Exploring the Value of Labor in Mexico07.20.21
The low cost of labor is one of the key reasons why manufacturing in Mexico has consistently remained a key strategy over the years. When compared to China and the U.S., Mexico maintains the lowest labor rates, while also adhering to a 48-hour work week. The result? Increased production at a lower cost.
Mexico labor rates start at $4.13/hour for an entry-level, non-skilled operator position, and go up to $34.61/hour for a production manager role, with varying job titles and salaries in between. These costs equal a fully burdened salary, which includes mandatory benefits, competitive market benefits, state tax, and federal taxes. Additionally, despite the lower cost of labor in Mexico, the quality of work remains high.
Mexico’s industrial workforce is equipped with an advanced level of training and skill development, making employees invaluable to foreign manufacturers wishing to expand.
There are over 2,500 higher educational institutions throughout Mexico with many schools partnering with companies for research and development and design projects. Manufacturers can also create their own programs to train students as needed and have first selection of candidates following graduation.
Meeting the Demand for Industrial Workers
The growing number of foreign investments in Mexico has kept the demand for laborers high. Fortunately, Mexico graduates over 110,000 engineers every year. Not only can manufacturers benefit from the low cost of labor in Mexico, they can also count on a thriving workforce to meet the rising need. With U.S. factories struggling to find skilled workers in specialized roles, this availability is valuable now more than ever.
It’s been reported as many as 2.1 million U.S. manufacturing jobs will go unfilled through 2030, leading many to consider exploring the option of expanding production to Mexico instead. Furthermore, USMCA provisions now require 75 percent of auto content be made in North America. This fairly new enforcement has caused many manufacturers to reshore vehicle and parts production from China to Mexico or at least strategize a diversification plan for the future.
Essentially, the lower cost of labor in Mexico speaks to only one part of the inherent value of Mexico’s workforce and the part it will play in the presence of foreign manufacturing companies in the future.
Partnering with a Shelter Company to Recruit Top Employees
As more companies turn to Mexico manufacturing solutions, the workforce is becoming increasingly competitive. The process of recruiting and hiring in Mexico takes time, resources, and insider knowledge of the current landscape and availability.
One of the many benefits of partnering with a shelter company is these responsibilities can be delegated to experts familiar with filling various manufacturing roles. IVEMSA handles all areas of HR to ensure you hire the best fit, as well as maintain competitive salaries and benefits to keep employee turnover low. A shelter company also helps you maintain compliance to abide by current labor laws and regulations specific to Mexico.
There are several advantages to manufacturing in Mexico. The cost-effective, highly skilled workforce is arguably one of the most impactful. Hiring the right people allows your company to continue to grow and deliver on current market demands.
To learn more about manufacturing in Mexico and how IVEMSA can help you reach your goals, contact us today.