What Makes Electronics Manufacturing in Mexico so Attractive?

Nearshoring to Mexico is an ideal choice for most North-American companies that need volume PCBA manufacturing; in this post, we’ll dive into why you should consider Mexico for your electronics manufacturing needs.

One of the many questions companies must answer is where they’ll have their PCBA products manufactured. It’s essential to choose a manufacturer that’s both inexpensive and qualified. Additionally, decision-makers should consider regions that can help them minimize their legal risks.

High production costs lead to higher end-user costs and lower profits. Finding an affordable manufacturer is an essential factor in building a competitive product that sells well to your end user.

In the United States, the federal minimum wage is $7.25 per hour, and in many states, it’s as high as $15. But the cost of living in Mexico is lower than in the United States. As such, labor costs in Mexico are lower as well. Wages average around $8.72 per day in most areas of Mexico and $13.13 per day in the Mexico Free Zone near the northern border.

As the demand for Mexico-based manufacturing operations increases, so does the incentive for Mexico’s federal government and state governments to invest in personnel training.

Mexico graduates an average of 115,000 - 130,000 technicians and engineers annually, making them an ideal source of skilled labor. Electronics companies specializing in printed circuit board assembly (PCBA) and other highly technical manufacturing can easily find qualified workers in Mexico.

Further, Mexico’s universities take part in education-exchange programs with Southern California and San Diego universities. Because nearshoring to Mexico has become a widespread practice, many of the country’s engineering graduates already have on-the-job experience in technology manufacturing.

Mexico’s highly-skilled electronics manufacturing workforce consists mainly of younger generations. You’ll be able to find workers for new jobs quickly since many recent graduates are looking for work. More importantly, that workforce will be there for years to come.

Trade agreements help cut costs and protect companies. There are around 13 free trade agreements in place in Mexico, such as the United States-Mexico- Canada Agreement (USMCA). The USMCA decreased or eliminated many tariffs to reduce the cost of production. Additionally, technology companies enjoy enhanced intellectual property protection.

Meanwhile, the trade war between China and the US continues to make news and affect outsourcing to that region.

Mexico has a top-notch manufacturing infrastructure, and its government has gone to great lengths to establish a top-notch electrical grid so manufacturers can work without interruption.

In 2018, the country’s government announced a $20 billion infrastructure improvement plan called the Construction and Modernization Program that will improve Mexico’s public transportation system. Since then, they’ve planned 14 projects to improve energy infrastructure and five to improve industrial parks.

Many of the upcoming infrastructure projects in Mexico will enhance their supply chain. Since supply chains between Mexico and the United States are easier to manage than those with China, this will mean good news for those nearshoring to Mexico.

Because nearly 85% of Mexico’s exports are bound for the United States, the logistics infrastructure between the two countries is among Mexico’s best. The Mexico-to-US logistics infrastructuresaw a significant boost over the years under NAFTA and has continued to improve under the USMCA.

The continuous improvement of the infrastructure, combined with Mexico’s educated, skilled labor force, leads to high-quality electronics manufacturing. Because Mexico is closer to the United States than China, your products will be less likely to get damaged along the way. Furthermore, you’ll be able to visit the manufacturing location more often and easily handle quality discrepancies.

In recent years, Mexico has also revised its intellectual property laws, enhancing protections for intellectual property. Mexico also belongs to the World Intellectual Property Organization which recognizes twelve different IP agreements. Meanwhile, counterfeit goods are produced in greater quantities in China than anywhere else in the world.

Customers have become more concerned about social responsibility and product origins. Work weeks in Asia may be as long as 60 hours, whereas Mexico has a strict 48-hour weekly limit. Mexico also has strict regulations governing occupational safety and goes to great lengths to prevent child labor. Additionally, Mexico has mandates that ensure your goods aren’t made with contaminated materials, protecting you, the factory workers, and your customers.

Many electronics businesses find themselves choosing between Mexico and China. While both locations have low labor costs and skilled laborers, an often overlooked advantage of manufacturing in Mexico is its proximity. The time-zone difference between China and the United States is drastic, meaning you’ll either have to stay up late or wait a day or more to communicate with your manufacturer.

Visiting your manufacturing facilities is also easier when they’re closer to home. When products get made in Mexico, companies in the United States and Canada can visit the manufacturing facility more often. Flights are less expensive and faster than flying to China, meaning they won’t reduce your productivity or increase your business expenses.

Mexico’s proximity impacts transportation costs as well. Once your goods are manufactured, it’s cheaper and faster to receive them from Mexico than from China. Manufacturing locations in Mexico can get the finished product to the United States or Canada within 24-48 hours. Comparatively, you could wait two to four weeks to receive your products from China.

Manufacturing defects will sometimes happen, regardless of where your goods are manufactured. Still, these problems can be solved faster by manufacturers located close by in Mexico, thanks to the speed at which the goods can be shipped back to them.