5 Reasons Why Nearshore Manufacturing Is A Perfect Fit for Mexico’s Textile and Apparel Industry

Last Updated on April 5, 2023

A strategic location and skilled workforce have contributed to the steady growth of Mexico's textile and apparel industry in recent years. Consequently, more and more companies are turning to nearshore manufacturing for their production requirements. Here are five reasons why Mexico's textile and apparel industry is well suited to nearshore manufacturing.

One: Textile and Apparel Production Is the Fourth Largest Industry in Mexico

According to the International Trade Administration, Mexico's textile and apparel industry accounts for 6 percent of the country's gross domestic product and 20 percent of all manufacturing employment in Mexico: this equates to employing almost 415,000 workers serving 22,000 apparel companies in 2013.

According to Statistia:

The textile and apparel industries, as part of this major sector, collectively represented roughly three percent of Mexico’s manufacturing GDP. From cotton farming and synthetic fiber production to the construction of yarn and fabric, and the final products of clothing and accessories, the Mexican apparel market has developed as versatile and overreaching.

Two: As Opposed to Chinese Textile Workers, Mexico's Textile Workers Are Specialists and Diversifying Their Skill Sets

Because of the growth in China in the manufacturing sector, Mexico had slipped from their largest apparel supplier in 2000 to the sixth largest by the end of 2010.

It was, however, a benefit for apparel manufacturers seeking Mexican partners that these drop-offs revealed: In place of the ordinary textile operations that had left the area, specialized workers in the textile and apparel industry remained, including leather manufacturers and fabric producers for filters, airbags, seat covers, and other products requiring skilled labor.

By 2016, U.S. specialty and industrial fabric exports to Mexico accounted for approximately 50 percent of total specialty and industrial textile exports from the U.S., representing a 1.13 percent increase over the previous year.

Three: The Geographical Location of Mexico Makes It a Strategically Important Market for Exports

Mexico's close proximity to the United States is a major advantage for businesses in the textile and apparel industry. Mexico is the second-largest supplier of textiles and apparel to the United States, with a 13.5% market share. Nearshore manufacturing in Mexico allows businesses to take advantage of shorter lead times, lower transportation costs, and easier communication with suppliers and customers.

Miguel Angel Andreu, a leading Mexican textile and apparel consultant, writes that the Mexican apparel and garment industry is increasingly using its low costs and proximity to the US to counter the messaging used by Chinese firms.

Manufacturers are focusing on their ability to offer flexibility and fast turnaround times, especially as US buyers appear increasingly reluctant to source high volumes of clothing from China due to the continuing uncertainty in the US market.

Four: Quality Control Is an Important Component of Mexico's Textile and Apparel Industry

Mexico's textile and apparel industry has a strong commitment to high quality control. The country has established strict quality standards, and manufacturers are required to adhere to these standards to ensure that their products meet or exceed customer expectations. Mexican manufacturers use advanced quality control systems to monitor production processes, identify defects, and ensure that products are free from defects.

Mexican clothing producers are working increasingly closely with brands in the US to help meet specific requirements, and that a growing number of suppliers are offering full package manufacturing, particularly for denim, which is Mexico's leading apparel export, and T-shirts.

Five: Favorable Trade Agreements

Mexico has a number of favorable trade agreements with other countries, especially the U.S. – Mexico – Canada Agreement (USMCA), which make it an attractive location for nearshore manufacturing.

USMCA is a trilateral trade agreement that replaced the North American Free Trade Agreement (NAFTA). The agreement is beneficial for the textile and apparel industry in Mexico because it creates a more predictable and stable trade environment, which can help to mitigate risks and increase profitability.

The USMCA includes several provisions that benefit the textile and apparel industry, such as rules of origin that incentivize the use of North American inputs in the production process. The agreement also includes provisions that improve access to the U.S. market for Mexican textile and apparel products, such as the elimination of tariffs on certain products.

In addition, the USMCA contains labor provisions that promote fair labor practices and protect workers' rights, which will help to improve working conditions in the Mexican textile and apparel industry. The USMCA is advantageous for the textile and apparel industry in Mexico, as it promotes fair labor practices and a more favorable trade environment, thereby improving the industry's competitiveness and sustainability.

Conclusion: Mexico's Nearshore Manufacturing is a Game-Changer for Textile and Apparel Businesses

For businesses in the textile and apparel industries, nearshore manufacturing in Mexico is the ideal solution. Due to its proximity to the United States, competitive labor costs, skilled workforce, favorable trade agreements, and sustainable practices, the country has become an attractive location for businesses seeking to enhance their manufacturing strategies. With the industry continuing to change, businesses will have to adapt and consider new manufacturing strategies, and nearshore manufacturing in Mexico may be the ideal solution.