Reshoring Manufacturing is the practice of bringing manufacturing and services back to North America from overseas, primarily China or other countries in Asia. Reshoring Manufacturing is the opposite of offshoring manufacturing, which is the process of manufacturing goods overseas to try to reduce the cost of labor and manufacturing.
Why U.S. Companies Are Moving Their Supply Chains From China to Mexico
NovaLink is committed to the philosophy that transitioning manufacturing to Mexico, with Mexico Supply Chain Services, should be an easy, rapid and cost-effective process. Supply Chain Brain listed reasons why companies are moving their supply chains from China to Mexico.
Goods can be imported from Mexico via ground transport in a matter of days or even hours. This is never an option for goods manufactured in China, from which everything must come by ocean or air. The former is very time consuming (it can often take weeks), and the latter is very expensive.
“Trusted Partner” Status for Customs
The U.S. offers two programs that help facilitate faster and easier Customs processing for U.S.-Mexico trade: FAST and C-TPAT. Initiated after 9/11, FAST is a trusted traveler/trusted shipper program that allows expedited processing for commercial carriers who have completed background checks and fulfill certain eligibility requirements (much like TSA Precheck for air travelers). FAST certification is for drivers; C-TPAT is a broader program that shippers must apply for. Once a company is certified for C-TPAT, its drivers can then apply for FAST. There are no such programs for U.S.-China trade.
A Transparent Landscape
There are also new modern options for transport that make Mexico attractive. Companies can coordinate door-to-door transportation between the U.S. and Mexico, including procurement of trucks on both sides of the border, customs clearance, insurance, financing, and reporting. This allows manufacturers to focus on their core competency, rather than logistics, and can also reduce the need for big in-house shipping and logistics teams.
Smaller Language Barrier
Spanish is the second-most common language spoken in the U.S., making it relatively easy to communicate with partners in Mexico (and find bilingual staff and vendors).
Mexico operates on the same time zones found in the U.S. — Eastern, Central, Mountain and Pacific.
Why Reshoring Manufacturing?
There are many reasons for manufacturers to reevaluate their offshoring operations and consider Reshoring Manufacturing to North America. Manufacturers are recognizing that costs, risks and strategic impacts of offshoring manufacturing operations are now large enough, especially with the trade tariffs against China by the United States, to overcome any market wage advantages.
According to Reshoring Initiative, the top reasons that companies are considering Reshoring Manufacturing are:
- Lead time
- Higher product quality and consistency
- Rising offshore wages
- Skilled workforce
- Local tax incentives
- Image of being Made in USA
- Lower inventory levels, better turns
- Better responsiveness to changing customer demands
- Minimal intellectual property and regulatory compliance
Advantages of Manufacturing in Mexico
There are many reasons why manufacturing in Mexico 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.
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.
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.
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.
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.