During the last decade, changing economics and global trends have shifted the equation in the manufacturing industry. Now Mexico´s direct manufacturing costs are 4% lower than China according to Boston Consulting Group. In addition, Mexico´s manufacturing industry has boosted its productivity based on its free-trade agreements platform, strong work ethic, organized industrial clusters and probusiness environment with relatively no conflicts.
International consultancy firms such KPMG and Boston Consulting Group agree on Mexico as the best alternative total cost to U.S. market. Moreover Mexico ranked as the best place for doing business in Latin America, in World Bank´s Doing Business Report, 2016. The document highlighted factors such as the elimination of business flat tax in 2014, and reduction of labor taxes and mandatory contributions besides investment in power supply infrastructure made by Federal Government.
In addition to lowering logistics and transportation costs due to market proximity, Tijuana offers a modern industrial infrastructure and strong supplier base that help companies to reduce their operations costs from 20% to 40% vs U.S.
Rising wages in China have once again shifted the equation in global manufacturing. Average manufacturing labor costs in Mexico are now almost 20 percent lower than in China, whereas in 2000, Mexico’s labor costs were 58 percent more expensive than China’s
Labor costs: U.S. Federal minimum wage is US $10 per hour. Mexico´s mínimum wage a standarized MX $70.10 (approximately US $4.50) per day throughout the country. (effective October 1, 2015.)
Tijuana´s industry hourly wage for direct labor ranges from U.S.2.86 to $4.60 based on the experience level required. (Fully burdened hourly, Ruiz Morales), this represents between 36% and 56% of savings vs some states in the U.S. National Conference of State Legislature