Manufacturing In Mexico?
Why you should manufacture offshore in China over Mexico
So you have decided to take your project offshore. Let’s take a look at four of the primary factors you should consider when determining where to outsource your manufacturing project. Cost, Quality, Safety, Service.
Cost
Wages normally account for most of the cost difference in manufacturing, particularly when the work is labor intensive. As measured in U.S. dollars, Chinese hourly labor compensation costs in manufacturing were roughly 4% of those in the United States and about 3% of those in the Euro Area. That’s why most novices to global sourcing expect a reduction of up to 50% when moving a product to China. In Mexico, the legal minimum wage for general labor (by hour in US$) is 4.56, compared with China at 0.80, or 82% lower (2011 data.) From purely a wage perspective, China is a more attractive locale for many types of manufacturing. Wage differences are some-what less pronounced for higher-skilled positions. Process engineers, for instance, earn about $16,000 yearly in China, $21,000 in Malaysia, $32,000 in Mexico, and $54,000 in the United States. However, China has a competitive edge over manufacturing in Mexico by having a significantly vast pool of well educated and highly skilled workers. China has also been graduating more than 1 million engineers each year. Labor productivity in China’s secondary industry (primarily manufacturing, but also includes construction, mining, and utilities) has risen on average 10% per year since 1991, due to increased education, technological progress, and rising capital investment.
Besides labor costs, utilities in China, such as electricity and phone lines are well below the costs incurred while manufacturing in Mexico. China understands the value of infrastructure and is investing heavily in roads, power, water, and ports. This applies in both major cities and miles into the countryside. This is one of the intangibles setting China apart from other offshore manufacturing destinations.
Quality
Selecting the right manufacturer is a critically important step in minimizing the risk of poor quality and ensuring a consistent and timely supply of parts and products that meet your exact specifications. With proper management, the quality of products made in both Latin America and Asia is comparable, although it is easier to locate facilities with higher capabilities (i.e. high tolerance, quality materials) in China. Companies with high quality requirements must be certain to identify and work with contract manufacturing firms capable of analyzing root causes and providing quality-based solutions. These firms should be certified to ISO standards and have a comprehensive Quality Management System in place. Globalink Manufacturing Solutions has been certified for ISO 9001 and ISO 13485 to meet and maintain exact manufacturing standards.
Safety
The personal safety and economic stability of the destination country is a factor too important to ignore when considering offshore manufacturing. With much of Latin America facing political unrest, crime and unstable currencies, it is relatively easy to eliminate all but Brazil, Chile, Costa Rica, Mexico and Puerto Rico. However, in recent years the level of crime related risk in Mexico has elevated substantially. Safe and stable regions of Asia include China, Malaysia, Vietnam, Singapore and Thailand. Relocating production to an area that has a long history of tried and true manufacturing and has been proven to be a safe environment both personally and economically cannot be overlooked.
Service
The level of service you can expect to receive from an offshore manufacturer in Mexico or China varies greatly from manufacturer to manufacturer. Time zone changes are a reality of offshore production. If an offshore manufacturer doesn’t accommodate the time zone change it can make consistent communication difficult, limiting the level of service they can provide. Another factor that can affect the level of service an offshore manufacturer is able to provide is the language barrier. If the manufacturer does not have an English speaking staff of engineers, quality personnel, and logistics personnel, it may be difficult to communicate needs and issues regarding your project effectively. Also, keep in mind that it is important to select an offshore manufacturer that provides quality service not just before and during production, but long after production as well. Selecting a U.S. based manufacturer like Globalink Manufacturing Solutions can eliminate those problems as you will be dealing with an English speaking staff that will facilitate your project for you, on your time, in your currency, and provide outstanding service throughout the part or product lifecycle.
Offshore production can produce the kind of bottom line results that you desire, but challenges do exist. Cultural barriers, distance, time zone differences, travel costs, currency, business relationships, shipping issues, and a unique set of laws and regulations are variables that must be managed.
Seeking advice and help from experienced, qualified professionals is essential. At Globalink Manufacturing Solutions we have taken the hassle and risk out of Offshore Manufacturing to provide our clients with a risk free, simplified process for all of your technical procurement and logistical needs. Our offshore manufacturing expertise will enable you to obtain the high quality, cost effective solution you desire. We guarantee our manufacturing and/or assembly to your exact specifications.
We take care of all project needs. Design & Development, Manufacturing, Assembly, Packaging, Logistics, we do it all. We are a true Single Source provider. We handle all U.S. Customs & Importation paperwork, duties, and shipping insurance. We can ship to your port, warehouse door, or distributor. We also offer warehousing if needed. Our lead times are 8-10 weeks with proper arrangements.
Offshore Manufacturing can be immensely rewarding, however it is a complex process. If you do not have the offshore experience and relationships necessary to be successful, a negative outcome is likely. Let the experienced professionals at Globalink help make your offshore experience, a rewarding and hassle free experience. Call us today!
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