Business Trends

China Losing Manufacturing Appeal as US Companies Turn to Mexico

In business opportunity, economy, Importing from China on July 7, 2009 at 5:32 pm

A new international bridge to Mexico is set to open October 2009 in the South Texas city of Mission, Texas. The Anzalduas International Bridge, a $168-million joint project between the United States and Mexico, will be one of the newest and largest border crossings in the country, and will directly connect Mission with Reynosa, Tamaulipas – a Mexican city known for advanced manufacturing and import/export operations.

Since the passing of NAFTA, Mexico has stepped up as a major competitor to China for cost-effective manufacturing. The main reason: lower transportation costs.

Compared to China and other manufacturing hubs, Mexico offers better access to the domestic and North American markets. A shorter, faster and cheaper transportation route to move products and supplies by truck, rather than over thousands of miles by ship, rail, and truck combined.

In South Texas, specifically the Mission metro area, eight international bridges connect the area with the industrial border communities of Reynosa, Matamoros and Monterrey, Mexico — some of the largest Mexican cities dealing with maquiladoras, importing/exporting goods, and vehicle traffic.

This relationship has made Mission and its sister cities an important industrial manufacturing corridor. Sharyland Business Park in Mission is in a Foreign Trade Zone (FTZ) – a “free port” allowing materials and finished goods to be imported or re-exported without payment of customs duties.

Area leaders have also been keen to other infrastructure planning on this side of the border. A new six-lane expressway now connects Mission with its sister cities. Interstate Highway I-69, another major artery of transportation, will soon connect trade routes from Mexico and Latin America to the United States and Canada. The Anzalduas Bridge will directly connect to I-69 – facilitating trade operations between the two countries.

“In the past, when the market softens in the U.S., we have always seen an increase in companies looking at our area as a way to reduce their costs and be more competitive,” said Pat Townsend, President of Mission Economic Development Authority.
This is evident in the number of companies that have visited the region. Companies like Black and Decker, Panasonic, and ALPS Automotive are attracted to the area for its low cost of living, career opportunities and location. Every day, more companies are finding and relocating here.

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  1. You made me learn something new today. I didn’t know Mexico was that attractive. So thanks!

    I’ve read that India and Vietnam are getting in the picture as well:

    http://afp.google.com/article/ALeqM5gHL4hap5rab8VuD6cP4YOgrSvsvQ

    “China is loosing some of its attractiveness to foreign investors as rising costs are forcing some US manufacturing firms to leave the country, the American Chamber of Commerce (AmCham) says.

    More than two-thirds of AmCham’s member companies agree that China is losing some of its competitive advantage in global markets due to rising costs (price pressures from competition and major customers, rising salaries and wages, changes in raw material prices, tax expenses and real estate cost inflation), human resources constraints, inconsistent regulatory interpretation, unclear regulations, lack of transparency and bureaucracy are picked as the top business challenges in China…”

    Bert
    http://bertmaes.wordpress.com
    About the future of CNC manufacturing education

  2. Hi Marvelousgirl

    When I was reading http://www.bizjournals.com/sanfrancisco/stories/2009/07/27/focus1.html, I was thinking about you:

    >> Why manufacture in China?

    * Shipping costs are at a three- to four-year low.
    * Integration of supply chain, especially for products like consumer electronics.
    * Labor costs remain cheaper than in the United States.

    >> Why manufacture in the Americas?

    * Closer to American markets.
    * Integration of supply chain, potentially for things like auto assembly.
    * Ease of making changes to orders.
    * Time. Products don’t sit on boats for weeks or months.
    * Cash use. Chinese manufacturers can require full payment before shipment.
    * Strength of currency. As the dollar weakens, the underlying cost advantage of China may dissipate.

    Bert
    http://bertmaes.wordpress.com
    About the future of CNC manufacturing education

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