The objective of manufacturing is to satisfy consumer needs through production. To achieve this, each process needs human capital, energy, machinery, and specialized technology.
Mexico, after the United States, is the largest exporter of manufactured goods on the American continent. Canada and Brazil count with manufacturing industries that are as developed as Mexico's, but their exports are smaller. But, how does Mexico compare to other manufacturing leaders in other parts of the world?
Here is how Mexico compares to other to China and India as manufacturing industries:
Means of production
China annually produces about $4 trillion worth of goods. 28.47% of the global total. In comparison, India produces $421 billion and Mexico $210 billion. The three of them are in the top ten of manufacturing countries in the world, although China has a very large margin of advantage.
India's unstable economy and development ecosystem have affected its affordability, which makes it less attractive for companies. And while there is no denying that China is the number one country when it comes to manufacturing at low costs, Mexico presents itself as a more strategic and cost-affordable option to the US, given the closeness of their territories, markets and time zones. It is easier and cheaper for any supervisor to collaborate. In transportation alone, any manufactured products are going to be less costly to bring from Mexico than from Asia.
Quality of production and skilled labor
One of the main reasons why India is not a bigger manufacturing industry is because of the limitations of its infrastructure. Insufficient electricity and water, inadequate roads and transportation, and sometimes lack of skilled labor produces many delays and mistakes during production. In China, poor working conditions and communication barriers also tend to affect the quality of production.
Many Mexican manufacturing companies have certifications such as ISO certifications and IATF certifications. Not to mention, Mexico counts on highly skilled labor with professionals in constructing, engineering, and manufacturing. The use of skilled labor vs. unskilled labor is in part what makes Mexican manufacturing more expensive than the one in China or India, but as we mentioned before, you make up for this difference in transportation, logistics, and even quality.
Some security and political factors have made the trade agreements with China shift in the last few years, including threats to intellectual property. The United States and India have a long history of trade and institutions like the US-India Strategic Partner Forum are trying to build easier pathways to licensing and approval for manufacturing. However, there is still a lot to be done.
When it comes to Mexico, The North American Free Trade Agreement (NAFTA / USMCA) made manufacturing in the country much more appealing and it allowed for a greater global expansion.
At Nepanoa we can help you find the best manufacturer options for you in Mexico, and integrate them into your expansion plan.
Read more: How to find the right suppliers in Mexico