Mexico Contract Manufacturing – The Benefits

In 2018, Mexico imported $371.9 billion worth of goods into the U.S. Manufacturing imports included vehicle components; agricultural products; medical instruments; and much more. Each year, more companies choose contract manufacturing in Mexico as the solution to their supply chain needs. Despite this growth, you may wonder if moving your operations to a new country is worth the investment. Before we can determine if contract manufacturing in Mexico is the best solution for your company’s needs, it is important to look at the competition.  

The Elephant in the Room

Mexico Contract Manufacturing - Mexico Versus ChinaWe cannot talk about contract manufacturing in Mexico without addressing the elephant in the room — China. In 1973, the United States and China began a lucrative contract manufacturing trade arrangement that lasted for over forty years. In 2018, the U.S. took steps to change its contract. The U.S. placed 25% tariffs on $50 billion worth of Chinese imports. These hefty tariffs signaled the start of a “trade war” between China and the U.S. Companies on both sides of the divide continue to struggle under the tariffs. The challenge now facing North American-based companies is how to find high-quality, low-cost alternatives to their current contract manufacturing partners. To answer those concerns, here are 10 benefits to moving your contract manufacturing operations to Mexico.

Top 10 Benefits to Contract Manufacturing in Mexico

  • Lower Labor Costs
  • Reduced Shipping Costs
  • Fewer Delays Through U.S. Ports of Entry
  • Other Financial Perks 
  • Mexico Is a Safe Place to Work
  • Superior Production Quality
  • Contract Manufacturing Shelter Companies
  • Safe Working Conditions
  • Outsourcing Creates U.S. Jobs
  • Lower Travel Expenses

Mexico Contract Manufacturing Benefit #1: Lower Labor Costs

Companies who move their contract manufacturing operations to Mexico have discovered significant labor cost savings. Studies suggest that labor expenses in Mexico are 40-50% lower than in the U.S. Even skilled laborers earn less in Mexico because the cost of living is so much lower than in America. In addition to initial savings, as wages in Mexico grow, evidence shows that productivity also increases. Companies who choose to enter into a contract manufacturing arrangement in Mexico keep labor expenses low while building revenue.

Benefit #2: Reduced Shipping Costs

Another benefit to contract manufacturing in Mexico is the proximity. As a contract manufacturer, lower shipping fees mean that both the company’s cash flow and its margins are protected. Mexico manufacturing means that the savings can go to your customers or your pocketbook. 

Benefit #3: Fewer Delays Through U. S. Ports of Entry

Nothing is worse than having an item stuck in Customs, especially if customers do not understand that some things are out of a company’s control. The logistics of transporting items through the Mexican ports are less complicated than other contract manufacturing options. Once again, this benefit ensures that not only does your supply chain flow smoothly, but your customers stay happy.

Benefit #4: Other Financial Perks

Contract manufacturers know that Mexico offers better exchange rates than other countries. Also, Mexico’s facilities try to use natural gas instead of electricity. Both measures reduce operational expenses.

Benefit #5: Mexico is a Safe Place to Work

The World Economic Forum recently released its annual crime report. The forum “measures the extent to which a country exposes tourists and businesses to security risks mainly related to serious harm to people (violence and terrorism).” According to this report, Mexico (53.31) is currently ranked near the U.S (47.7). Headlines about border violence are unsettling, but these reports are incomplete. The violence that dominates the headlines revolves around a few large cities. Legitimate businesses have never been targets of this violence. Manufacturing in Mexico, like other places, depends on creating a security-conscious environment. Those tools include surveillance cameras, gated entry points, and security personnel. 

Benefit #6: Superior Production Quality

For years, Mexico’s reputation for superior manufacturing has made it an industry leader. Mexico is now the leading producer of electronics due in part to its access to skilled labor. These positions are often difficult to fill in North American countries. 

By comparison, China often experiences quality issues with its products. The logistics associated with returning an item are often prohibitive and result in write-offs. These issues usually include shipping fees, distance, time involved, and language barriers. 

What Are the Products Manufactured in Mexico?

  1. Mexico Contract Manufacturing - Made in Mexico Product SealTV’s and Electronics
  2. Tools
  3. Candy
  4. Toothpaste
  5. Appliances
  6. NASA Jumpsuits
  7. Inks and Printers
  8. Aerospace Components
  9. Medical Devices and Supplies
  10. Fender Stratocaster (Strat) Guitars

Mexico Contract Manufacturing Benefit #7: Contract Manufacturing Shelter Companies

Foreign companies rely on contract manufacturing shelter companies to guide them through the transition. A shelter company focuses on the administrative and legal logistics of a business. At the same time, the foreign company focuses on its core goal: manufacturing. The production value of the product remains high while decreasing the operating costs. 

