There's no question that Mexico has become a central hub for manufacturing. With its low cost of labor, skilled workforce, and close proximity to the U.S. as compared to that of China, outsourcing to Mexico just makes sense for U.S. businesses. The medical device industry in particular has seen exponential growth in Mexico. More specifically, medical device near shoring has taken over Tijuana as a dominant industry with over 44 companies and 41,000 skilled workers.
Why are medical device companies moving their manufacturing to Mexico?
Due to increased labor costs domestically, medical device companies can often lower operational expenses when moving manufacturing to Mexico. This move makes sense for domestic medical device companies due to the short supply chain routes, fast turnaround times and lack of tariffs for exports. Tijuana, in particular, has been a hot spot for manufacturing not only for its short distance from the American border but also because many of the workers in the area are fluent in English. These factors, as well as its mild climate, make Tijuana an appealing option for businesses. San Diego is home to a number of medical device companies, which makes Mexico an obvious destination for manufacturing. The labor force in Mexico is both skilled and technical, with a higher number of engineering graduates than the U.S., making it an ideal workforce for medical devices that undergo strict requirements based on the level in which they support human life.
Why manufacture in Mexico over Asian facilities?
Mexico is 46 times closer to Los Angeles than China and only a few short miles away from San Diego; this makes importing and exporting more efficient. It also provides significantly easier access for executives to manage and oversee their facilities. The close proximity also means lower overhead on transportation while maintaining low labor rates, which are 14.6% lower than that of China's. Additionally, the English to Spanish language barrier, as well as cultural differences, do not have the same level of impact that other Asian countries do. With a heavy influence of Mexican culture in Southern California and San Diego, many Americans in the area also speak Spanish. Clear and transparent communication is one of the key differentiating factors of any successful outsourcing program.
What types of medical items are most popular to manufacture in Mexico?
A variety of medical devices are manufactured in Mexico including surgical equipment, respiratory equipment, catheters and cannulae, medical gowns, surgical kits, splints, orthopedic devices, medical drapes, custom fluid pouches, medical grade sewn products, and many more.
What does the future hold?
According to Mexico's National Institute of Statistics and Geography (INEGI), the value of medical device production in Mexico will continue to expand in the next ten years and will total nearly $15 billion by 2020. North American Production Sharing (NAPS) is a San Diego-based administrative and compliance management service that has helped Intuitive Surgical, a California-based medical device company, see a huge positive impact on profitability after moving its manufacturing to Mexico. The company has used NAPS' services to streamline its production at minimal costs while ensuring that international business laws are being followed.
Leave a comment below with your insight into nearshoring medical device manufacturing in Tijuana. What you think the future holds for this industry?