This past November 19-21 Mexico’s National Maquiladora Association, known as the acronym INDEX in the Spanish language, had its forty-first annual convention in the nation’s capital. The group gathers each year for the purpose of keeping abreast of, and discussing, both national and international issues that affect its members’ interests. Along with information on the current state of affairs in the Mexican automotive industry, developments with regard to IVA tax exemption and IMMEX certification issues and transportation and IT security issues, attendees were apprised of the fact that,since 2013, global economic developments have resulted in the fact that Chinese manufacturing wages now top those paid in Mexico.
One of the event’s featured speakers, Marco Gonzalez Hagelsieb, the chief operating officer of Americas IMS at Sanmina-SCI, cited a 2013 report by the chief economist for Bank of America Merrill Lynch that last year that demonstrated that the cost of manufacturing labor in Mexico was close to twenty percent lower than that of China. Chinese manufacturing wages have been trending upward at a double digit rate since 2002. Although Chinese manufacturing wages have eclipsed those of Mexico, while speaking at the Mexico’s National Maquiladora Association (INDEX) convention, Gonzalez Hagelsieb stressed that while an cost advantages in wages may be a temporary advantage for Mexico, the country “should concentrate on manufacturing products that are high in value-added” in order to create a lasting economic advantage for itself.
While base level Chinese manufacturing wages stand at an average of US $6.93 per day in China, the corollary figure for Mexico is US $4.70. Bank of America Merrill Lynch used statistics compiled from Mexico’s national bank, Banco de Mexico, and its National Statistics and Geography Institute (INEGI) to arrive at these numbers.
According to information provided during INDEX’s yearly convention, beyond Chinese manufacturing wages that are paid in excess of those in Mexico, there are other advantages that sustain Mexico’s position as one of the worlds most attractive destinations for foreign direct investment in manufacturing. These include:
- A legal infrastructure that provides strong protection for intellectual property
- Solid support for the Kyoto Protocol for the protection of worker rights
- A privileged geographic position that gives it rapid access to key global markets
While some products continue to be successfully manufactured in China, many companies have chosen to bring the production of certain items back to the the Americas from the Far East due to the rise in Chinese manufacturing wages and other factors. Over the course of making his comments before the members of INDEX, Gonzalez Hagelsieb noted that in the areas of telecommunications equipment, computer parts and some related accessories, as well as in a number of other classes of products in the Mexican electronics manufacturing sector,in particular, the NAFTA partner country offers favorably competitive conditions to foreign investors.