Mexican Factories are beating out China!
Posted by: MaryAnn in Mexicali, Mexico, tags: manufacturing, Mexico
Fireworks over Mexicali!
A reader sent in a query to me. He wanted to open a small factory for his sewing business and asked if Mexicali was safe.
The answer is a resounding YES. In Phoenix, he is paying $10 an hour for his employees – in Mexicali, it would be only $2 an hour.
Companies are now realizing that Mexico is a much better investment than Asia. Rising Chinese costs and higher shipping prices are part of the reason. Then there is China’s rampant piracy, risk of losing intellectual property, quality failures, and communication problems.
Also, China is just too far away.
Mexico is located on the U.S. border; goods can reach U.S. retailers and manufacturers in only two days rather than in five weeks from China.
In addition, in Mexico, business operations and practices are handled much like in the U.S.
Where is Mexicali?
Beijing’s Lenovo left China to open a plant in Mexico to make up to 5 million ThinkPad notebook PCs a year. Yes, manufacturing is even moving from China to Mexico!
Despite all of the drug war news happening in Tijuana, and Juarez, the Mexican maquiladoras-factories making goods for export-are not fleeing. Each day, 9,000 managers cross the Rio Grande safely from El Paso Texas, to the Juárez plants of Johnson Controls, Cummins, Emerson Electric, Delphi Automotive, and others.
MOVING TO MEXICALI
Mexicali, a city of close to 1 million, and the the capital of the Mexican state of Baja California, has been spared the violence of nearby Tijuana.
Baja California, and Mexicali are in Mexico’s Free Zone and are not considered parts of Mexico for customs purposes. In the Free Zone businesses may import goods duty free, except from other parts of Mexico.
Mexicali and Monterey are the two safest places for manufacturing in Mexico. Mexicali, however, holds a big advantage, because it is right smack on the border, close to both San Diego and Phoenix.
U.S. Interstate 8 is just seven miles from Mexicali, and U.S. Interstate 10 is only a few miles further north.
Rail service from Mexico crosses the Mexicali border into California and extends to San Diego and Los Angeles, with connections to all U.S. rail routes.
Air transport is also available from Mexicali’s International Airport, and from the Imperial Valley Airport 15 miles north across the border from Mexicali.
Things are so good in Mexicali, that David J. Hill, formerly with National Semiconductor, is leading the development of a 10,000-acre high-tech park called Silicon Border in Mexicali.
Factory jobs are moving from the U.S. to Mexico.
Kellogg’s new $100 million plant in Mexicali has 247,500 square feet – it is their 4th factory in Mexico. Kraft buys its taco shells from a factory in Mexicali owned by a subsidiary of PepsiCo.
Skyworks Employees in Mexicali
In Mexicali, Skyworks, a maker of semiconductors for mobile phones and PDAs, is adding 100 jobs to produce items they formerly made in Maryland. Skyworks originally considered relocating to China, but decided Mexico is actually cheaper because its skilled workforce is more efficient.
Yes, Mexicali is more efficient than China!
Mexicali is also attracting such high-tech industries as microelectronics, aerospace, and medical devices. Gulfstream has expanded its Mexicali facility to produce sections of executive jets. Honeywell, which has large manufacturing operations in Mexicali, has opened a $40 million center staffed with 300 of its engineers.
Honeywell in Mexicali
To further improve its manufacturing prowess, Mexico is studying successful business models in Asia, the U.S., and Europe. Mexico is also collaborating with universities and private industry to upgrade workforces, infrastructure, research and development programs.
In the past five years the Mexicali campus of Universidad Autónoma de Baja California (UABC) has doubled its engineering enrollment to 4,000.
UABC and CETYS Universidad, Mexicali’s top private university, recently added bachelor’s and graduate programs in aerospace engineering, microelectronics, bioengineering, radio frequency design, and renewable and clean energies.
Mexicali, itself, is a model of clean energy usage. It does not depend on fossil fuels to generate electricity, but has a huge 750 MW geothermal power plant site just 20 miles to the south of the city. Baja California even exports electrical energy to the U.S!
Fluency in English is a requirement. In fact, many residents of Mexicali are English speakers. Most of the movies in Mexicali are in English along with the TV.
Mexicali from California
Not only that, in Mexicali, you can drive a car with U.S. plates, and pay in dollars or pesos wherever you want – even at Mexicali’s Super Wal-Mart!
This is all due to Mexicali being in Mexico’s Free Zone.
With Calexico right across the border, most Americans would feel very much at home in Mexicali.
The drug cartels? Mexicali is extremely peaceful, with no apparent activity from any of the reputed drug cartels.
Mexicali "Shelter Plan" Site
For those who want to start small, and gain an easy manufacturing foothold in Mexico, space, and employees are ready and waiting in industrial parks, including Mexicali.
