Consulting firm AlixPartners has found Mexico to be the cheapest place in the world to manufacture products for the U.S. market.
India comes in second, while China and Brazil are the third and fourth cheapest places.
This isn’t news for some Chinese companies, who have been setting up manufacturing capacity in Mexico for years as a way to reduce their production costs.
It’s important to remember that costs, even wages, have been rising rapidly in China over the years. Combined with transportation and other factors, it all eventually adds up and apparently has.
Moreover, Mexico’s competitive position vs. China is likely to strengthen further, given the yuan could soon be adjusted upward against the dollar. Someone this author knows well used to help set up factories on the U.S.-Mexico border. We hear the scale of these factory cities is something to see.
Commodity Online: The influx of Chinese manufacturers began early in the decade, as China-based firms in the cellular telephone, television, textile and automobile sectors began to establish maquiladora operations in Mexico. By 2005, there were 20-25 Chinese manufacturers operating in such Mexican states Chihuahua, Tamaulipas and Baja.
The investments were generally small, but the operations had managed to create nearly 4,000 jobs, Enrique Castro Septien, president of the Consejo Nacional de la Industria Maquiladora de Exportacion (CNIME), told the SourceMex news portal in a 2005 interview.
China’s push into Mexico became more concentrated, with China-based automakers Zhongxing Automobile Co., First Automotive Works (in partnership with Mexican retail/media heavyweight Grupo Salinas), Geely Automobile Holdings (PINK: GELYF) and ChangAn Automobile Group Co. Ltd. (the Chinese partner of Ford Motor Co. (NYSE: F) and Suzuki Motor Corp.), all announced plans to place automaking factories in Mexico.