Why expanding to Mexico.
With Americans able to literally walk over the border if they choose, however effective business decision making require more than intuition. Reasoning is using the facts and figures in front of you to make decisions.
There is sound reasoning in choosing Mexico as the ideal location to expand your manufacturing or assembly facility.
Skilled and availability of young trainable
Lower labor cost
Geographic position and proximity to the US market
Tax incentives for manufactures
Elimination of taxes and duties due to Free Trade Agreements with 44 countries
World-class communication infrastructure
Supply chain integration
Availability of technical training, engineering, research and design
Devotion to quality culture
Legal certainty and protection of intellectual property
Growing domestic market
One of Mexico’s greatest advantage is its location. Its shared border with the United States facilitates the trade between the two countries with a sophisticated network of world-class highways and modern efficient customs facilities. Abundance of labor supply and engineers in Mexico means that US, Canadian, European, Japanese, Korean and recently Chinese companies are locating their manufacturing facilities in Mexico which increases foreign direct investment and contributed to improve the quality of life of families in many communities across the country. The impact of this impressive economic growth is visible along the US-Mexico border and key industrial regions in Central Mexico.
Reasons to choose Sonora.
The state of Sonora is adjacent to Arizona and share a common border of 389 miles (626 km) and six ports of entry. Because of its strategic location, during the early 60’s the border city of Nogales, Sonora attracted arguably the nation’s very first “maquiladora” assembly plant. Since then the number of production facilities has been growing steadily. Now fifty years later the city has over 80 manufacturing companies in the Aerospace, Automotive, Electronics and the Medical fields.
During the second half of the 80’s Ford Motor Company built an automobile assembly plant in Hermosillo, which resulted in the attraction of multiple world-class supplier and created an economic “boom” and transforming the city into a modern and sophisticated metropolis. At present the Ford assembly plant built some 313,000 vehicles a year. The majority of the vehicles built in Hermosillo are shipped via rail to U.S. and Canadian markets. It is important to mention that Nogales has the oldest rail crossing of any border port of entry along the U.S.-Mexico border. Since opening in 1882, the rail has served primarily mining and agricultural industries. At present, and in addition to freighting cars, it also transports bulk commodities such as cement, copper ore, beer and agricultural commodities.
Sonora is also home to the nation’s second largest cluster for aero-engines and some of the players that operate production facilities in the state are Rolls-Royce, GE, Pratt & Whitney. In addition to the aforementioned sectors other industrial clusters include: Metal-Mechanics, Mining, Agribusiness and Information Technology.
Recently, both Governor Doug Ducey of Arizona and Governor Claudia Pavlovich of Sonora has sealed an agreement and pledge to pursuit a joint economic development of what is now being called the Megaregion of Sonora-Arizona. This “single region” partnership seeks to attract investment worldwide, foster economic development and create jobs in both Arizona and Sonora. The dynamics of cross border trade between Sonora and Arizona, whether by rail and overland trucks through all of its six border port of entry reflect the composite effects of both trade between the United States, Mexico, Canada and the rest of the world.
At present, the State government of Sonora is embarked into the modernization and creation of new infrastructure projects that would boost the competitiveness of the region:
of the deep-water port at Guaymas on the Gulf of California, that would largely
The modernization and expansion of the Hermosillo International Airport.
The upgrade of the Mexican Customs compound in Nogales, since it is the largest overland port for the exportation of fresh produce from Mexico.
The all concrete north-south Federal highway 15 that connect US Interstate 19 and the rest of the Mexican Federal highway network. Upon completion by the end of 2018, this state wide - high specifications highway would improve safety and on time delivery of goods.
The recently completed new natural gas pipeline that run from the Arizona border and crossed the entire state of Sonora. The immediate impact of this pipeline is the increase in competitiveness of several midsize cities along its way to the southern border with the neighboring state of Sinaloa.
The advantage of Southern Sonora.
Sonora is shaped like a funnel and the region beneath the state capital of Hermosillo is an extensive area that lies between the pristine blue water of the Gulf of California and the magnificent Sierra Madre, thus providing an exceptional quality of life and a safe place to raise a young family. Some leisure activities in the region include hiking, mountain biking, horseback riding, scuba diving, wind surfing, kayaking, fishing and camping.
Southern Sonora’s main manufacturing centers are located at Guaymas, Empalme, Ciudad Obregón and Navojoa. The region is home to over 1,025,367 inhabitants that has distinguished themselves for outstanding work ethic and employer loyalty. These people pride themselves in learning new manufacturing skills, then in combination with the many young talents graduating from the region’s trade schools, colleges and universities are the driving force in the transformation from an agricultural to a manufacturing society.
