food packaging in mexico

Nov 2020

Advantages of Food Packaging in Mexico

food packaging in mexico
food packaging in mexico

Factory location decisions play a critical role in running an efficient supply chain. 

Top-level procurement managers constantly search for new cost savings strategies. Changing suppliers might deliver major wins for the company. However, to justify the switching of suppliers is sometimes tricky. But, some factors can justify such action.    

This article is specifically for those companies open to nearshore production management. You wouldn’t be alone if you were. A five-year forecast (2019 – 2025) shows Mexico with a Compound annual growth rate (CAGR) of 14%.  

The many logical reasons to consider Mexico include: 

  1. Maintain Country of Origin & No Duty Charge
  2. 40% decrease in transportation costs
  3. Stable costs support better supply chain planning
  4. Mitigate demand spikes with shortened delivery cycles
  5. Reduce the risk of damaged goods delays
  6. Support your social and sustainability directives
  7. Better technical help 
  8. Stronger collaboration to drive business development

Next, we review each of these benefits in more detail.

Factory location decisions play a critical role in running an efficient supply chain. 

Top-level procurement managers constantly search for new cost savings strategies. Changing suppliers might deliver major wins for the company. However, to justify the switching of suppliers is sometimes tricky. But, some factors can justify such action.    

This article is specifically for those companies open to nearshore production management. You wouldn’t be alone if you were. A five-year forecast (2019 – 2025) shows Mexico with a Compound annual growth rate (CAGR) of 14%.  

The many logical reasons to consider Mexico include: 

  1. Maintain Country of Origin & No Duty Charge
  2. 40% decrease in transportation costs
  3. Stable costs support better supply chain planning
  4. Mitigate demand spikes with shortened delivery cycles
  5. Reduce the risk of damaged goods delays
  6. Support your social and sustainability directives
  7. Better technical help 
  8. Stronger collaboration to drive business development

Next, we review each of these benefits in more detail.

1. USA Stays as Country of Origin

When goods are packaged or packed in Mexico and not modified, they retain their original country of origin marking for US customs purposes. As long as the process does not add features or extra value, you qualify for this option.

This means US manufactured products packaged in Mexico may retain their “MADE IN USA” marking. The American label makes those manufacturers sensitive to maintaining their country of origin extremely happy. Finally, the majority of such transactions are duty-free in Mexico and the United States.

2. 40% decrease in transportation costs

Labor is not the main issue driving companies from China to Mexico. It’s the shipping costs that are extremely high, as compared to Mexico.

Simple numbers tell the story. In 2020, a medium shipment from China to a port in Long Beach cost nearly $5,000. The charge for transporting similar freight from Tijuana to Los Angeles by land is roughly $2000. 

The high-priced costs to ship across the Pacific Ocean are making less sense. It’s not only the extreme distance but the fluctuations in prices. 

Unpredictable Oil prices and marine cargo insurance are additional dilemmas. Shipping totals can be 8 times higher when manufacturing in China than in Mexico

3. Stable supply support better supply chain planning

The instability of the market affects the true cost visibility. Long-range supply channels embody this type of risk. Most of the danger is from rising operational expenses. 

Mexico’s location offers huge advantages for US-based companies, including:

  • Suppliers are often near the border and in the same time zone. 
  • Established border crossing schedules and restrictions simplify coordination and management.
  • Increased delivery visibility improves business intelligence and decision-making.

4. Mitigate demand spikes with shortened delivery cycles

Speed of delivery is another important factor in the world of manufacturing. 

Think about this. What is the worst-case ship time from northern Mexico to the midwest United States? Possibly, it takes four days. In contrast, it can take a few weeks to ship goods from China to any North American destination.

Let’s review some key concepts related to speed:

  • Just-in-time manufacturing requires certainty about the timeliness of delivery.
  • Cross continent supply chain means identifying demand changes much sooner.
  • Slower supply channels mean inventory management constraints. Beware of retailers resenting larger stock quantities.
  • Experts always recommend a reliable and fast supply chain when doing product development.

5. Reduced risk of damaged goods delays

A Quality Assurance Manager’s worst nightmare can be a defective product contaminating the whole supply shipment. In this scenario, these damaged materials can sometimes lead to the quarantine of the entire shipment.  

Sorting out suspect material is costly and time-consuming. The end customer usually asks the manufacturer to replace all such identified items immediately. 

Major hazards of such an example include:  

  • Collapsed production lines due to insufficient materials. 
  • Sorting and inspecting requirements lead to profit losses. 
  • Future sales may suffer if retailers perceive unexpected inventory constraints. 

