Could it be the end of the ubiquitous “Made in China” packaging? According to industry experts, American outsourced manufacturing is starting to shift from China to Mexico, and some labor is even coming back to the U.S. itself as labor costs to rise in China, and as American economical ties with China begin to unravel.
“They’re all looking for a new model,” says Jason Sauey, whose family-owned business makes a variety of plastic items, such as Duncan yo-yos. After resisting the allure of China back in 2004 when competitors contracting there slashed prices, Sauey is now reaping the benefit of the decision to move his labor force to Mexico. He explains that price alone is not driving the shift — it’s also thanks to changing perceptions about the importance of both quality and speed of response, in which China has left much to be desired.
According to economists, the “eagerness” of the market’s interest in Mexico is a type of energy that hasn’t been seen since the first days of the North American Free Trade Agreement, back in the 1990s. Since 2010, U.S. trade with Mexico has grown a steady 30%, and now accounts for an incredible $507 billion annually. America also receives political benefit from opening the trading doors to Mexico — the economic disparity between the two countries has often been identified as a reason behind the large numbers of undocumented immigrants who cross the border into the U.S. Trade is economically beneficial to both countries, and can help pacify border control issues.
The U.S. also benefits from the closer locale when it comes to jobs — as the Economic Times points out, “Neighbors tend to share more of production.” About 4% of parts used in Chinese imports come from the U.S., compared to 40% of parts imported from Mexico.
One potential drawback of moving operations to Mexico, though, is that the country — and its potential employees — are varied in their approach to creating quality products. “In Mexico, almost right is good enough; second best is fine,” explains Edward Treanor, a factory manager working in Mexico. He adds, though, that its close proximity to the U.S. makes it easier to correct issues that arise.