More work for contract manufacturers in Mexico 

Reports of the demise of contract manufacturers in Mexico have been greatly exaggerated. While a lot of high-volume electronics manufacturing left Mexico for China several years ago, Mexico contract manufacturers' business is growing.


"Mexico lost a lot of business to lower-cost Asian electronics contract manufacturer sites," says Robert Freid, president of Contract Manufacturing Consultants in Bellevue, Wash. "Most of that business will never come back." But Mexico seems to be "backfilling with higher-mix, mid- volume business, products that involve electro-mechanical assembly," says Freid.

Other industry observers say that Mexico is handling more automotive and white goods OEM business, and that Mexico is ramping up as the low-cost location within the Americas.

Freid says working with contract manufacturers in Mexico is convenient for many OEMs who are selling into the United States. "Companies look at communications convenience when deciding where to locate manufacturing. To have an contract manufacturer plant at the same time or within a time zone or two is preferred versus communication with Asia which means you’re on the phone 5 or 6 in the morning." says Freid.

While Asia will attract more manufacturing generally, electronics contract manufacturers will not totally abandon North America. Some observers say that OEMs and contractors will spread out manufacturing geographically and have certain manufacturing close to where the products are shipped.

Often times the total landed cost of building a product by a contract manufacturer in Mexico for products sold in the US or Europe is less or at least competitive with products built in China or other Asian countries.