Keep in mind that it’s normal for some amount of defective goods to happen. Having a factory near your own border allows for more reasonable plans to handle these situations. 

6. Support your social & sustainability directives

While not a quantitative reason to change suppliers, humanitarian issues are compelling. US companies are wary of outsourcing to regions with unfair working conditions. Never put your brand image at risk for temporary profit gains. 

The competitive food packaging industry requires high productivity levels. As a result, many Asian factories forgo safety. Workers get pushed into living and working in crowded sweatshops. Often they get exposed to elements that pose serious health risks. 

Mexico has better quality controls because of employee-safety regulations. Additionally, worker safety monitoring and strong child-labor laws enable much better work environments. 

Similarly, Mexico is leading sustainable development strategies. Recycling, water conservation, and green energy are part of government initiatives already in place. 

As a result, green partnerships are easily found in Mexico. All private factories measure, mitigate, and offset their impact on the environment and local communities. Not to mention the lowering of your carbon footprint by traveling just south of the border. 

7. Better technical help

Businesses with global outsourcing experience report that Mexico has excellent support services. This is good news for any company interesting in nearshore solutions. 

We at WITREK believe this as true for two main reasons. 

First, Mexico focuses on methods to foster foreign investment. As a result, they follow these best manufacturing practices:

  • Study Lean manufacturing methods
  • Adopt quality certification systems, like ISO:9001
  • Made ongoing labor training a high priority

Second, big trade agreements like NAFTA and USMCA also made Mexico a manufacturing powerhouse. They offered incentives to create a diverse and skilled labor force in all areas of manufacturing, including:

  • Machine operation
  • Warehousing
  • Design
  • Engineering
  • Mechanics
  • Administration

8. Stronger collaboration to drive business development

Many of the factories offering food packaging in Mexico go beyond average services. In fact, to lure in more American companies, most develop world-class value-add propositions. 

Customers are encouraged to engage with their in-house resources. This means they freely offer a wealth of knowledge and resources. There is often the invitation to use on-site tools, print shops, and design rooms. Nothing drives innovation like creating new unique product ideas.  

Final Conclusion

Now you have it: 8 reasons for having food packaging managed in Mexico. As you just read, nearshoring offers much more than labor cost savings. So are you ready to become a company hero and explore the idea further? 

Deciding to move is only half the battle. Planning and executing a successful manufacturing change is complex. Having a trustworthy partner that offers local support is a smart move. 

That’s where WITREK’s full-service solutions come in. We offer a full-service production management service. We work to ensure your business here in Mexico is a total success. 

Do you agree about our list? Are there other things pushing food packaging from China to Mexico? Share your opinion about why (or why not!) in the comments!

Factory location decisions play a critical role in running an efficient supply chain. 

Top-level procurement managers constantly search for new cost savings strategies. Changing suppliers might deliver major wins for the company. However, to justify the switching of suppliers is sometimes tricky. But, some factors can justify such action.    

This article is specifically for those companies open to nearshore production management. You wouldn’t be alone if you were. A five-year forecast (2019 – 2025) shows Mexico with a Compound annual growth rate (CAGR) of 14%.  

The many logical reasons to consider Mexico include: 

  1. Maintain Country of Origin & No Duty Charge
  2. 40% decrease in transportation costs
  3. Stable costs support better supply chain planning
  4. Mitigate demand spikes with shortened delivery cycles
  5. Reduce the risk of damaged goods delays
  6. Support your social and sustainability directives
  7. Better technical help 
  8. Stronger collaboration to drive business development

Next, we review each of these benefits in more detail.

1. USA Stays as Country of Origin

When goods are packaged or packed in Mexico and not modified, they retain their original country of origin marking for US customs purposes. As long as the process does not add features or extra value, you qualify for this option.

This means US manufactured products packaged in Mexico may retain their “MADE IN USA” marking. The American label makes those manufacturers sensitive to maintaining their country of origin extremely happy. Finally, the majority of such transactions are duty-free in Mexico and the United States.

2. 40% decrease in transportation costs

Labor is not the main issue driving companies from China to Mexico. It’s the shipping costs that are extremely high, as compared to Mexico.

Simple numbers tell the story. In 2020, a medium shipment from China to a port in Long Beach cost nearly $5,000. The charge for transporting similar freight from Tijuana to Los Angeles by land is roughly $2000. 

The high-priced costs to ship across the Pacific Ocean are making less sense. It’s not only the extreme distance but the fluctuations in prices. 

