50-$6.50 per hour.”
With such favorable conditions, the footprint of Entrada’s clients at its facility continues to grow dramatically – despite a challenging global environment.
“In 2009 our 11 clients employed 1200 workers. At the start of 2013, they more than doubled their workforce.Furthermore, three of these clients are in the process of making investments of more than $1 million each to expand their production capabilities,” explains Doug. “Again the flexibility and scalability of the model and infrastructure we offer enables manufacturers to grow their presence at apace well aligned with their mounting ambitions.”
In sum, Mexico’s proximity to the US and Canada, highly competitive cost structure, and transparency make it a winning location for low-cost manufacturing for North American markets. Scouting further, wire harness manufacturers find that in the center of Mexico, total operating costs are hands down the most competitive in North America.
Finally by relying on the Entrada Group model, manufacturers can secure even greater cost savings, whilst enjoying the opportunity to focus management attention where it truly belongs: running their core business.In an industry where the difference between staying ahead and falling behind is a matter of a few dollars per hour… wire harness manufacturers are doubling down on Central Mexico.
As featured in the March/April 2013 issue of Wiring Harness News