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You are here: Home / News / Warehouse News / Welcome to the neighborhood

Welcome to the neighborhood

Rising wages and recent socio/political developments in Asia are prompting U.S.-based companies to explore the possibility of nearshoring to a nation closer to home: Mexico. Not so long ago, Asia was the clear destination of choice for companies looking to set up offshore manufacturing and distribution operations. Much of the draw, of course, was low-cost labor—back in the day, the wage savings easily offset the higher transportation and supply chain costs. Now that’s starting to change. As wages rise in Asia—and other complications, such as the recent economic and political unrest in China, emerge—U.S. companies are increasingly exploring the possibility of relocating those operations to a country much closer to home: Mexico. While wages in Mexico are higher than those in Asia, they’re still significantly lower than U.S. pay scales. In addition, the economic climate and transportation infrastructure are improving. Security continues to be a concern, but the Mexican government has taken major steps to boost both prevention and enforcement efforts. President Enrique Peña Nieto said his country is "consolidating to be a trustworthy destination to invest in." When it comes to shifting manufacturing to Mexico, the automotive industry has led the way. Mexico now accounts for about 18 percent of North America’s auto production—a figure that’s expected to reach 25 percent by 2020. According to the Brookings Institution, employment in the industry has increased 46 percent since 2009. Honda, Nissan, Audi, Kia, and Volkswagen manufacture in Mexico, and Ford, Toyota, and Goodyear all have announced multibillion dollar projects. Mercedes is considering opening a facility there as well. The auto industry has set the pace for other industries through its labor education and quality initiatives. For those holdouts that continue to buy and/or manufacture in Asia and ship to the U.S., there is a Mexican answer for them as […]

About the Author

Sue Boczenowski is the Marketing Manager for Abel Womack.

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