“Shelter plans” provide U.S. companies with ready-made manufacturing facilities complete with employees.
The Shelter Plan
The shelter plan provides foreign manufacturers with a fast start in manufacturing operations in Mexico without having to go through the process of setting up their own facility.
With the shelter plan, the risks of labor liability, ownership of facilities and legal presence in Mexico are avoided. Immediate start-up is possible with minimal costs, and there is flexibility to grow or shrink as needed. There is no long-term commitment, and no legal presence in Mexico is required for this.
It’s time for manufacturers targeting the U.S. market to take a hard look at Mexico – and especially at Mexicali.
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Mary Ann,
My fiance and I moved to Mexicali in October. We live on De Las Americas, just a few blocks from the Synopsis Cafe you always raved about. We would like to meet you and your husband sometime, as we are always looking for American friends. Please let me know what you think…
yaa definitely Maxico is better option .it is always better to spend money where u and ur money are safe . I think tht these both condition are not fulfilled by Asian
countries.
From what I hear, Asia should be pretty safe.
I have worked for Autolite as a project cordinator during the start up phase for about eight months..I love it….the people there are respectful and the hospitality is unreal….the natives that know have a level of understanding why most americans are there..and its for industrial purposes….i would love to go back and assist any company needing help with training and set up for a new Industrial site….Please feel free to e-mail with questions of interest or inquires at poseydr69@yahoo.com…..
You love Mexicali? Wait ’til summer temps hit 120 degrees. Wait ’til the domestic water system goes toxic again. Wait ’til the cops threaten to arrest you for running a red light that wasn’t there, unless you hand over $20 mordida (the little bite of death). Mexicali is not as dangerous as Juarez, with its 3,000 murders so far this year, but give it a little time to catch up. Get accustomed to the reality that everything in Mexico is corrupt. My company, which is a different division of yours, closed seven plants in Los Angeles. More than 3,500 people permanently lost their jobs. We built five big plants in Mexicali that employed three Mexicans for every job that was previously done by one American. Why? Because Jose’ has been on the job for 3 months and is about to cross the border. Angel is Jose’s backup and will soon replace him. Xavier was hired last week to learn Angel’s job, and will soon take over. Every position has at least three Mexicans because the turnover rate is so high. This constant upheaval means that no one is properly trained to do their jobs. Quality is a word that does not translate into Mexican culture. Two thirds of all US companies that opened factories in Mexico as part of the NAFTA agreement have now pulled out of Mexico and relocated to China or Eastern Europe. Think twice before entering an extremely dangerous place. It is not worth the risk!!!
You love America. Wait until you get foreclosed on and have to move into a tent. Wait until you are kidnapped in Phoenix, which has a much higher kidnap rate than Mexico. Wait until you get thrown into jail for not paying for you health insurance. Enjoy paying twice as much for your medical services as any other country – and the US health care ain’t too good. I had a successful operation here, for 1/10th what it would cost in the US. On top of that, my surgeon did a great job, and I recovered. The US doctors were never able to diagnose what I had. They just prescribed pain-killing dope. The same operation for $100,000 in the U.S. fails about 100% of the time – visit http://www.inspire.com to read the sad stories and failed operations where the patients have to love on Vicodin to survive.
Wait until your job is outsourced to China. Think about it. If the US stopped outsourcing jobs to China and kept them in the US, we would have no unemployment and no recession. Enjoy paying three times the rent in the US. Enjoy not having the $94+ income tax exclusion we get for living overseas.
You think only Mexico is corrupt. Wake up! All that TARP money going to Goldman Sachs, and their ilk, making Wall Street rich. Now California is sending its TARP money to China to bring in Chinese labor to build the lite rail system. What do you think the Governator is getting as his commission. Go buy a General Motors car – the worst in the world, back by Obama, and paying the top GM guys a fortune, and for what.
We have been in Mexicali for over two years and the heat is no worse than Phoenix. The only time the police ever honked at us in Mexicali, was the night we neglected to turn on our auto lights. You, Mr. Gringo, are a blind believer in what the American media is feeding you.
God Bless,
MaryAnn
I agree on what you wrote here about Mexico, But just to add China is home to the fastest-growing economy. In the face of a crippling global economic downturn, China powered ahead in 2009, driven by big government stimulus programs and large increases in bank lending. And while China isn’t immune to the downturn, it continues to experience impressive growth and resiliency. china economy and its citizens are growing richer each day. In January, China overtook the U.S. to become the world’s largest auto market. Its entry into the World Trade Organization (WTO) and hosting of the 2008 Olympics reflect its growing role on the world economic stage.
Yes, China is fast-growing, but an interesting aside is that many Chinese are now migrating to Mexico for a better life. Many of these Chinese come to Mexicali, as Mexicali was originally a Chinese town populated mainly by railroad workers.