How Mexico Manufacturing Solves U.S. Labor Demands
06.27.25Reshoring manufacturing to America has been high on the list of priorities for the U.S. administration, particularly following the U.S./China trade war and COVID-19 pandemic. These two events exposed concerns regarding retaliatory tariffs and unreliable supply chains, leaving manufacturers facing extensive and costly production delays.
Furthermore, rising labor rates in China and challenges associated with intellectual property (IP) protection have also led many U.S. manufacturers to bring production closer to home. However, in many cases, this move is easier said than done.
Though the idea of reshoring manufacturing to America is a positive sentiment, research shows there are not enough qualified workers to fulfill the demand. The National Association of Manufacturers shows workforce challenges in the U.S. continue, with more than 71% of manufacturers citing an inability to attract and retain employees as their top challenge as of 2023 Q3.
Additionally, as of December 2023, the Bureau of Labor Statistics reported 601,000 open manufacturing jobs, resulting in a three-month high. Plus, predictions show the U.S. manufacturing industry could see a need for up to 3.8 million jobs over the next decade.
Therefore, in regards to labor and logistics, Mexico manufacturing makes the most viable sense for many.
Where Are All the American Industrial Workers?
The industrial labor shortage in the U.S. is due to a combination of factors. The job market is different from what it was a few decades ago. Advances in education and technology have widened job opportunities, and there aren’t as many workers who seek manufacturing as a career path, especially at the rate required to keep pace with the production necessary.
Additionally, an entire generation of industrial workers is retiring, with younger workers unwilling or unqualified to fill the vacant positions. Furthermore, manufacturing in sectors including aerospace, automotive, electronics, and medical devices is complex and requires a specific skill set and experience, which, compared to Mexico’s labor pool, U.S. workers simply don’t have.
There’s been a notable decline in America’s vocational school enrollment since 2017. Meanwhile, Mexico continues to invest in advanced education and training in the manufacturing industry, contributing to a steady pipeline of qualified workers.
Lastly, competitive pay is necessary to recruit and retain employees while managing overall manufacturing costs. Compared to labor rates in Mexico, which start at $6.96 USD for fully burdened, semi-skilled workers, U.S. manufacturers can’t compete and recruit in the same way.
Discover All the Benefits of Nearshoring to Mexico
Mexico manufacturing provides an alternative solution for U.S. companies that want to bring production closer to home. The proximity of Mexico to the U.S. market makes it an ideal location, leading to quicker lead times compared to China, plus incentivized trade as part of the USMCA trade bloc.
But perhaps most importantly, there’s access to a highly skilled, cost-competitive industrial workforce that can boost manufacturers’ long-term strategies.
There are several advantages of nearshoring to Mexico, and a shelter services company handles the administrative responsibilities required to set up production, including recruiting, payroll, and retention.
To discuss labor rates in Mexico and get an idea of total costs for your company, contact IVEMSA today.
Sources:
https://nam.org/wp-content/uploads/2024/01/Outlook-Survey-December-2023-Q4.pdf