Globalization has led to more companies to transfer manufacturing and assembly operations to overseas factories with China often winning out for its seemingly lower price. However, in recent years, many North American companies have moved their manufacturing to Mexico's maquilas, or factories.
Mexico is one of the top manufacturing countries in the world, offering a particular focus in technology and electronics. Since the 1970s, the country has played host to companies producing computer hardware, processing units, telephones, and more. Today, Mexico is home to over 730 manufacturing plants dedicated to the electronics industry. Eight of the ten largest manufacturing suppliers in the world operate in Mexico.
First to make the move
Offshoring to Mexico started in the 1970s with Burroughs and Motorola. Burroughs originally produced mechanical adding machines before moving on to become one of the world's largest producers of mainframe computers as well as typewriters and printers. Motorola, a pioneer in telephone technology, invented the protocols and technologies used in cell phone technology today, including the first consumer mobile phone.
Both Burroughs and Motorola discovered the advantages of transnational electronics companies working in Mexico and quickly set up maquiladora plants in the city of Guadalajara. This ultimately planted the seeds that would lead to Guadalajara becoming the Mexican Silicon Valley 20 years later, a flourishing city for electronics companies.
Growth of audio & video
Audio and video manufacturing, particularly involving televisions, has become hugely popular throughout Mexico. Flat screen TVs alone represent about a quarter of Mexico's annual electronics exports. According to the Ministry of Economy, about 61% of audio and video electronics manufacturers are located throughout Baja California in Mexico. After the Baja cluster, Ciudad Juarez in Chihuahua is the largest producer of TVs in Mexico. A number of recognizable electronics companies including Samsung, Sony, Sanyo, and JVS (Victor Company of Japan), are located in Baja California.
Mexico is also a well-known center for manufacturing home appliances, an industry that creates about 35,000 direct jobs and 110,000 indirect jobs. The country has about 78 major factories dedicated to producing domestic electric appliances. In 2010 alone, the industry grew by about 11.37%. Some of the major companies that base their home appliance production in Mexico include Mitsubishi Electric, Delphi, Electrolux, and General Electric, all creating everything from microwave ovens and refrigerators to vacuum cleaners and air conditioning units.
The city of Tijuana is also becoming a central hub for numerous brands in the electronics industry, including Plantronics and Flextronics. Tijuana has the advantage of being so close to the U.S.-Mexico border, allowing for easy transport and communication. Tijuana is also home to countless skilled workers.
Why manufacture in Mexico?
Near shoring in Mexico comes with huge benefits for large companies in the electronics industry. The country is a neighbor to the United States, a leader in and the largest market for electronics and devices. Mexico also has an immensely skilled, well-trained workforce. The country boasts about 130,000 students graduating in fields related to technology and engineering each year. Mexico also features large suppliers and supply chains, allowing for easier distribution of finished products.