The twin cities of Guaymas and Empalme
Surely, this area with a combined population of 214,223 has propelled in less than thirty years to help Sonora acquire the largest cluster of aero-engines manufacturers in Mexico. Some of the companies that has production facilities in Guaymas/Empalme are GE, Pratt & Whitney and Rolls-Royce.
The Ciudad Obregón-Navojoa corridor
This corridor sit in the middle of Mexico’s three most productive agricultural basins created by the Yaqui, the Mayo and the Fuerte rivers and has for over a century been the breadbasket of Mexico. This is the hub of a region that comprise several adjoining cities and municipalities such as Alamos, Bacúm, Benito Juarez, Huatabampo and Etchojoa, that together has a population that exceed 811,144 inhabitants.
Cities such as Navojoa are indeed beyond the border, therefore it does not have the traffic, safety concerns and the negative impact of high turnover rate that affect manufacturers. Then its proximity to Arizona of only 375 miles (600 km) allows trucks reach the Mariposa port of entry in Nogales in just 7 hours through the new all concrete pavement highway. Located in between two deep-water multi-modal ports, only 122 miles (196 km) south of Guaymas and 120 miles (192 km) north of Topolobampo. The region is serviced by four major airports (Hermosillo, Guaymas, Obregón and Los Mochis) and two general aviation airfields (Navojoa and Alamos). Then, when there is need for critical air cargo, these can be shipped through Tucson or Phoenix Sky Harbor located one and three hours respectively from the Nogales border.
This strategic location, its fast-paced workers and the ability to get products to market is being accomplished through the partnership of Mexico’s SAT and United States CBP officers conducting joint inspections of cargo leaving Mexico and entering the United States that has cut truck processing time from 4 hours to only 20 minutes at the state-of-the art Mariposa customs compound.
After logic and correct assessment, Southern Sonora is the ideal solution for large or small-sized manufacturers with limited human and financial resources that are seeking to reduce cost, avoid being at a border city and still enjoy the proximity to the United States.
Workforce in Mexico.
The workforce in Mexico is comprise of a young population that make up over 42% of its 117 million inhabitants and ranges from the ages of 20 and 49 years old.
The labor force includes direct production worker, to highly trained professionals, which lends itself well to a variety of manufacturing in Mexico. For more than 50 years of manufacturing industry along the northern states of Mexico, companies and manufacturers associations has work tirelessly in providing comprehensive training to its employees, also through school-industry and apprentice programs.
Direct Labor in Mexico
Unskilled direct labor in Mexico is typically defined as those employees who do not have a high level of education and/or do not require a lot of training to successfully achieve their daily tasks. Generally speaking, these employees have no more than a high school education and are not bilingual.
Semiskilled direct labor in Mexico differs from unskilled in that the employee typically has a minimum of 2-3 years of experience in a specific type of work. Another scenario may be an employee without a lot of experience but with natural skill sets that enable them to be trained for a higher level of work than simple tasks. Sometimes this level of employee will be fully or partially bilingual, as well. Because semiskilled employees in Mexico are typically paid about 20-30% more than unskilled, their level of turnover is generally lower.
Skilled direct labor for manufacturing in Mexico is becoming much more common due to the sophistication of the products being manufactured in Mexico. Skilled direct labor can be found in many maquiladoras, especially those servicing the aerospace, medical device and metal mechanic industries. Generally speaking, skilled labor has at least 5 years of experience in a specialized line of work. Some examples might be a welder for engineered metal products, a cleanroom CNC operator or even a specialty leather-sewing operator. It is not uncommon for a skilled laborer in Mexico to make double the salary of their unskilled counterpart.
Indirect Labor in Mexico
Facility management, including plant managers, operations managers, production managers and QC managers make up a large portion of the indirect labor force in Mexico. These highly skilled and well-experienced individuals are increasingly sought after in the Mexican labor force.
Demand for engineers in Mexico, including manufacturing, electrical, process and mechanical, is rapidly growing. The aerospace, medical device, electronics, automotive, consumer product and metal mechanics industries are increasingly expanding the scope of their Mexico manufacturing operations, thus requiring a larger pool of engineers to run their facilities. In fact, Mexico graduated more engineers in 2013 than the United States.
Supervisors make up the remainder of indirect labor required in virtually every manufacturing facility in Mexico. Unlike managers in Mexico, supervisors typically receive salaries below their U.S. counterparts, depending on their experience and seniority.