A decade ago the rush to China was on. Factories produced at unbelievable prices and it seemed that anything could be purchased direct. 10 years later, the reality for many companies has set in. Yes, pricing is good although costs have risen and quality can be difficult to manage. Communications, port closures, rising transportation costs, intellectual property concerns, long lead times and extended supply chains are all real issues faced by importing companies.
Near shore sourcing is the new trend with Mexico leading the charge. So called maquiladoras, Mexican assembly plants mostly located along the US-Mexico border, now offer a range of world class manufacturing solutions with far fewer issues than sourcing from Chinese factories and several distinct advantages.
- Shorter supply chain. Mexico’s geographic proximity translates into shorter lead times, quicker turn around and lower freight costs.
- Less inventory. With shorter lead times importers can respond faster to peak demand and do not require the same high levels of on hand inventories.
- Ease of communication. Most maquiladoras’ administration and engineering staffs are completely bi-lingual and used to doing business in English. Also the proximity allows for faster, easier plant visits and same time zone telephone calls.
- Familiarity with US market requirements. With many years of experience exporting into the US, most maquiladoras are intimately familiar with the demands and challenges of the US market and know “how to do business” in the United States.
- Higher environmental standards and greater respect for intellectual property rights. Pursuant to NAFTA rules Mexican factories are subject to much higher clean air, clean water, and labor standards than are typical in China. Moreover, Mexico has a long history of respecting patents and other intellectual property. Mexico is rarely the source of knock offs.
- Dozens of land border crossings. With the harm caused by the latest series of West Coast port closures, the ease of shipments out of Mexico and into the US is a major consideration.