Due to various factors affecting Mexico’s economy, including the dependence and collaboration with the U.S. market via the North America Free Trade Agreement (NAFTA), in addition to their ability to continuously provide high-end manufacturing at cost competitive prices, manufacturing in Mexico has become a thriving scene for manufacturers. The following list will show the companies that have profited off of this.
Mexico’s decreasing manufacturing labor costs versus other markets, especially in the fields of automotive, aeronautical, and electronics have also made the region especially attractive. As a result of these factors, the Mexico manufacturing industry has become a haven for companies seeking to benefit from lower production costs in an effort to meet their bottom line, while simultaneously increasing their international exposure.
Top 7 Manufacturing Companies in Mexico
Some companies that have taken a plunge into manufacturing in Mexico include:
Chrysler, also known as FCA LLC, is the U.S. subsidiary of Fiat Chrysler Automobiles NV., and one of the largest manufacturers of automobiles in America.
FCA sells vehicles worldwide, including Dodge, Ram Trucks, Jeep, and Chrysler. They also have a major accessories and auto parts division called Mopar, and SRT, its performance automobile division.
Chrysler made the decision to transfer its less profitable passenger car production to Mexico, sometime in 2016, as part of Sergio Marchionne’s, CEO of Chrysler, Ferrari, and Fiat Chrysler Automobiles, multi million dollar plan to meet the growing popularity of SUV’s in America. The company also seeks to benefit from the lower cost production of vehicles in Mexico in an effort to maintain market share.
As of current, Chrysler has approximately 30 production and assembly plants located throughout mexico, including Toluca, Ramos Arizpe, and Saltillo and is estimated to have increased its Mexico to U.S. exports by approximately 139%.
Honda Motor Co., Ltd., whose subsidiaries include Acura, Montessa Honda, PT Astra Honda, is a Japanese public multinational conglomerate corporation and one of the largest manufacturers of automobiles, motorcycles, aircraft, power equipment, and internal combustion engines.
They are also manufacturers of garden equipment, marine engines, personal watercraft, power generators, and more.
In 2014, Honda, under CEO and President of Honda Motor Co., Ltd Takanobu Ito, constructed Honda de Mexico, S.A. de C.V. near Celaya, Mexico, where its primary focus is the production of the Honda Fit subcompact model, in an effort to meet the growing demand for fuel efficient vehicles throughout U.S. and Mexico. They also manufacturer other global cars, including Acura, CR-V, and more.
As of current, Honda has more than 8 auto plants located throughout Mexico, including Celaya, El Salto, and Jalisco, and has since increased its mexico manufacturing products capacity from 1.63 million units to over 1.87 million units.
Volkswagen, also known as VW, is a founding member of the Volkswagen Group, a large international corporation in charge of multiple truck and car brands, including Audi, Lamborghini, Bentley, Bugatti, SEAT, MAN, and more, and one of Europe’s largest automakers.
Volkswagen has been operating its Puebla, Mexico factory since 1967, which has since grown into Volkwagen’s largest factory outside of Germany, in an effort to drive down prices in the U.S where the SUV market is booming.
As of current, Volkswagen has produced more than 120,000 SUV’s alone in its Puebla factory and has also ramped up the production of other cars via manufacturing in Mexico, including Jetta, Golf, and Beetle.
4. Bombardier Inc.
Bombardier Inc., a Fortune Global 500 conglomerate company, is a Canadian multinational aerospace and transportation company and one of the largest manufacturers of business jets, regional airlines, mass transportation equipment, recreational equipment, and provider of financial services.
In 2011, Bombardier Inc., under CEO Alain Bellemare, made the decision to transfer the production of its Q400 wings, cockpit, and various other parts for its more costly turboprop planes to Mexico in an effort to rebuild a loss of revenue and cut supply chain costs that prevented them from rivaling with less expensive brands.
As of today, Bombardier has an estimated global share of about 30 percent for the aircraft and continues to strive for more via manufacturing in Mexico.
5. Brake Parts Inc.
Brake Parts Inc. is a leading global automotive aftermarket company and the premier manufacturer and supplier of brake system components.
In 2015, after losing profits on each pair of calipers produced due to the lower costs offered by competitors moving to Mexico, Brake Parts Inc. made the decision to invest in manufacturing in Mexico in order to keep up with the change taking place in the global community.
Currently, Brake Parts Inc.’s Nuevo Laredo facility employs over 200 people, as compared to the previous 134 people, at lower costs.
6. Rexnord Corp., Indianapolis
Rexnord Corp., Indianapolis is a leading manufacturer of industrial bearings.
About a year ago, Rexnord Corp. transferred production of industrial bearings at its Indianapolis facility to its existing Monterrey, Mexico facility in an effort to operate in a more cost effective manner.
Rexnord Corp has since realized an estimated savings of approximately 15.5 million per year in production costs.
7. Mondelez International
Mondelez International is an American confectioner’s food and beverage company based in Illinois. It consists of the global snack and food brands of the former Kraft Food Inc. and includes several billion dollar brands such as, Chips Ahoy!, Oreo, Belvita, Triscuit, Nabisco, Trident, Cadbury, and more.
In 2016, under CEO Irene Rosenfield, Mondelez International decided to transfer production of its Oreo brand product at its Southwest Chicago plant to facilities in Mexico in an effort to reduce supply chain costs and remain relevant in the global economy.
As of current, Mondelez International has mexico manufacturing companies in Salinas, Mexico, and has realized an estimated savings of 46 million per year.
In the end, the boom in manufacturing in Mexico has caused more companies to reevaluate their current business model in an effort to reduce costs, provide affordable products, and expand their growth in global markets, which in turn helps them remain competitive in the market.
If you are a company who has experience with manufacturing in Mexico, please feel free to share your insight with other investors.