A Return to South of the Border Sourcing? (Part 2 of a 2 Part Interview)

This morning, I'd like to welcome Aptium Global's Lisa Reisman back to Spend Matters (by posting, she is giving me a break from my crazy travel schedule these past few weeks). In full disclosure, I have an economic interest in her firm, considering that she's my wife.

Hey, what about Mexico?

For all of the recent press surrounding China, it started to make us wonder why we don't hear anything about Mexico these days. And so I picked up the phone to call one of the best sourcing guys I know, German Dominguez, who led Goodyear's Mexican sourcing efforts and is currently a Consultant on Mexico Sourcing matters, and asked him what he is seeing in terms of US sourcing activities. For Part 1 of the interview, please click here.

When does it make sense to stay in China vs. come to Mexico?

One disadvantage to Mexico is the lack of materials (variety) of products produced. There are many more comparable steel grades in China than in Mexico. For products that are less common, China may be the better option.

In addition, when your product is running long and steady, with few lifecycle changes, it makes sense to stay in China (when you have a stabilized product). But if that is not the case, Mexico will be a more flexible option. However, I think Mexico and China can complement each other and buyers can use both together to take better advantage of a truly global supply base.

How is Mexico impacted by a sliding US dollar?

The Mexican economy is very linked to the dollar. A lot of Mexican companies here in the border invoice in US dollars. They want to sell in dollars because they are paying their suppliers in dollars. This acts as a natural hedge. If the dollar goes down more, it will be a benefit to Mexico. A lot of product is still purchased from the US. For example, refined petroleum products are imported into Mexico from the US. A lot of different raw materials such as steel and plastic resins are as well. This is why Mexico is so linked to the US economy.

What else can you tell us?

If you have any additional questions for us about the new dawn of Mexico sourcing -- and what categories that some industrial manufacturers are currently moving from China to Mexico -- please post a comment or drop a line. We would be happy to share our thoughts with you online or off (though some, unfortunately, are not blogable).

Lisa Reisman is Middle Markets Editor of Spend Matters. She can be reached via email @ lreisman [at] aptiumglobal [dot] com. German Dominguez is a Strategic Sourcing Specialist with over 10 years in the Direct Purchasing industry. He has worked with such companies as Delphi, Philips, and Goodyear. He presently serves SmithCNC-USA, LLC as a Mexico Sourcing Consultant. He can be reached at german [at] mexicosourcingassistant [dot] com.

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