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Manufacturing in Mexico - Pros/Cons

Anything related to sourcing or importing products.

amp0193

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With the on-set of environmental shutdowns and rising labor and raw material costs in China, it's got me thinking about manufacturing elsewhere.

Does anyone here know someone who has ever imported/manufactured in Mexico?


The challenges seem like they would be mostly upfront: Finding a factory, getting them set up, making sure the quality is there and the product is right. Probably dealing with limited or no English.

Assuming I could get manufacturing quality to be the same, and could manufacture for the same price I do in China, the benefits would seem to be:

  • Saving thousands per container in freight costs.
  • Shaving a couple of weeks off of the freight lead times vs. ocean freight from China. Especially because I'm in Texas.
  • No Chinese New Year + Other Holidays.

@Kak - Didn't you manufacture your raw materials in Mexico? Or maybe it was in S. America. I don't remember exactly.

@Walter Hay - What are some other factors I'm not taking into consideration here? I need to get your latest book, as I'm sure you talk about it some there, but for the benefit of the forum let's discuss here.

@Runum - I think you actually recommended someone in Mexico to me a couple of years ago. Were they a forum member here? I don't remember the full story or know what they are up to these days.
 
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sam9530130

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I don't have much experience with manufacturing but I lived in Mexico for a little while so if you need help with culture or language, I'd be happy to help. Good luck
 

G-Man

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With the on-set of environmental shutdowns and rising labor and raw material costs in China, it's got me thinking about manufacturing elsewhere.

Does anyone here know someone who has ever imported/manufactured in Mexico?


The challenges seem like they would be mostly upfront: Finding a factory, getting them set up, making sure the quality is there and the product is right. Probably dealing with limited or no English.

Assuming I could get manufacturing quality to be the same, and could manufacture for the same price I do in China, the benefits would seem to be:

  • Saving thousands per container in freight costs.
  • Shaving a couple of weeks off of the freight lead times vs. ocean freight from China. Especially because I'm in Texas.
  • No Chinese New Year + Other Holidays.

@Kak - Didn't you manufacture your raw materials in Mexico? Or maybe it was in S. America. I don't remember exactly.

@Walter Hay - What are some other factors I'm not taking into consideration here? I need to get your latest book, as I'm sure you talk about it some there, but for the benefit of the forum let's discuss here.

One of our food processors is in El Paso. They basically have separate entities on both sides of river, manufacture on the MX side, then transfer the inventory to the American sub. You get the cost savings of the MX facility, but we don't have to deal with any of the import shenanigans, as we're technically buying it from the US.

Business Directory - Greater El Paso Chamber of Commerce | El Paso, TX
 

amp0193

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I don't have much experience with manufacturing but I lived in Mexico for a little while so if you need help with culture or language, I'd be happy to help. Good luck

Gracias!
 
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AgainstAllOdds

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Don't limit yourself to Mexico.

Look at top world tradeshows for the product you're purchasing. Figure out which countries has the best manufacturing capability. Speak with suppliers in those countries.

As of a few years ago Mexico has cheaper labor than China. Problem is that they're also extremely inefficient in comparison. I hired an individual to contact every single factory in Mexico for a product I was purchasing. The quotes I received were 2-3x higher. My assumption is that you'll find that in your search as well.

Mexico is better than China for a multitude of reasons:
  • Quicker turnaround time due to proximity
  • Cheaper labor
  • Easier to fly to for QA
Yet even with those advantages they still do a fraction of the business of the Chinese. A huge reason for that is price.
 

Kak

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I like Mexico. It has been good to me in several ways. Results may vary.

You will find a couple of things:
Pros:
-Product quality is better
-NAFTA
-uniqueness
-less rip off artists

Cons:
-Products cost more
-Shipping is more if you’re used to ocean freight out of China, slightly less than air if you substitute it with truck
-Product consistency and supply line solididity is a definite con.

Like anything, you get out what you put in. You could make millions doing business exclusively with Scandinavian countries too, but why? I operate in a global economy with regards to my businesses. I literally don’t care what countries I do business with as long as it’s legal and profitable.
 
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Walter Hay

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I think @Kak has summed it up rather well. Buy wherever you can do so legally and profitably.

Those who have read my book know that I have long advocated looking to countries other than China. The latest edition deals specifically with 18 countries plus the USA, and has a catch-all section to assist in sourcing in almost any country.

An important point to consider is that it is generally far easier to locate suppliers in China than in any other country, because the unleashing of capitalism in China has revealed a vast latent entrepreneurial spirit. Ordinary people who never saw an opportunity to operate their own business suddenly saw the possibility opened up to them and they have seized it with enthusiasm, and rapidly learned how to advertise their wares internationally.

Although sourcing in China is so easy to accomplish once you learn how to avoid the pitfalls, there are many undesirable factors in buying from China.
  • Freight costs. Although the cost of sea freight is low, that is not an option for a great many importers, particularly new ones.
  • Poor quality mindset. This is partly cultural, but is largely influenced by the downwards cost pressure exerted by Western buyers, mostly the very big retailers. Using trusted inspection services will help alleviate this problem.
  • Penny pinching attitude of manufacturers towards keeping costs down, and that includes deceptive practices. (E.g., you buy stainless steel, you get plated mild steel that until it rusts, looks like stainless steel.)
  • The frustrating habit (for Westerners) of Chinese business people to always say yes, even if they mean no.
  • The existence of a vast pool of talented scammers. I know you will find them in any country, but nowhere near the same extent.
Given that it is so easy to source in China, few importers seem willing to follow the harder road and search other countries. As I point out in my book, many of the sites I suggest for sourcing outside of China are not user friendly, but once you learn how to use them, there are potentially great benefits:
  • Unique products. Sometimes, simple browsing can open up great possibilities.
  • Better quality. I must include a caveat here with a generalization that might raise some objections: The Latin attitude is very easy-going compared to some others, and as in dealing with China, could require more effort to achieve good quality control.
  • Many countries neglect export possibilities, so they don't even have B2B sites. Following the search path I outline in the catch-all section of my book can be very time consuming and in many cases be met with disinterest on the part of officials whose job is supposedly to promote exports.
  • Shipping by sea from some countries will cost a lot more than shipping from China.
Regarding the issue of quality, I would mention that I have seen quite a lot of products that have been made in developed countries selling at retail at prices similar to far inferior quality items from China. The retailers might be (not likely) accepting lower margins, but the quality plus the labels "Made in..... Italy, Germany, Australia, USA, UK, Sweden, etc" result in the goods flying off the shelves.

A more adventurous approach to product sourcing could give a big edge to those who are willing.

Walter
 

amp0193

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-Shipping is more if you’re used to ocean freight out of China, slightly less than air if you substitute it with truck

This surprises me.

Shipping a container by rail (or truck?) from Mexico to Dallas would cost more than a sea freight shipment from China?

Or am I misunderstanding you?

supply line solididity is a definite con.

What do you mean by this?
 
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Kak

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This surprises me.

Shipping a container by rail (or truck?) from Mexico to Dallas would cost more than a sea freight shipment from China?

Or am I misunderstanding you?

What do you mean by this?

Yes sea from China is cheaper than trucks from Mexico. China has better economies of scale. Trucks from Mexico are cheaper than air from China. I haven’t done any rail or intermodal.

I mean finding a supplier that can solidly and consistently provide the same products in higher quantities is difficult in Mexico. That goes for consumer products or raw materials.
 
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