Contract manufacturing in Mexico

Mexico has proven to be a popular location for contract manufacturing products for North American and European OEMs for products that have a quick time-to-market turnaround requirement or high transportation costs.

For some time, it’s been common knowledge many North American OEMs with complex, low-volume products can save on total landed costs by having their manufacturing needs met across the border.

One other advantage to working with contract manufacturers located in Mexico is companies can work in the same time zone as their manufacturing partner as opposed to having a company products manufactured in other lower cost areas such as Asia where it is almost always best, and costly, for the OEM to also establish an OEM team based in the region to help address some of the communication challenges that inevitably surface when teams work in different time zones.

Companies such as Hewlett-Packard, Hitachi, IBM, Microsoft, Philips, Siemens, and many others manufacture some of their products in Mexico.

The Mexican government is beginning to offer a more compelling list of enticements to encourage companies to manufacture their products in Mexico as more companies also look at alternative low-cost regions such as China and India.

With China continuing to establish infrastructure and India, Vietnam and other emerging contract manufacturing markets are evolving each year, Mexico can no longer compete on low wages, alone. Some benefits the Mexican government is offering companies includes the government paying transfer costs associated with bringing business into Mexico; tax-free status for certain industries as well as covering some research and development costs, all which are already in place in many countries competing for the same business and economic opportunities.