+52 (867) 7240420, +1 (956) 242 7744 Tracking September 17, 2019

Mexico’s Manufacturing Cost Competitiveness: A Rising Global Star


Nowadays, foreign investment in factories in Mexico is taking off again, even in industries in which China has been dominant. For instance, Mexican exports of electronics more than tripled, to $78 billion, from 2006 to 2013.

A significant shift in cost competitiveness is behind Mexico’s manufacturing revival. A decade ago, average direct manufacturing costs in China were estimated to be 6 percentage points cheaper than Mexico’s, according to the BCG Global Manufacturing Cost-Competitiveness Index. Now, Mexico is estimated to be 4 percentage points cheaper.

In China, labor costs soared and productivity wasn’t able to keep up. In Mexico, the 67% rise in average Mexican manufacturing wages from 2004 to 2014 was almost entirely offset by productivity gains in the modern industrial sector and an 11% depreciation of the peso against the U.S. dollar.

Source: https://www.bcgperspectives.com/

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