A major shift in where and how the world’s manufacturing dollars are being spent is the focus of reports published by Yahoo! Finance and StreetAuthority last week. In China,wages have been steadily climbing at a rate of at least 12 percent each year over the last decade. This,combined with the high cost of shipping goods from the other side of the globe,is prompting a growing number of manufacturers to consider Mexico as a more cost effective alternative.
“The evidence clearly shows which country is poised to own economic growth in the next decade,” writes Joseph Hogue of the StreetAuthority network. “[Mexico] has a quarter of the transportation costs as goods exported from China and a boom in natural resources that makes the energy to run plants extremely cheap.”
According to a survey conducted in 2011 by online manufacturing superstore MFG.com,at least 21 percent of North American manufacturers said they plan to bring production closer to the U.S. and 38 percent are actively working to do so as soon as possible. What all of this means in the bigger picture is that Mexico will continue to attract new foreign investment dollars in record amounts.
“Mexico’s economy grew by 3.9 percent last year,and foreign direct investment is hitting record highs as manufacturers return,” writes Hogue. “The country already exports more manufactured products than the rest of Latin America combined.”
In addition,the Pew Hispanic Center reports that net immigration from Mexico to the U.S. has dropped to zero in recent years,while Mexico has simultaneously increased its total amount of U.S. imports,which rose to more than 16 percent in 2012. Finally,Mexico holds a total of 44 free trade agreements – more than any other country – including agreements with major players such as the U.S. and the European Union.