Manufacturing in Mexico
Mexico is a top destination for foreign manufacturers looking to expand their operations. With its strategic location close to the U.S. and Canada, competitive labor costs, and robust trade agreements like the USMCA, the country has become a global manufacturing powerhouse. However, beyond just being an attractive hub for production, Mexico itself represents a growing opportunity for consumer goods companies due to its expanding middle class and booming e-commerce sector.
Benefits of Manufacturing in Mexico for Foreign Companies
Foreign companies benefit from Mexico’s proximity to key markets in North America, allowing for reduced shipping times and transportation costs. Its well-established industrial infrastructure, with numerous specialized manufacturing clusters, is designed to support a wide range of industries, including consumer goods, automotive, and electronics. Companies also benefit from Mexico’s access to over 40 free trade agreements, giving them a competitive edge in reaching international markets.
In addition to the economic advantages, Mexico’s skilled labor force is continually evolving. With an education system focused on developing engineers and technicians, manufacturers are finding the workforce highly capable of handling complex production tasks, including the use of advanced technologies and automation.
The Growing Middle Class and E-Commerce Opportunities
While Mexico continues to attract foreign manufacturing, it’s also home to a burgeoning middle class, driving consumer demand domestically. This growing purchasing power, particularly among younger generations, has led to a surge in e-commerce activity, creating new opportunities for both local and foreign companies to tap into the market.
Mexico's e-commerce market has experienced double-digit growth in recent years, boosted by increasing internet penetration and a digitally savvy population. This presents a unique opportunity for consumer goods companies not only to produce in Mexico but also to sell to a rapidly expanding and increasingly sophisticated local market.
Manufacturing in Mexico provides a dual advantage: the ability to efficiently serve North American markets while also accessing a large and growing consumer base within Mexico itself. This combination makes the country an attractive destination for companies looking to maximize their market reach and operational efficiency.
Consumer Goods Manufacturing in Mexico
Mexico has become a significant player in the global consumer goods manufacturing landscape. The country's strategic location, trade agreements, and skilled workforce have made it an attractive destination for multinational companies seeking to establish consumer goods manufacturing operations.
Some Major Companies and Locations
Mexico is an optimal location for establishing a consumer goods manufacturing plant due to a combination of strategic advantages. Firstly, Mexico offers proximity to the lucrative North American market, providing easy access to the United States and Canada. This geographical advantage facilitates shorter supply chains, reducing transportation costs and enhancing logistical efficiency. Mexico has a well-established manufacturing infrastructure and a skilled workforce, offering cost-effective labor without compromising expertise.
The country has also entered various trade agreements, such as the United States-Mexico-Canada Agreement (USMCA), promoting tariff-free trade and fostering a favorable business environment. Furthermore, Mexico's stable political and economic climate provides a secure backdrop for long-term investment. With a sizable middle class and increasing consumer demand, the Mexican market has a significant consumer base, making it an attractive destination for companies looking to expand their manufacturing operations in the consumer goods sector.
Several multinational corporations have chosen Mexico as a hub for their consumer goods manufacturing operations, capitalizing on its proximity to the United States, access to diverse markets, and favorable trade agreements. Among the prominent companies engaged in consumer goods manufacturing in Mexico, three stand out:
Unilever:
Location: Unilever has a location in Mexico City and is also establishing another plant for consumer goods manufacturing in Mexico in the northern city of Salinas Victory, which is on the outskirts of Monterrey. Four hundred billion dollars will be invested over three years. At its maturity, the project will create 1,200 direct and indirect jobs.
Products: Unilever Mexico manufactures Items for beauty and personal care.
Colgate-Palmolive:
Location: Colgate Palmolive's consumer goods manufacturing facility is located in Mexico City.
Products: Colgate Palmolive Mexico manufactures products from personal and home care to pet foods.
Proctor & Gamble:
Location: P&G Mexico is located in Parque Industrial San Martin Obispo Naucalpan in the State of Mexico.
