Once the site of simple production, Mexican high value manufacturing has become commonplace and widespread throughout the nation.
When The North American Free Trade Agreement (NAFTA) was first implemented over twenty years ago, Mexico was seen almost exclusively as the home of low-value assembly operations, and globally competitive labor rates for export manufacturing. This has changed over the years. In recent times, Mexican high value manufacturing capabilities have succeeded in making the country a high- technology destination for companies from around the world.
As the globe grows smaller and more interconnected, particularly due to the improved communication technologies that have been introduced over the last several decades, international organizations have looked for ways to shrink their supply chains and bring home many of the operations they sent to far flung destinations, particularly to China in the Far East. With a large consumer market in the United States advantageously situated next door to Mexico, many are establishing Mexican high value manufacturing operations in an effort to reduce supply costs and shorten shipping times for their products to the world’s largest consumer market. The argument is often made that trucking is more consistent than shipping by other means. This being the case, Mexico boasts several entry points through which trucks may transport goods across the US border by way of a state-of-the-art, streamlined customs process.
High Tech High Value
It is not only the convenience of Mexico’s proximity to US markets that has C-suite executives positioning their companies to engage in Mexican high value manufacturing. Though the country’s wages aren’t growing as fast as China’s, the skill of Mexican labor and the value of its output is rapidly outpacing that of the Chinese worker. Mexico is growing in important areas that enhance its viability in the global marketplace. As universities partner with industry clusters to train thousands of young professionals for highly skilled jobs that produce Mexican high value manufacturing, a middle class is rising in Mexico. 75% of Mexican families now own their own home. Additionally, enrollment in advanced education programs in the nation’s universities has spiked.
Today’s focus of Mexican manufacturing – much different than was the case in the 1980s and 90s – is centered on products such as medical devices, computers, gaming consoles, aircraft, and automobiles. In fact, Mexico has quickly become the second largest source in the world for high-tech products. Mexico now has its own version of Silicon Valley in the centrally located city of Guadalajara – where some six hundred high technology companies churn out quality components and finished products. In Chihuahua and Queratero, many of the world’s finest aerospace companies have opened Mexican high value manufacturing facilities. These firm include internationally known companies such as Pratt & Whitney, Honeywell and Bombardier. The automotive industry in Mexico, which competes on the level of South Korea and Japan, is scattered throughout both the border region as well as in the central region of the country, and engages in Mexican high value manufacturing to produce both standard and luxury models. Prominent automotive players in the country include Mercedes-Benz, General Motors, BMW, Audi, Volkswagen, KIA, GM, Ford and Hyundai. It is also anticipated that, in the near future, major Chinese automotive brands will join them in Mexico.