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Mexican labor costs represent a competitive edge

Mexican labor costs represent a competitive edge

When compared to that of its manufacturing rival, China, as well as those of other emerging market countries, Mexican labor costs are among the most competitive in the world.

According to an April 4, 2013 Reuters article, “Mexico’s wages as a proportion of economic output are lower than those in Indonesia, the Philippines, Thailand, Hungary, Brazil, Poland,” and even South Korea.

A decade ago Mexican labor costs for direct workers exceeded those of its main manufacturing rival, China, by a factor of three. Today, due to a number of factors, demand for factory help growing faster than supply being a principal one, Mexican wages are a fifth lower than those of its Asian competitor.

While it is projected that Mexico’s labor force (those individuals between 18-65)  will grow at a rate of twenty percent over the next ten years, growth among China’s will be at a rate of just under three percent. This means that Mexican labor costs will retain an edge vis-à-vis China’ for the foreseeable future.

Direct Mexican labor costs in Ciudad Juarez are among the U.S. – Mexico border area’s most competitive. The average fully burdened cost for unskilled factory labor is US $2.70 per hour. while skilled labor can be contracted for a similarly burdened cost of US $3.05. Skilled labor, for purposes of general comparison, is defined as senior level technicians that typically have three to four years of experience in a commensurate position and possess technical and/or a high school diploma.

Beyond direct workers, approximate high and low ranges Mexican labor costs for select indirect manufacturing positions across Ciudad Juarez industries include:

Customs Manager

low $US 54,997
high $US 69,471

Equipment Maintenance Manager

low US $44,882
high US $63,398

Finance Manager

low US $41,492
high US $79,889

Human Resource Manager

low US $46,379
high US $95 978

Information Technology Manager

low US $43,397
high US $76,469

Manufacturing Engineer

low US $44,853
high US $87,620

Process Engineering Manager

low US $56,623
high US $65,051

Production Manager

low US $44,883
high US $77,874

Purchasing Manager

low US $56,381
high US $63,035

Quality Manager

low US $45,463
high US $80,908

While administrative salaries are, in some instances, similar, or on par with their North American counterparts in the U.S. and in Canada, true savings occur in the areas of direct and indirect labor

Mexican labor costs absorbed, and the careful selection of personnel, in key areas will do much to ensure the smooth running of maquiladora manufacturing operations in Mexico.

Remember, relevant and useful Mexico manufacturing content is available at one’s finger tips by downloading the Tecma Group mobile app from the Google Play Store, interested parties can also receive Mexico manufacturing information on a weekly basis by SMS Texting the word Tecma to 96000.

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This quarterly publication will be populated with content that is useful and relevant to readers that are contemplating Mexico investments, have operations already within the Republic, as well as to other individuals that have an interest in Mexico and its manufacturing sector.