China and Mexico Manufacturing: Rather Than Either/Or, Why Not Both?

China manufacturing has been the model U.S. companies have relied on for decades to save on production costs amid rising demand. However, with continuing trade policy uncertainties and the supply chain slowdown during the COVID-19 pandemic, this strategy hasn’t quite rebounded as the go-to option it once was.

While China manufacturing still makes sense for some, the shift toward manufacturing in Mexico has become a bigger part of the conversation. Fortunately, for many, there doesn’t have to be a definitive decision of choosing one location over the other. Manufacturers have seen the value of diversifying production and embracing the advantages both solutions provide.

However, let’s take a closer look at reasons why manufacturers are transitioning manufacturing to Mexico, either as an alternative to China or as an addition, and how a shelter services company can help make the move more seamless.

A Shift Away from Overdependence

Tariffs have taken center stage regarding the state of manufacturing. Though nothing is certain when it comes to changes in policy, having a diverse portfolio gives manufacturers more options when there’s disruption in the market.

This was made clear during pandemic times as breakdowns in the supply chain and increasing transportation and labor costs caused manufacturers to rethink their overreliance on China. However, rather than impulsively pull away from production altogether, many have chosen to expand their manufacturing efforts and explore solutions in Mexico.

Mexico has long been a main manufacturing hub. Global companies in the automotive, aerospace, electronics, and medical devices sectors, in particular, have benefited from the close proximity to the U.S. market, a highly skilled labor pool, and the unique advantage of shelter services to meet their growing needs.

Mexico’s Geographical Advantage Over China

For many, the low cost of labor in China has been the biggest incentive for offshore production in previous years. However, between China’s increasing labor rates and costly transportation expenses, nearshoring to Mexico saves manufacturers both time and money.

Additionally, the geographical difference plays a key role in strategy. The proximity of Mexico to the U.S. market makes it an invaluable option, helping manufacturers cut down on lead times, increase transportation options, and gain greater production oversight for business leaders.

Shelter Manufacturing vs. Contract Manufacturing

Manufacturing has also become increasingly complex as new technology is introduced. Therefore, company leaders are more hesitant to hand over their entire process via contract manufacturing in China. It leaves companies susceptible to intellectual property (IP) infringements and quality assurance challenges.

Alternatively, shelter manufacturing is the safest way to conduct business in Mexico. It allows companies to maintain full control over production and processes as well as ownership over IP, equipment, and materials. Moreover, working with a shelter services company minimizes risk when launching production in a foreign country and optimizes cost savings with a shorter setup time.

Explore All Options with IVEMSA

Rather than choosing one location over another, exploring more than one option, including manufacturing in Mexico, is where many companies see a viable long-term strategy.

If diversifying your portfolio is part of your production goals, contact IVEMSA to learn how shelter services can serve as a competitive advantage.