Products: Proctor & Gamble Mexico manufactures home care and tissue, personal care, hygiene products, feminine protection, and healthcare products
L’Oreal:
Location: L'Oreal owns and operates two manufacturing facilities in Mexico. One is in the nation's capital, while the other is in Villa de Reyes, San Luis Potosi. In addition to the Mexican market, L'Oreal's plants supply the broader Latin America region.
Products: At its two Mexican production facilities, L’Oreal Mexico manufactures dermatological products, personal hygiene products, and hair dyes for more than 15 brands.
Mary Kay Cosmetics:
Location: Mary Kay Cosmetics has invested extensively in Mexico, investing $20 million in Mexico in its headquarters in the state of Nuevo Leon.
Products: Cosmetics
Avon Cosmetics:
Location: Avon’s manufacturing plant in Celaya, Mexico, is the largest of nine factories the company operates worldwide. It is the only facility that houses both production and distribution facilities.
Products: Perfumes, colognes, and cosmetic products.
Grupo Bimbo:
Location: Founded in Mexico City, Grupo Bimbo has a significant presence nationwide. The company, known for being the world's largest baking company, operates numerous production facilities across Mexico, with key locations in Monterrey, Puebla, and Guadalajara.
Products: Grupo Bimbo manufactures a wide range of baked goods, including bread, pastries, and snacks. The company's products are popular in Mexico and have a global presence.
Whirlpool Corporation:
Location: Whirlpool, a leading home appliance manufacturer, has established a strong manufacturing presence in Mexico. The company has facilities in Monterrey and Celaya, contributing to Mexico's position as a critical player in the global appliance market.
Products: Whirlpool produces a diverse range of home appliances in Mexico, including refrigerators, washing machines, and ovens. The strategic location allows the company to cater to domestic and international markets.
Range of Consumer Goods Manufactured
In addition to the examples above, consumer goods manufacturing in Mexico spans a broad spectrum, encompassing food and beverages, household appliances, electronics, textiles, and more. The country's diverse industrial landscape allows for the production of an extensive array of products. Some notable categories include:
Food and Beverages:
Mexico is renowned for its food industry, and consumer goods manufacturing includes producing various food items. Among the food and beverage items manufactured in Mexico are tequila, salsa and hot sauces, tortillas and tortilla chips, beer, coffee, guacamole and avocado products, and Mexican snacks.
Home Appliances:
Due to several strategic advantages, Mexico is an ideal location for manufacturing home appliances. Its proximity to the United States, a major consumer market, facilitates cost-effective transportation and shorter supply chains, reducing logistical complexities.
Companies like Whirlpool contribute significantly to the manufacturing of home appliances. From refrigerators and washing machines to ovens and microwaves, Mexico's manufacturing sector plays a crucial role in meeting global demand for these products.
Textiles and Apparel:
Mexico is also a hub for textile and apparel manufacturing. Companies in this sector produce clothing, footwear, and textiles, contributing to domestic consumption and exports. Among the textile and apparel items manufactured in Mexico are denim and jeans, textile fabrics, uniforms and workwear, home textiles, knitwear, footwear, and technical textiles.
Workforce in Consumer Goods Manufacturing
Mexico's consumer goods manufacturing sector's success is attributed to its geographical advantages and its skilled and adaptable workforce. The manufacturing industry in Mexico has undergone significant transformation, focusing on technology-driven processes and specialized skills.
Mexico's workforce is highly adept at manufacturing consumer goods, thanks to various factors contributing to their skill and efficiency. Among them are:
Skilled Labor Force:
Mexico has invested in developing a skilled labor force, particularly in manufacturing. Technical and vocational training programs have been crucial in supplying industry workers proficient in operating advanced machinery and adhering to international quality standards.
In particular, the educational system in Mexico is strategically aligning itself to prepare workers for active participation in the consumer goods manufacturing industry. Vocational and technical education programs are becoming increasingly prominent, offering specialized engineering, manufacturing processes, and quality control training.
Collaboration with Educational Institutions:
Many companies collaborate with local educational institutions to meet the evolving demands of consumer goods manufacturing in Mexico. This collaboration ensures that the workforce is equipped with the latest skills and knowledge, fostering innovation and efficiency.
