Lower Labor and Energy Costs Are Expected to Propel Mexican Manufacturing Exports, Adding $20 Billion to $60 Billion in Output to Mexico’s Economy Annually by 2017; U.S. Suppliers Also Will Benefit, Predicts The Boston Consulting GroupWithin five years, higher manufacturing exports due to a widening cost advantage over China and other major economies could add $20 billion to $60 billion in output to Mexico’s economy annually. And thanks to the North America Free Trade Agreement (NAFTA), U.S. manufacturers of components for everything from automobiles to computers assembled in Mexico also stand to benefit, according to new research by The Boston Consulting Group (BCG).The key drivers of Mexico’s improving competitive edge are relatively low labor costs and shorter supply chains due to the country’s proximity to markets in the U.S. Another important advantage is that Mexico has 44 free-trade agreements — more than any other nation — allowing many of its exports to enter major economies with few or no duties.A tipping point was reached in 2012, when average manufacturing costs in Mexico, adjusted for productivity, dropped below those of China. By 2015, BCG projects, average total manufacturing costs in Mexico are likely to be around 6 percent lower than in China and around 20 to 30 percent lower than in Japan, Germany, Italy, and Belgium.“Mexico is in a strong position to be a significant winner from shifts in the global economy,” said Harold L. Sirkin, a BCG senior partner. “That is good news not only for Mexico, which relies on exports for around one-third of its GDP. It’s also good for America, since products made in Mexico contain four times as many U.S.-made parts, on average, as those made in China.”via Mexico’s Growing Cost Advantage Over China, Other Economies Will Boost Its Exports — and U.S. Manufacturers.
About The Author
August 23, 2012
- The United States and Mexico: Building and Designing Things Together – Forbes
- Made in Mexico: An emerging auto giant powers past Canada – The Globe and Mail
- How to Boost Border Competitiveness? Just Ask the Folks There.
- How Will Mexico’s Economy Perform in 2015?
- It’s Time To Reset U.S.-Mexico Relations – John M. Ackerman – POLITICO Magazine