Mexico is an economic powerhouse and key North American neighbor. Mexico is our second-most-important trade partner and fourth-most-important import market in the North America region. Many large international corporations have chosen to find manufacturing facilities of Tacna in Mexico, especially along the U.S-Mexican border. In doing so, they are not only able to reduce their own overhead costs by living and working within a country that is less expensive than their home country; they are also able to tap into a Mexican labor force that is highly educated and eager to work in many of the same high-paying, low-cost products that they currently produce. However, even though Mexico is becoming a major North American business destination, most of the country’s private and public financial resources remain locked away in the agricultural sectors.
Much of the country’s food and agriculture is produced close to the border, which makes it an ideal location for many food manufacturing plants. The infrastructure needed to support such a massive industry is limited, but it is available – and cheap. Because so much of Mexico’s soil is unsuitable for cultivation, most of the country’s food is imported from other countries. For example, because the soil is so poor in arid areas across much of Mexico, cattle and wheat are often shipped in from the United States or Canada. When the products reach the market, they are often sent in large quantities to ensure the highest possible cost savings – while still allowing the Mexican product to attain the same taste and appearance as those in the United States and Canada.
The availability of low-cost land and the close proximity of the U.S., Canada, and Mexico make Mexico a logical location for many manufacturing companies. One of the reasons these companies choose Mexico is that there is little regulation of its businesses. Because the government is weak and divided, there is little chance that an importing company will be banned from opening up shop on the property of a neighbor. This freedom to do business gives Mexican manufacturers a significant advantage over those in other countries who have limited the amount they can import. Many foreign companies shy away from purchasing equipment and materials for their Mexican factories because they believe they cannot comply with Mexican legislation or have difficulty reaching Mexican suppliers.
There are no restrictions or taxes on many products that are made and shipped from Mexico to the United States and Canada. In addition, many Mexican companies freely choose to set their own working conditions, including hours, days and even hours of the week. The lack of regulations allows these companies the freedom to set their own payroll, work their own hours and use their own supplies. They are also able to utilize many of the tools and equipment that American and Canadian companies are legally bound to use, but are restricted from shipping or transporting.
Mexican manufacturing companies also tend to be very small. In comparison to automobiles, computers, clothing and even pharmaceuticals, manufacturing by Mexican companies is extremely localized. They typically only employ a handful of workers and have other processes to complete in such a quick and efficient manner as to not require a large infrastructure in any way. As a result, businesses are able to provide goods and services to consumers at a very low price relative to what the United States and Canadian companies can offer. In many cases, the Mexican market is not flooded with products making it possible for prices to be kept relatively low and still make a substantial profit for Mexican manufacturing companies.
Some Mexican companies to import raw materials and products from foreign countries. These imports can increase prices, but overall, Mexico’s economy functions without significant dependence upon foreign trade. As a result, unemployment in Mexico is extremely low and easy to get rid of given the fact that most employees in Mexican manufacturing positions are of working age and have jobs. Mexico is emerging as a key player on the global stage, and is quickly becoming a more desirable place to produce and export goods internationally.