Adaptability to Technological Changes:
In Mexico, the training landscape for consumer goods manufacturing is undergoing a transformative shift to meet the demands of the present and future. Recognizing the pivotal role of skilled labor in sustaining a competitive manufacturing sector, initiatives are being implemented to equip Mexican workers with cutting-edge skills. Training programs focus not only on traditional manufacturing processes but also on incorporating advanced technologies such as automation, artificial intelligence, and data analytics.
Labor Regulations and Wages:
Mexico's labor regulations and competitive wages have attracted multinational companies. The country's labor laws balance protecting workers' rights and fostering a business-friendly environment.
Consumer goods manufacturing in Mexico is a dynamic and integral to the country's economy. With the presence of global giants like Grupo Bimbo, Whirlpool, Colgate Palmolive, and others, the sector has contributed to domestic employment and positioned Mexico as a critical player in the global supply chain. The diverse range of consumer goods produced and a skilled and adaptable workforce presents opportunities for further growth and innovation in the Mexican manufacturing landscape. As the industry navigates challenges and embraces opportunities, it remains a crucial driver of economic development and international trade for Mexico.
The E-Commerce Landscape
For those interested in doing business in Mexico, e-commerce could be a the best opportunity to evaluate the market.
Unleashing Potential in a Growing Market
Mexico's e-commerce market has been expanding at an impressive rate. The global pandemic drove an unprecedented growth in online sales in Mexico, and it never really slowed down. In fact, Mexico is one of the fastest growing e-commerce countries in the world. In 2023, over 23% of all sales with a debit or credit were made online, to the tune of about $45 billion dollars, and an average ticket of $10.61 dollars per transaction (CONDUSEF). This includes all types of e-commerce purchases made by debit or credit in Mexico, including tax. Below are B2C e-commerce sales statistics.
The global e-commerce market is showing signs of stability after years of uncertainty, with a projected increase of 10% for 2024 and 8.8% for 2025. Mexico is positioned as the fastest-growing retail e-commerce country in the world (AMVO with data from eMarketer).
Opportunities for Foreign Retailers
For foreign retailers, Mexico offers a fertile ground to grow. The country’s young population, coupled with an affinity for digital shopping, makes it an attractive market. Additionally, Mexico's geographic proximity to the United States and its inclusion in trade agreements like the USMCA (United States-Mexico-Canada Agreement) further enhance its appeal. By establishing a foothold in Mexico, foreign companies can tap into a large and eager consumer base.
Central Mexico is home to about 80% of the e-commerce market potential, and approximately 20% of the country's population reside in the zone. The e-commerce sector has exploded in Mexico in recent years. Between Q1 2020 and Q1 2023, Mercado Libre and Amazon absorbed almost 9.7 million square feet of warehouse and fulfillment centers nationwide.
The largest and most dynamic of the 9 logistics corridors that make up the zone, the CTT Logistics Corridor, has seen a 50% increase in the number of square feet of warehouse and distribution space over the last 5 years. The pipeline of construction at the close of Q2 2023 registered 5.1 million square feed of planned projects, with about 91% of the activity registered as "big box stores" warehousing activity known as "last mile delivery" operations direct to consumers.
Key Takeaways
Mexico as a Leading Hub for Foreign Manufacturing
Mexico continues to attract multinational companies seeking efficient and cost-effective manufacturing operations. Its proximity to key North American markets, competitive labor costs, and access to trade agreements like USMCA make it a preferred destination for global consumer goods production.
Expanding Middle Class and E-Commerce Growth
Mexico's growing middle class has fueled the rise of e-commerce, creating significant opportunities for consumer goods companies to access an increasingly tech-savvy and digitally connected population. The e-commerce sector in Mexico has seen double-digit growth, positioning the country as a hotspot for online retail activity.
Dual Market Opportunity
Manufacturing in Mexico offers a dual advantage: it allows companies to efficiently serve both North American and international markets while also tapping into a burgeoning domestic market driven by increasing consumer spending and demand for goods, both in physical stores and online platforms.
