January 31st, 2012
Knowledge of labor market benefits companies beyond minimum wage adjustments
Mexico’s minimum wage commission set the increase for 2012 at 4.2% for all three of the country’s geographic zones, bringing the cost of labor to about 62.33 pesos/day. This is calculates to about 4.60 U.S. dollars per day. While the cost of labor has increased in Mexico, the cost of labor has also been increasing in other low cost countries like China.
A wage increase in Mexico is not necessarily a disadvantage. When reevaluating overseas strategies, it is important to assess production costs as a whole, including transportation and shipping costs. A key advantage that Mexico holds about its labor market is that it has focused its resources on developing special training and linkage programs that tie in directly with a specific industry.
Press Release
January 26th, 2012
Nissan Motor Co., the Asian carmaker with the biggest production capacity in Mexico, will spend as much as $2 billion on a third factory in the country as the yen’s strength drives the company out of Japan. Nissan’s current Mexican plants, able to build more than 700,000 vehicles a year, are at their operating limit, Bill Krueger, vice chairman of the company’s operations in the Americas, said in a conference call. “We’ve got more capacity and growth to be developed across the Americas.” Mexico’s proximity to the U.S. makes it an attractive location and viable option for car manufacturers. Read more:
Nissan Plans $2 Billion Plant in Mexico
January 10th, 2012
The Mexican aerospace and defense market alone had revenues of $2.4 billion in 2010, a CAGR of 8 percent between 2006 and 2010.
The defense segment in Mexico’s markets was the most lucrative in 2010, with total revenue of $1.5 billion, equivalent to 65 percent of the market’s overall value. Mexico is expecting its market performance to improve in the 2010-2015 period and reach a total value of $4 billion by 2015. Read more:
Slower Growth in Aerospace, Defense in 2012
January 6th, 2012
The aerospace industry has grown immensely in the Baja California region. In the past five to 10 years, more than 50 aerospace and defense companies have started operations in Baja California. Most companies are American, producing everything from electronic components to steel bolts for commercial and military aircraft. These companies employ more than 10,000 high-tech workers, many of them engineers, technicians and software developers.
Kenn Morris, president of Crossborder Group, a San Diego-based market research firm, explains that a lot of the factories are being built “in such a way these days, and they’re managed in such a way, that they can be put anywhere on the planet. But they’re coming to Mexico.” In this article by PRI’s “The World”, clarity is brought to past assumptions about Mexico and its strategic advantages, such as its proximity to the US. The article also portrays a few companies and their experiences with their factories in Mexico. Read more:
US Aerospace and Defense Companies Set Up Shop in Mexico
January 3rd, 2012
From October 13th through November 18th, 2011, Cook Associates Executive Search polled nearly 3,000 manufacturing executives primarily small to mid-sized U.S. companies. C-level executives and vice presidents in charge of operations, manufacturing and supply chain management participated in the survey. The survey identified that products needing technology improvement or innovation served as the primary reasons for manufacturing returning to the U.S. The survey concluded that 85% of executives are strongly considering moving manufacturing back to the U.S. and 37% of companies specified rising overseas costs as the primary reason.
Companies are finding they are able to retain a high level of competitiveness in today’s changing economy by being strategic as to manufacturing locations. NAPS specializes in offering outsourced administrative support to companies interested in manufacturing in Mexico. NAPS can assist in evaluating manufacturing costs in China compared to the U.S. and Mexico and also develop innovative strategies to lower total production costs. Read more:
NAPS Press Release / Cook Associates Executive Search – Survey Information
December 27th, 2011
Honda Motor Corp has developed plans to relocate a huge chunk of its manufacturing to North America over the next two years. Its Japanese manufacturing facilities faced many challenges over the past year including the strengthening of the yen and natural disasters. Because of the yen’s strength over the dollar, Honda was losing money from cars exported out of Japan. The strategic shift is “directly linked to the yen,” Tetsuo Iwamura said, president of American Honda. “It is virtually impossible to make money on exporting vehicles from Japan in the short and medium term.”
Honda, which produced 1.29 million vehicles in North America in 2010, plans to build a new plant in Celaya, Mexico, and expand all seven of its existing assembly plants, aiming to build just short of 2 million cars and trucks a year, Mr. Iwamura said in an interview with The Wall Street Journal. Read more:
Honda Revs Up Outside Japan
December 8th, 2011
North American Production Sharing, Inc. (NAPS) received recognition for its contribution to Mexico’s 2011 “Environmental Leadership Program for Competitiveness” administered by Mexico’s Federal Environmental Agency and counterpart to the EPA, SEMARNAT. This program is designed to increase the competitiveness of small and medium size businesses through training in eco-efficiency.
Leader companies such as NAPS work with clients, vendors and suppliers for a coordinated approach to increase efficiency and reduce waste. By learning about best practices in the industry, companies achieve increased efficiency in a variety of areas including energy, water, packaging materials, the redesign of processes to maximize the use of residuals, and lowering levels of contamination.
Full Press Release
November 29th, 2011
The U.S. Department of Commerce, ProMexico, the Tijuana EDC along with Baja California state and local government representatives met with aerospace companies such as Cubic, Eaton, Parker, and Cobham on November 15th. The idea was to initiate a program that would increase the growth of the Defense industry in the CaliBaja Bi-national Mega-region. Attendees from Baja CA’s aerospace cluster worked together to identify barriers and opportunities that Defense manufacturing companies are facing. Read more:
Baja CA – Aerospace Cluster
November 10th, 2011
The North American Competitiveness Conference was held at the University of San Diego on Tuesday, November 8th. The event was organized by the Mexico Business Center, a division of the San Diego Regional Chamber of Commerce. Guests included government officials from the United States, Mexico and Canada. Among the companies represented at the event were Toyota, Kyocera, Goodrich, Eaton and Suntron.
Leaders of the maquiladora industry in Baja California want to establish a stronger network of local suppliers that would specialize in components and services for everything from medical devices to airplanes to solar panels. Various business executives from top manufacturing companies and government professionals shared Baja’s strengths and addressed concerns that might alter investment in the region. Read more:
Local Supply Chain
October 26th, 2011
As Chinese salaries rise and trade tensions deepen between China and the U.S., factories along the U.S. Mexican border could benefit. Since 2005, wages have jumped 218 percent in China but only 25 percent in Mexico. Chris Kuehl, economic analyst for the Fabricators and Manufacturers Association, said that over the next decade, Mexican wages are projected to rise only a third as much as Chinese wages.
Alejandra Mier y Teran, who heads the Otay Mesa Chamber of Commerce, said that factories are moving back to from Mexico to China not only because of the rising costs but also because of political uncertainty, as U.S. politicians try to pressure China into revising its currency and breaking down trade barriers. “We’re seeing a lot more activity along the border and and when factories open in Tijuana, that means more jobs for customs brokers, distributors and suppliers on this side of the border,” she said. Read more:
Mexican Factories Could Mean Jobs in San Diego