For over 50 years, Mexico’s shelter services have provided their global partners with protection from liability. This protection means that foreign companies are not vulnerable to Mexico’s legal system or taxation practices. Shelter companies simplify the process of moving an operation to Mexico. Providing a turnkey, start-up approach to manufacturing is only one of the perks. Under a shelter company, you also maintain all intellectual property rights for your products and services.

Mexico Contract Manufacturing Benefit #8: Safe Working Conditions

Conditions in Mexico manufacturing have improved over the years. Contract manufacturing companies in Mexico know they must meet global standards. They provide benefits for their employees, including medical, family leave, paid sick time. Labor unions advocate for safe working conditions and fair wages. Employee turnover is lower because they want to take advantage of the perks provided by reputable manufacturing partners in Mexico. 

Mexico Contract Manufacturing Benefit #9: Outsourcing Creates U.S. Jobs

Recent headlines have capitalized on the fear that moving manufacturing companies out of the U.S. is costing U.S jobs. Indeed, millions of U.S manufacturing jobs move overseas each year, but that isn’t the whole story. 

U.S manufacturers often choose to outsource lower-level work to Mexico or China. The reduction in costs means that there is more room in their budgets for skilled U.S-based workers. In some cases, lower-level jobs can also be challenging to fill in the U.S because of the higher cost of living in that country. In that event, manufactures find it necessary to outsource parts of their business.

Mexico Contract Manufacturing Benefit #10: Lower Travel Expenses

Mexico’s proximity to the U.S means you will reduce the cost of lengthy international travel. Your executives will be able to spend more time in their offices. When you can’t be on-site, a knowledgeable workforce will provide clear information.

By comparison, China’s distance can make it difficult to resolve issues. The time and expense involved can cut into the cost-savings you were hoping to achieve. Steep differences between time zones and languages can produce added expensive manufacturing delays. 

Building Your Business the Right Way

Mexico Contract Manufacturing - Building Your Business the Right WayDo you want to take advantage of these benefits? Mexico is fully capable of meeting your manufacturing needs. Manufacturing companies around the world have discovered the value of moving their operations to Mexico. Manufacturing in Mexico means you have fewer supply chain delays and more revenue to build your business. 

If you ask a contract manufacturer in Mexico, they will tell you that while there are many manufacturing solutions out there, none of them provide the same level of help, experience, and high-quality products as Mexico. Your company can start saving today.

Our company has over 40 years of manufacturing excellence. Our ongoing dedication to high-quality, low-cost manufacturing makes us a great shelter company. We understand the pressures facing the global manufacturing industry. We understand that you want to see the advantages of lower labor costs while taking advantage of increased production. We’re prepared to help you achieve these goals, and much more. Contact us for your FREE initial consultation today!

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Christmas Delivery

US Based Manufacturing Company Brings Warmth to Those in Need in Hermosillo by Donating Blankets 

On December 21, BF&S Manufacturing donated 170 blankets to the State Capital of Hermosillo, Sonora (Mexico) to aid those in need during this cold winter season. 

CEO Carlos Fernandez spent over a year developing the concept for Blankets for Borders – a fly in event that would bring together pilots from all over in order to donate blankets for those in need. The event would require participants to donate a blanket or coat and, in return, they would receive a free pancake breakfast at their destination. It was a way to marry his love of aviation with philanthropy. The pandemic had the unfortunate impact of canceling this event, but the need was still there. 

“I made a promise and didn’t want COVID to get in the way of that promise.” – Carlos Fernandez

Fernandez knows and understands how great the need is in these communities. BF&S Manufacturing has operations in Agua Prieta, and Cumpas, Mexico. His company employs over 500 high-skilled employees and he travels often between the United States and Mexico. He has witnessed, firsthand, the devastation of the pandemic. For those in need, the cold is painful; but for those living on the streets, it can be deadly. 

“It gets incredibly cold in Hermosillo and these freezing temperatures can be very dangerous for those who are homeless or living in poverty. This is a very real need during this time.” – Carlos Fernandez

Fernandez is keeping his promise during these challenging times by donating 170 blankets to those in need. BF&S Manufacturing specializes in medical and aerospace manufacturing and is committed to making the communities in which they operate a better place to work and live.  The SEDESON (Secretario de Desarrollo Social del Estado de Sonora) will be responsible for distributing the blankets to ensure they go to individuals and families who are struggling.

