Nearshoring is a concept that has become very popular in recent years, especially in the manufacturing sector. Moving part of a company’s operations to a nearby country is a strategy that has brought many benefits for corporations. For example, factories in the United States have benefited from Mexico’s manufacturing for decades to reduce production and exportation costs.
But Why Mexico? Many important aspects need to be considered when looking at the advantages of nearshoring to Mexico vs. other countries in Europe or Asia. Let’s talk about some of them.
Top Benefits of Mexico’s Manufacturing
Geographic location
The United States and Mexico share an economic territory that, although divided by a border, in cultures with Mexico, and there is no significant time difference; two reasons why trade between these two countries is easier and cheaper.
Trade agreements
USMCA, the trade agreement between Mexico, the United States, and Canada, gives companies the confidence and structure required to work with confidence in their investments. Also, the prerequisites provided by these regulations incentivize manufacturing and assembly projects in Mexico.
Cost-effective, highly skilled labor
While the cost of labor rates Mexico offers remains competitive, the focus on industrial education and training stays consistent. This means that companies in the U.S. benefit from cost-effective labor while keeping production quality through a competitive market.
Intellectual Property protection
Intellectual Property is essential for companies in the U.S. and has been a reason for concern when operating in China. Product protection and licensing security are greatly valued as technology keeps evolving in all industrial sectors.
Aerospace Nearshoring: Why is Mexico So Popular?
With the challenges that come from the emergence of historical events that affect global supply chains—such as the COVID-19 pandemic—many American companies have turned their eyes to their neighboring country.
Top Benefits of Mexico’s Manufacturing
- Geographic location
- The United States and Mexico share an economic territory that, although divided by a border, in cultures with Mexico, and there is no significant time difference; two reasons why trade between these two countries is easier and cheaper.
- Trade agreements
- USMCA, the trade agreement between Mexico, the United States, and Canada, gives companies the confidence and structure required to work with confidence in their investments. Also, the prerequisites provided by these regulations incentivize manufacturing and assembly projects in Mexico.
- Cost-effective, highly skilled labor
- While the cost of labor rates Mexico offers remains competitive, the focus on industrial education and training stays consistent. This means that companies in the U.S. benefit from cost-effective labor while keeping production quality through a competitive market.
- Intellectual Property protection
- Intellectual Property is essential for companies in the U.S. and has been a reason for concern when operating in China. Product protection and licensing security are greatly valued as technology keeps evolving in all industrial sectors.
- Aerospace Nearshoring: Why is Mexico So Popular?
- With the challenges that come from the emergence of historical events that affect global supply chains—such as the COVID-19 pandemic—many American companies have turned their eyes to their neighboring country.
For example, Aerospace OEMs are currently concerned about sourcing crucial manufacturing elements such as titanium, one of the materials of which Russia is one of the main exporters.
Moreover, the increase in oil and gas prices following the start of the conflict are two essential reasons why Europe is not a viable option for the business.
But Mexican manufacturing has achieved a high level of specialization, capability, and knowledge, especially in recent years, so large companies are considering Aerospace nearshoring and foreign investment in Mexico.
When researching the possibility of starting Aerospace nearshoring in Mexico, companies must remember that each state is different and has a particular specialization. For the Aerospace Industry, the top cities are Tijuana, Nogales, Mexicali, Saltillo, Monterrey, and Chihuahua.
Are you looking for a place abroad to set up your company? At Tijuana EDC, we have more than 30 years of experience providing specialized business consulting and logistics services for companies considering business opportunities in Mexico and contract manufacturing solutions in Tijuana.
We have the information you need to set you up and take your business to a new level. Contact us for more information.
