Here's Why Mexico Is Increasingly Becoming a Crucial Global Manufacturing Hub Mamta Badkar - Business Insider
go to original May 3, 2014

China’s low-cost labor force wages, weak yuan, and high investment helped make it a manufacturing and exporting hub.

But over time, as the yuan appreciated, wage inflation ticked up, and supply chains became more complicated, multinationals started exploring other options.

In what’s been dubbed the American manufacturing renaissance, many U.S. companies have been reshoring operations.

However, another big beneficiary of rising Chinese labor costs and U.S. economic growth has been Mexico. This has come despite concerns about crime and safety.

Mexico benefits from the North America Free Trade Agreement (NAFTA). At 44, it also has more free-trade agreements than any other country. Mexico also benefits from having its natural gas prices tied to those in the U.S. where prices are substantially lower relative to the rest of the world.

Average electricity costs are about 4% lower in Mexico than in China, and the average price of industrial natural gas is 63% lower, according to a study by the Boston Consulting Group.

The same study found that by 2015, average manufacturing-labor costs in Mexico are projected to be 19% lower than in China. In 2000, Mexican labor was 58% more expensive than in China.

Read the rest at Business Insider

We invite you to add your charity or supporting organizations' news stories and coming events to PVAngels so we can share them with the world. Do it now!