Why Mexico Manufacturing and the Benefits of the Maquiladora?

Mexico has quickly become an ideal location for outsourcing manufacturing operations as low-cost labor, favorable tax laws, forgiving tariff regulations, and close proximity to American markets and supply chains have made production in the country safer and more cost-effective than ever before. Often times when people think of low-cost outsourced manufacturing options, China and other nations in Southeast Asia are the first locations that to spring to mind. While it is true that many of the countries in this part of the world offer very enticing labor rates, many of the ancillary costs and risks associated with manufacturing on the other side of the planet are often overlooked and therefore unfortunately left out of the equation. At the end of the day when all of the associated costs and risks are factored in and the entirety of the manufacturing operation is taken into consideration, Mexican maquiladoras quite often outperform the global competition.

The following are a few of the numerous issues that need to be considered when selecting where you want to outsource your manufacturing:

Mexico shares more than 2,000 miles of border with the United States, and many major cities such as San Diego, Los Angeles, Tucson, Phoenix, El Paso, San Antonio, and Austin are located within a mere 150 miles of the border. Calibaja Manufacturing Services takes physical proximity to the United States (and the savings associated with the following issues) one step further as we are located less then 10 minutes from the Mexicali commercial port of entry.

• Freight Costs (raw materials and finished goods)
• Oversight and Engineering Support (travel)
• Time Zones (response time is reduced)
• Inventory Holding Cost
• Supply Chain Stability
• Proximity to North American Markets
• Low Lead Time
• Focus on Quality
• Economic/Political Stability

• Freight Costs (raw materials and finished goods): It is not cheep to send anything halfway across the world. Take one quick look at a globe and it becomes immediately obvious that Mexico is the closest low cost labor market to the United States. This fortunate geographic proximity immediately translates to huge savings on freight costs.
• Oversight and Engineering Support (travel): Incredibly easy access to Mexican manufacturing facilities grants companies regular oversight of production and easy access for engineering support; further enhancing your bottom line by forestalling potential production issues while simultaneously saving you money on travel costs.
• Time Zones (response time is reduced): Mexico shares three out of the four times zones of the continental United States. This simple fact translates into greatly improved response time compared with South East Asia and China. For example, when it is 9:30 am on Monday in Shanghai it is 6:30 pm on Sunday in Los Angeles and 9:30 pm in New York. The loss of a day of communication could potentially cost your company millions of dollars, a risk that is easily negated when outsourcing with Calibaja.
• Inventory Holding Cost: The financial cost of holding an inventory is not to be underestimated. Whether your inventory is in your warehouse ready to be shipped or is sitting in a container on the high seas thousands of miles away from your market, the financial burden is the same. When manufacturing with Calibaja, our proximity to the United States allows our customers to keep only as much inventory as they need on the shelves.
• Supply Chain Stability: The logistics of moving a manufacturing operation are exponentially more convoluted as the physical distance to the new location increases. If your business is currently manufacturing in the United States and you were to move to Mexico, you could keep the same supply chain! The same cannot be said about moving thousands of miles away.
• Proximity to North American Markets: The USA is one of the largest consumers on the face of the Earth. In fact, Americans spend nearly $7 Trillion on consumer goods each year. It does not take much stretching of the imagination to deduce how manufacturing products on the doorstep of a market of this proportion can translate into enormous cost savings. It is up to you to take advantage of this opportunity before your competition does.
• Low Lead Time: When your business out sources its manufacturing in Mexico, you are not reliant on material that needs to travel halfway across the globe. Reducing lead times reduces the amount of resources you have to allocate to manufacture and ship your product as well as continual updates on the progress of the production allow control over expenses and problems that may occur.
• Focus on Quality: Over the past 40 years, Mexican maquiladoras have been manufacturing an amazing range of products by consistently producing high quality products at a competitive price. The striking prevalence of international corporations with manufacturing operations in Mexico and the incredible diversity of products being produced attests to the competencies of the workforce and the superior quality that they are capable of.
• Economic/Political Stability: Mexico has made incredible strides over the past few decades to improve their reputation as a first class economy. The World Bank ranks Mexico with the 12th largest Gross Domestic Product in the world, and with a population of over 100 million people, it has the 4th largest per capita income in Latin America. With record growth and low inflation, Mexico also provides stringent protections for American businesses and mutual economic opportunities.

All of the above mentioned considerations have a couple of very important common denominators: cost savings and risk reduction; two undeniably important factors to be taken into consideration when choosing a manufacturing outsource.