Unpredictable Oil prices and marine cargo insurance are additional dilemmas. Shipping totals can be 8 times higher when manufacturing in China than in Mexico

3. Stable supply support better supply chain planning

The instability of the market affects the true cost visibility. Long-range supply channels embody this type of risk. Most of the danger is from rising operational expenses. 

Mexico’s location offers huge advantages for US-based companies, including:

  • Suppliers are often near the border and in the same time zone. 
  • Established border crossing schedules and restrictions simplify coordination and management.
  • Increased delivery visibility improves business intelligence and decision-making.

4. Mitigate demand spikes with shortened delivery cycles

Speed of delivery is another important factor in the world of manufacturing. 

Think about this. What is the worst-case ship time from northern Mexico to the midwest United States? Possibly, it takes four days. In contrast, it can take a few weeks to ship goods from China to any North American destination.

Let’s review some key concepts related to speed:

  • Just-in-time manufacturing requires certainty about the timeliness of delivery.
  • Cross continent supply chain means identifying demand changes much sooner.
  • Slower supply channels mean inventory management constraints. Beware of retailers resenting larger stock quantities.
  • Experts always recommend a reliable and fast supply chain when doing product development.

5. Reduced risk of damaged goods delays

A Quality Assurance Manager’s worst nightmare can be a defective product contaminating the whole supply shipment. In this scenario, these damaged materials can sometimes lead to the quarantine of the entire shipment.  

Sorting out suspect material is costly and time-consuming. The end customer usually asks the manufacturer to replace all such identified items immediately. 

Major hazards of such an example include:  

  • Collapsed production lines due to insufficient materials. 
  • Sorting and inspecting requirements lead to profit losses. 
  • Future sales may suffer if retailers perceive unexpected inventory constraints. 

Keep in mind that it’s normal for some amount of defective goods to happen. Having a factory near your own border allows for more reasonable plans to handle these situations. 

6. Support your social & sustainability directives

While not a quantitative reason to change suppliers, humanitarian issues are compelling. US companies are wary of outsourcing to regions with unfair working conditions. Never put your brand image at risk for temporary profit gains. 

The competitive food packaging industry requires high productivity levels. As a result, many Asian factories forgo safety. Workers get pushed into living and working in crowded sweatshops. Often they get exposed to elements that pose serious health risks. 

Mexico has better quality controls because of employee-safety regulations. Additionally, worker safety monitoring and strong child-labor laws enable much better work environments. 

Similarly, Mexico is leading sustainable development strategies. Recycling, water conservation, and green energy are part of government initiatives already in place. 

As a result, green partnerships are easily found in Mexico. All private factories measure, mitigate, and offset their impact on the environment and local communities. Not to mention the lowering of your carbon footprint by traveling just south of the border. 

7. Better technical help

Businesses with global outsourcing experience report that Mexico has excellent support services. This is good news for any company interesting in nearshore solutions. 

We at WITREK believe this as true for two main reasons. 

First, Mexico focuses on methods to foster foreign investment. As a result, they follow these best manufacturing practices:

  • Study Lean manufacturing methods
  • Adopt quality certification systems, like ISO:9001
  • Made ongoing labor training a high priority

Second, big trade agreements like NAFTA and USMCA also made Mexico a manufacturing powerhouse. They offered incentives to create a diverse and skilled labor force in all areas of manufacturing, including:

  • Machine operation
  • Warehousing
  • Design
  • Engineering
  • Mechanics
  • Administration

8. Stronger collaboration to drive business development

Many of the factories offering food packaging in Mexico go beyond average services. In fact, to lure in more American companies, most develop world-class value-add propositions. 

Customers are encouraged to engage with their in-house resources. This means they freely offer a wealth of knowledge and resources. There is often the invitation to use on-site tools, print shops, and design rooms. Nothing drives innovation like creating new unique product ideas.  

Final Conclusion

Now you have it: 8 reasons for having food packaging managed in Mexico. As you just read, nearshoring offers much more than labor cost savings. So are you ready to become a company hero and explore the idea further? 

Deciding to move is only half the battle. Planning and executing a successful manufacturing change is complex. Having a trustworthy partner that offers local support is a smart move. 

That’s where WITREK’s full-service solutions come in. We offer a full-service production management service. We work to ensure your business here in Mexico is a total success. 

Do you agree about our list? Are there other things pushing food packaging from China to Mexico? Share your opinion about why (or why not!) in the comments!

Share

Leave a Reply

Your email address will not be published. Required fields are marked *