Maquila Reference is designed to serve as a reference/guide for the Maquiladora Industry and Mexico manufaturing.

Manufacturing in Mexico: Packaging in Mexico

Packaging in Mexico

Packaging in Mexico is beginning to play a larger role in many companies supply chain strategy, especially in consumer electronics. Over the past decade, many United States based electronics manufacturers shifted production to Asia to benefit from low-cost labor, but with labor wages now on par with Mexico and air freight costs from China continuing to rise, these same companies are turning to Mexico to help improve their bottom line.

For companies selling into the North American market, Mexico offers an excellent choice for outsourcing when considering increased shipping costs from China, insurance, product delivery and time to market. And while China remains a good option for low-cost labor and high volume production, Mexico can refine the supply chain, adding flexibility to an operation and reducing shipping costs by up to 70%.

By shipping products in bulk from China to Mexico, the goods pass into Mexico duty-free. Light assembly and/or just packaging the product in Mexico is performed and the finished goods are returned to a warehouse in the United States or distributed directly to the end user from Mexico. If the finished goods are subject to duty payments, these payments are often deferred until the product crosses into the United States, helping to preserve cash flow.

Hiring a well-run outsourced administration and compliance management company (or better known in Mexico as a “shelter company”) can help optimize this strategy and improve the likelihood of success in Mexico. Shelter companies understand all the labor laws in Mexico, accounting laws in Mexico, import/export regulations in Mexico and environmental laws in Mexico and can act as a partner by handling all the administration of any operation. This assistance enables companies to focus on production and quality control, which inevitably results in faster growth.

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