Pros and Cons of Starting Wire Harness Manufacturing Operations in Mexico
Looking at expanding your wire harness manufacturing operations to Mexico? The country offers very cost-competitive production, in addition to several other manpower advantages. Of course, there are challenges you may encounter in your Mexico production facility too. But with a little knowledge and the right Mexico partner, those can be overcome.
Wire Harness Manufacturing Operations
What are Mexico’s Strengths?
Wire harness manufacturing operations and Mexico are a natural fit, due to the country’s cost-competitive labor. According to Boston Consulting Group, Mexico is among the world’s top 15-highest exporting nations. The wire harness market is expected to grow at an annual growth rate of nearly 5% through 2022. This makes Mexico – with its labor, production capacity and accessibility to OEMs and Tier One suppliers an attractive host.
Another strength rests in simple geography. Mexico has such a strong advantage over China, in particular, because of its close proximity to the United States and Canada. Freight can be trucked out of Mexico’s interior states and arrive at the US border within a single day. That’s another reason why light products like wire harnesses are a good fit in Mexico.
Availability of labor is another advantage wire harness manufacturing operations enjoy in Mexico. In Zacatecas, where Entrada Group’s manufacturing campus is located, there are currently more than 7,000 highly skilled workers at numerous manufacturing facilities conducting wire harness assembly.
Wire harnesses are deployed in numerous industries. The automotive sector in Mexico is one that stands out due to abundant growth opportunities. Greater acceptance of electric vehicles (EVs) is driving the automotive wiring harness market. EVs require greater use of electronic segments, in comparison to traditional cars. Tax cuts and incentives to promote EVs will further boost the wire harness sector. This demand will boost the automotive wire harness market to be worth over $78 billion by 2026, according to projections.
Even with myriad such advantages, Mexico does pose a few challenges for wire harness manufacturing operations, mainly in workforce retention and cultural integration. For instance, even though there is a large pool of talent, many wire harness-producing companies face high turnover, chiefly due to the competitive nature of today’s manufacturing landscape in Mexico. For example, Telamon (an Entrada Group client), experienced explosive growth in its facility at our Zacatecas manufacturing campus, leading to high turnover. Our yearlong analysis led to substantial recommendations, changes and workplace improvement investments (which you can read more about here).
Providing an attractive work environment with numerous benefits also is paramount for succeeding in today’s Mexico manufacturing sector. But many companies can’t overcome this challenge. For those that don’t – especially international firms that try to only replicate the work and business environment from their home base and do not take into account the cultural or business variances of Mexico, they tend to lose out on top-tier workforce talent, as well as new business opportunities.
In summary, launching wire harness manufacturing operations in Mexico will enable you to lower your overall operating costs. These cost savings can be passed along to price-sensitive customers and can make you more competitive when seeking new business. It’s important to be aware of the challenges inherent in Mexico manufacturing, and to optimize both the management team on the ground as well as the direct labor force that will spur your growth in the country.