As China’s Wages Climb, Mexico Stands to Win New Manufacturing Business
Not long ago, Mexican factories couldn’t compete with the “China price,” the ridiculously low cost of production in the Asian nation.
But sometime this year, with rock-bottom wages soaring in China, the average cost of factory labor in the two nations will be roughly the same. This is a boon to Mexico, and its industrial parks are swelling.
The trend has caught the attention of chief executives such as Rob Moser, the president of Casabella Holdings, who recently started adding up the pros and cons of where to make the housewares that his New York firm designs and sells.
China was cheap — really cheap — when he first started buying there in 2003. But labor costs have climbed at a double-digit pace, and there were other factors that made China less convenient.
“You’ve got to get a visa to China, and that takes time. It’s a 16-hour flight, hours to the factory. It’s days at the very least to tackle some of these issues,” he said, referring to production problems that invariably arise.
“You literally can be in a facility in Mexico the same day and be fixing things. That is a huge benefit,” Moser said.
So, like a number of U.S. and Canadian businesses, large and small, Casabella decided to bring some of its business back to North America this year, specifically to Mexico, the United States’ third-largest trade partner after China and Canada.