Mexico has undoubtedly risen to become a strong force in the manufacturing world, home to hundreds of manufacturing plants, some of which are the largest suppliers in the world. Cities including Tijuana have expanded in the electronics space in particular. The automotive and aerospace industries have also exploded in Mexico, resulting in a drastic increase in manufacturing plants from Mexicali down to Puebla.
Why more jobs in Mexico means more jobs in the U.S.
The competitive nature of the manufacturing industry has created an environment of fear in the U.S. Some view the expanding job market within the close proximity of Mexico as a threat to the U.S. economy as jobs are being taken away from our turf – something we are protective over. What is often overlooked when we experience an influx of jobs to an outside market is the promotion of jobs within the U.S. that actually occurs in turn.
In order to stay globally competitive, some U.S. manufacturing companies must move certain jobs to “lower-cost” manufacturing countries, such as Mexico, where hourly wages are lower than that of the U.S. The majority of these jobs consist of general assemblers and machine operators. The expansion of large manufacturing plants more recently in Mexico has allowed streamlined manufacturing processes and an increase in skilled engineering workers. By moving these jobs to somewhere like Mexico, it strengthens the foundation of the U.S. company, which ultimately leads to new jobs in their U.S. facilities, such as R&D, engineering, sales, marketing, and other professional positions that are different than the production jobs that have relocated to Mexico.
Nearshoring for a more local supply chain
The United State’s close proximity to Mexico means less money spent on importing goods from countries further away, promoting a more “local” supply chain. For one, importing and exporting goods between the U.S. and Mexico is more cost effective than the costs incurred from the same process between the U.S. and China. Raw materials including plastics, metals, and chemicals that are made in the U.S. are more and more often exported to Mexico over China, which promotes jobs in the U.S. versus China. The relative distance between Mexico and the U.S. means an opportunity for the U.S. to supply these raw materials over other countries, while China’s need for these products may not equate the U.S. as the first choice supplier.
Furthermore, when American companies relocate their manufacturing from Asia to Mexico, the manufacturing plants are typically located along the border of Mexico, which promotes “cross-border” consumer spending. Many Mexicans with jobs at these facilities can (and do) cross the border into the U.S. and consume U.S. goods and services, therefore lending to the U.S. economy.
Different, not fewer jobs
As companies shift their manufacturing efforts towards Mexico, Americans are getting different jobs, certainly not fewer jobs, from this transition. As the job market for skilled workers in Mexico expands, and these job opportunities are outsourced to Mexico over the U.S., businesses are growing, becoming more efficient, and creating more opportunity for higher-level jobs within the U.S. When taking a look at the unemployment rate in the U.S., there has been a steady fall over the past four years, all while Mexico is experiencing its largest growth ever.
Thinking about moving manufacturing to Mexico?
For it’s affordability, close proximity, quality workforce, and cross-border consumer spending, Mexico has emerged as a smart location for manufacturing. Certain things to keep top of mind while exploring manufacturing options in Mexico include, oversight of the production floor to maximize efficiency, security in areas that might have higher risk and Mexico’s Border Improvement Program manufacturing law.