Why Is Mexico’s Labor Force Such a Strategic Advantage for U.S. Manufacturers?

By: | April 25th, 2024

  • By Sergio Tagliapietra, CEO IVEMSA 

Mexico’s cost-effective labor is one of the main advantages for U.S. manufacturers. Finding skilled workers in the U.S. has proven challenging in recent years due to the slowdown of workers interested in entering the manufacturing industry. Furthermore, industrial labor costs are much higher in the U.S. than in Mexico, which is why many are considering nearshoring to Mexico.

Yet, it’s not only the cost savings that make recruiting from Mexico’s talent pool an alluring strategy. The diverse skill set and proximity to the U.S. market also prove to be beneficial as companies expand. 

Here’s more on what Mexico’s workforce offers and how partnering with a shelter company can help maximize these benefits:

Labor Rates

Labor rates in Mexico are less than wages in the U.S. when fulfilling industrial roles. Even with Mexico’s 20% minimum wage adjustment in 2024, the daily rate equates to $17.85 USD in the northern border states and $14.17 USD per day for the rest of the country. As an example, for a fully burdened, semi-skilled worker, Mexico labor rates, on average, equal $5.60/hour USD compared to $23/hour USD in the U.S. for a similar role.

Skilled Workforce

While China has been historically known for its low-cost labor, it is most advantageous for manufacturers with low-mix, high-volume products. Whereas, those with specialized products, there’s a better likelihood of finding cost-effective, skilled labor in Mexico. 

For decades, Mexico has invested in its industrial workforce through advanced education and technical training programs. With the rise in technology sophistication and product distinction, it’s necessary to have employees who have welding, machine operation, and other similar skills necessary to complete production.

Strategic Location

Mexico is one of the top international trade destinations, maintaining 13 free trade agreements with 50 countries, including the USMCA. Per the USMCA, there are certain incentives associated with manufacturing in North America, most notably in the automotive space. 

Additionally, the proximity to a U.S. audience makes it convenient for manufacturers who are nearshoring to Mexico versus operating in China. They can get their products to market faster and at a fraction of the cost it takes to ship.

Recruit Qualified Labor and Launch Production Faster

Businesses can leverage the benefits of nearshoring to Mexico by working with a Mexico shelter company. It is the safest way to do business and reduces the learning curve for foreign operators setting up production in Mexico for the first time. 

In addition to helping U.S. manufacturers recruit and retain skilled workers, a shelter company also helps them navigate Mexico’s severance pay laws and differences in employee benefits so they can stay compliant and competitive. 

Additionally, by implementing shelter services in Mexico, manufacturers can set up production in three to four months following site selection. This drastically cuts down on the typical timeline of the six to seven months it takes to launch production as a standalone entity. 

Securing cost-effective labor is only part of what the full scope of shelter services offers. Operating under a shelter also allows U.S. and other foreign manufacturers to minimize risk and liability, save costs on infrastructure, permits, and licensing fees, and maintain ownership over all manufacturing processes and intellectual property rights. 

Learn more about the benefits of working with a shelter company when nearshoring to Mexico.


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