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Whitepaper: For International Manufacturers in Mexico, A Consistently Weakening Peso is Still a Competitive Advantage, For Now
Ever since Mexico’s Peso crisis of 1994, the value of the Peso against the US Dollar has been sliding. The result has been cost savings that benefit foreign manufacturers that are buying in Dollars or Euros.
For manufacturers considering setting up Mexico operations, the longtime trend continues to present a competitive to present a competitive cost savings advantage over other production locations.
But even though cost savings in overhead operations can be an attractive element to any supplier’s business plan when looking to establish an international production footprint, Mexico’s Peso fluctuations also bring operational concerns and complications that no manufacturer should ignore.
A newly released whitepaper examines this key area of concern and the benefits of Mexico’s manufacturing sector.
- Why the peso has weakened yet remained stable over time, inspiring confidence from investors
- How currency changes have strengthened Mexico as a producer for export in contrast to China
- Why a weaker peso favors international producers based in Mexico
- How geopolitical forces between the Trump administration and the new AMLO administration in Mexico may affect the exchange rate
- Why some currency-driven savings in Mexico may be more limited, and what every supplier needs to keep in mind when budgeting for an operation in Mexico
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More from the Whitepaper
The fact that Mexico’s currency decline has been relatively gradual—without too many wild swings in value—has further bolstered manufacturers’ confidence about the prospect of producing in Mexico, particularly when compared against alternatives.
Take China for example. Mexico’s competitive benefit predominately materializes in its labor costs. While huge growth in demand for labor in the manufacturing sector have increased wages in China’s factories in recent years, Mexico’s wages have remained much more attractive than China’s, because Mexico’s currency has continued to devalue, while China’s Yuan has increased in value.