Mexico Manufacturing Labor Costs
Learn everything you need to know about manufacturing labor costs in Mexico, including average wages, benefits, and taxes.
Mexico Manufacturing Labor Costs: The Lowdown
Are you considering manufacturing your products in Mexico? If so, you need to know about the country's labor costs.
In addition to low wages, Mexico also offers a number of other benefits to manufacturers, including:
- A skilled workforce: Mexico has a highly skilled workforce with a strong work ethic. This can help you improve your productivity and quality control.
- A strategic location: Mexico is located in the heart of North America, which gives you easy access to both the US and Canada. This can help you expand your market reach and grow your business.
- A stable government: Mexico has a stable government that is committed to attracting foreign investment. This can give you peace of mind knowing that your investment is safe.
If you're considering manufacturing your products in Mexico, be sure to contact NovaLink today. We can help you get started and make the most of your investment.
Minimum Wage in Mexico
Mexico has some of the lowest manufacturing labor costs in the world. In fact, the average hourly wage for a manufacturing worker in Mexico begin at just $4.90. This is significantly lower than the average hourly wage for a manufacturing worker in the United States, which is $20.00.
What Is a Maquiladora?
The term “Maquiladora” refers to a manufacturing solution created in the 1960s to take advantage of preferential tariff agreements between the U.S. and Mexico & to encourage foreign investment in that country. Maquiladoras in Mexico are now referred to as IMMEX (Industría Manufacturera Maquiladora y de Servicio de Exportación). A Maquiladora in Mexico is a factory or plant that is located near the Mexico/U.S. border. It is staffed by Mexican workers, but owned and operated by a U.S. company (although other countries, such as China, can also operate a Maquiladora). A Maquiladora allows manufacturers to operate duty-free and tariff-free. Businesses outsourcing their manufacturing needs can benefit from this approach in many ways. These needs may result from cost competitiveness or the availability of labor to meet demand.
Advantages of Manufacturing in Mexico
There are many reasons why Manufacturing in Mexico vs China is simply the better solution: Mexico manufacturing represents the best of both worlds for manufacturing companies who seek to increase quality and production while reducing costs.
Viable Labor Pool
Low labor costs in Mexico provide many benefits than just a lower bottom line; see how your business can profit from utilizing the low-cost labor pool in Mexico.
Supply Chain Solutions
U.S.-made parts and products are used by Mexico manufacturers up to four times more than China; this is a tremendous benefit to suppliers in the United States.
Geopolitical Stability
The Mexican government is very friendly to foreign business and investment, as demonstrated by their 44 trade agreements with countries around the globe, including the recently-signed USMCA agreement.
Proximity to the US
Production is closer to the U.S. border; faster time to the consumer market than shipping across the Pacific Ocean, which can take weeks. Manufacturing in Mexico means lower transportation, trucks and trains as opposed to ships, and the abundance of warehousing make Mexico a cost-effective solution.
Low Labor Costs in Mexico: Top 10 Ways Manufacturing Profits
Low labor costs in Mexico provide more benefits than just a reduced bottom line; see how your business can profit from utilizing the trained and cost-effective labor pool in Mexico.
Is it Cheaper to Manufacture in Mexico?
While manufacturing in China may provide some immediate cost advantages, it is generally more cost-effective to operate manufacturing operations in Mexico over the long term.
- Manufacturing Labor is Less Expensive and More Plentiful than China
- There is an abundance of warehousing and manufacturing space on the border of the US & Mexico (particularly in Texas) that is significantly more inexpensive than in China.
- In light of the current supply chain problems using sea freight, the speed of the arrival of goods from Mexico to the US is perhaps the greatest advantage offered by manufacturing in Mexico. In comparison to China, it takes a fraction of the time for your products to reach American warehouses and stores.
- US buyers, citing poor quality and delays from China, are buying more goods and supplies from factories located in Mexico.
- Due to the US Free Trade Agreement with Mexico, it is relatively inexpensive and almost seamless to move goods across the border. Currently, Chinese goods entering the US are subject to high tariffs, which makes the process of transporting them into American markets very expensive.
- In Mexico, energy costs are comparable to those in the United States, making them both cheaper and more environmentally friendly. There is a high dependence on coal in China, and there is a gas shortage, making energy costs high and causing frequent power outages.
- The exchange rate for the Peso compared to the US dollar is very favorable, allowing investments in Mexico to go further than investments in China.
- The intangibles of manufacturing in Mexico; easy setup model, protection against intellectual property theft and limited legal liabilities are benefits that are not offered when manufacturing in China.
