Salient to Investors:
Boston Consulting says Mexico is beginning to beat China as a manufacturing base despite its higher crime rate: a plus for the US because Mexican factories use 4 times as many American-made components as Chinese factories do.
Mexico’s 4 key advantages:
- Manufacturing wages, adjusted for Mexico’s superior worker productivity, will be 30 percent lower than in China by 2015. China’s wages were one-quarter as high as Mexico’s in 2000 but will be slightly higher by 2015. By 2015, Mexico will be around 29 percent less expensive.
- Mexico has free-trade agreements covering 44 countries versus 20 for the US and 18 for China.
- Mexican manufacturing has a significant advantage in energy costs. China pays from 50 percent to 170 percent more for industrial natural gas.
- Mexico has developed a national expertise in certain industries, which makes it more attractive for companies to locate or expand plants there. 89 of the world’s top 100 auto parts makers have production in Mexico. More than 70 appliance manufacturers are in Mexico.
Harold Sirkin at Boston Consulting says manufacturing accounts for 35 percent of Mexico’s GDP versus 12 percent of US GDP – the US benefits by selling more components to Mexican manufacturers and more consumer products to Mexicans.
Read the full article at http://www.businessweek.com/articles/2013-06-27/four-reasons-mexico-is-becoming-a-global-manufacturing-power#r=rss
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