World Bank Statistics Confirm Mexico’s Attractiveness for Aerospace Manufacturing

World Bank Statistics Confirm Mexico’s Attractiveness for Aerospace Manufacturing

Fri, 2012-03-30

Mexico continues to benefit from U.S. companies who see it as an attractive manufacturing destination. 

In fact, 63 percent of foreign investors surveyed by the business advisory firm AlixPartners, named Mexico the most attractive country for siting manufacturing operations closer to the United States; only 19 percent of the companies reported supply-chain disruptions in Mexico as a result of security issues. 

According to Rich Bergmann, Accenture’s global lead for manufacturing, Mexico’s proximity to the United States solves the most pressing issue facing manufacturers, which is speed to market: "The stability of the time schedule of supply has become paramount in manufacturing. Whether we like it or not, a 12-month forecast, steady-state demand is no longer a reality. Everyone is running lean supply chains and inventories. Being close to customers is key to reducing lead-time. Add to that the overall total landed cost and that explains why reshoring is occurring in Mexico," he says. 

In fact, Mexico is currently helping multinational firms cope with a variety of factors stemming from intense global competition, says Arizona State University associate professor, Arnold Matlz, of the W.P. Carey School of Business. Mexico has played an important role in easing these pressures amongst the manufacturing industry by allowing companies to reduce and control operating costs, offering an increased operational flexibility, and accommodating shorter product/service development cycles, among other things. 

One industry flocking to Mexico for its lower cost structure and ample workforce is aerospace manufacturing. Between the years 2010 and 2011, total sales in Mexico's aerospace industry increased by 25 percent to $4.5 billion, according to the Aerospace Industries Association, which, according to World Bank statistics, was a significant improvement on the aerospace industry's overall annual growth rate of 15 percent.

"In spite of what is in the news, Mexico's manufacturing economy is humming along," says Steve Colantuoni, director of corporate marketing for the Offshore Group.  Foreign direct investment in Mexico rose 9.7% in 2011 compared to 2010 to reach $19.44 billion and many in the manufacturing industry believe that their economic outlook will only improve in the next five years in Mexico.