American-Based Near Shore Manufacturing Company Donates Life-Saving Medical Supplies to a Hospital in Moctezuma, Sonora

On October 30, 2020, American-Based Aerospace and Medical near-shore manufacturer BF&S Manufacturing (MEFASA), donated life-saving medical supplies to Hospital Comunitario Moctezuma. The Moctezuma municipality welcomed this donation by hosting an event at the University de la Sierra in order to thank CEO Carlos Fernandez for his company’s generous donation. The Mayor of Moctezuma, Adriana Sepulveda Rodriguez, was in attendance and publicly thanked Fernandez. 

“MEFASA is part of the community and we are always interested in supporting not just the people of MEFASA, but people of all of the municipalities, to make them better, and to help everyone have a better life.” – Carlos Fernandez, CEO BF&S Manufacturing.

Moctezuma is 20 miles south of BF&S’ (MEFASA) manufacturing operation in Cumpas, and it is where the COVID-response hospital for the region is located. Fernandez worked with doctors in order to understand how best to help this hospital care for those suffering from COVID-19. This donation included a blood monitor that is used with the respirator in order to monitor the patient. This expensive piece of equipment is a critical, life-saving element in the battle against COVID.

“Thank you and God bless all of you! This is a great help to our community and you are welcome any time!”  – Adriana Sepulveda Rodriguez, Mayor of Moctezuma.

In addition to providing this needed equipment, Fernandez invited Dr. Juan Manuel Romero Trejo from Hospital Comunitario Moctezuma in order to ensure proper safety protocols were being met in order to keep all of his employees safe. Dr. Trejo was incredibly grateful for this opportunity, and assured Fernandez they were indeed protecting their employees. 

“I am at peace because the company, the owners of the company are indeed worried about the safety of their employees” – Dr. Juan Manuel Romero Trejo

BF&S Manufacturing has been a part of the Cumpas and Moctezuma community for decades. They currently employ 500 skilled laborers and have corporate offices and a warehouse located in Arizona (USA); manufacturing operations are in Agua Prieta, Sonora (Mexico) and Cumpas, Sonora (Mexico). They are dedicated to the communities in which they work and make a commitment to these communities to care for their employees, and improve the lives of everyone.

American-Based Aerospace Manufacturer Adds 225 More Jobs to a Local Community

Companies Can Help Boost Local Economies as Well as Their Bottom Line by Outsourcing to Mexico

On February 18, 2020, a well-established, American-based contract aerospace manufacturing company known as BF&S Manufacturing broke ground to expand operations in the small town of Cumpas, Mexico.

Cumpas and the surrounding area is home to 20,000 people and is just south of the Arizona/Mexico border by 100 miles. BF&S Manufacturing has been a fixture in this community for over 20 years, employing over 200 employees currently in high-skilled positions. This new expansion, slated to open in early 2021, will add 225 jobs to their current operation.

For CEO Carlos Fernandez, this expansion is an exciting opportunity to fill a growing need for companies who are looking for a qualified, near-shore manufacturer with industry experience and the certifications necessary to ensure quality control for their clients. Fernandez credits their growth with their extreme level of precision and skill, as well as a mass shift as companies seek to move their operations out of China as a result of rising tariffs, duties, a concerning lack of regulations, a lack of quality control, and complications with transportation and shipping. 

Because BF&S Manufacturing works primarily in aerospace and medical device industries, they are held to the highest standard and meet all necessary certifications within their field. Their employees are highly skilled and their quality control is exceptional. BF&S adheres to the same high standards as manufacturers in the USA, Canada, Europe, and other First World countries. By contrast, products manufactured in China face minimal regulations and quality control.

“If something we manufacture fails, the ramifications of that failure are huge. We have zero tolerance for error in our industry. Not every factory or company has that same standard; companies who work with sub-par manufacturers need to understand that risk” – Carlos Fernandez, CEO BF&S Manufacturing

The town of Cumpas is overwhelmingly supportive of this expansion, excited to have such a large increase in job opportunities that will serve their community throughout this difficult crisis in which so many have lost their jobs and livelihood. BF&S is a reputable company people are proud to work for because they are treated as valued team members who do important work that benefits everyone.

“When I was young, people were proud to work for GM and Ford. It was a generational pride that was passed on. BF&S Manufacturing is about more than making money and serving companies; for over 30 years our employees have been treated with dignity, and as part of a team.” – Carlos Fernandez, CEO BF&S Manufacturing

BF&S Manufacturing was founded in 1988 by Carlos’ father, Bob, an immigrant to the United States from Monterrey, Mexico. They currently employ 500 skilled laborers; this expansion will add 225 employees to their company, and allow for continued growth. BF&S Manufacturing corporate offices and warehouse are located in Arizona (USA); manufacturing operations are in Agua Prieta, Sonora (Mexico) and Cumpas, Sonora (Mexico).

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