Mon, Sep 13, 2010
Shipping Considerations Outweigh Labor Costs When Compared To
China
Cessna is nearing completion on its fourth expansion in the
Mexican city of Chihuahua, which will increase the size of it's
factory there 10 fold over it's original floor space.
Part of the reason for the expansion in Mexico is that China's
labor costs have risen to a level that is only about 14 percent
below Mexican wages, though a Chinese worker in a factory still
makes less than $2 per hour, according to Bloomberg News.
Cessna CEO Jack Pelton said that when the lower cost of shipping to
and from Mexico, rather than overseas to China, is added to the
salary piece of the equation, the balance is tipped to its plant in
Chihuahua.
There are other factors as well. U.S. companies overall say they
like that there are cultural similarities between the U.S. and
Mexico, and that there are fewer labor issues at Mexican plants
than at Chinese facilities. They also say that most Mexican
executives and middle managers are able to speak English, which
helps communications.
Mexican officials said its manufacturing sector is likely to be
the engine that drives its economy for the next several years. They
say oil exports have dropped dramatically, and that tourism and
consumer purchases are struggling with little expectation of
recovering in the near term. But in the wake of NAFTA, enacted in
1994, the country has made trade agreements with over 30 nations
including members of the EU, Japan, and Israel. The Mexican
government says the aerospace industrial sector in Mexico employs
more than 20,000 workers in 186 companies in the manufacturing,
services and design engineering areas, as well as MRO.
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