Boston Consulting Group Highlights Mexico’s Manufacturing Strengths (Part One)
Does Mexico offer manufacturers the best combination in the world of location, productivity and cost-effective operations?
Global management firm Boston Consulting Group (BCG) certainly seems to think so, based on a recent report examining a wide variety of essential factors for manufacturers worldwide.
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As the chart below depicts, Mexico stands out for cost-competitiveness among the world’s highest-exporting manufacturing nations.
Here’s what we found most noteworthy about the strengths of Mexico manufacturing, based on BCG’s analysis in the chart above:
- Mexico is the 13th-largest exporter in the world among the full set of 34 nations BCG analyzed (note that our chart above shows ten nations among the top 34, based on the highest-exporting nations in the world and their most common low-cost country counterparts)
- Mexico is the second-most cost-competitive manufacturing export nation (only Indonesia fared better for affordability)
- China is the world’s top manufacturing exporter, but operating costs there are creeping ever higher. On average, production costs in China now outpace Mexico. It’s further worth noting that production costs on China’s coast (the Yangtze River Delta region), are higher still (95 vs. 93, compared to 86 for Mexico), according to BCG.
- BCG’s analysis excludes transport and logistics costs. When those costs are thrown into the mix for China, in particular, Mexico looks even more attractive as a production location for U.S./Canada export.
- U.S. is the third-largest manufacturing exporter in the world, with a baseline cost score of 100 in BCG’s index. Yet it’s crucial to point out that BCG based U.S. production costs on southern U.S. states only. If the data included nationwide costs, Mexico would look even more like a relative bargain.
- For proximity to the U.S. market, no country can match Mexico for export value and affordability.
Check here for part two of this blog post, which delves into BCG’s analysis of Mexico’s strengths as a regional production hub for North America export.
Source: Boston Consulting Group