When Mexico Isn't Cheaper (Than China)

Over on Spend Matters affiliate blog Metal Miner, my wife and blogging partner in crime Lisa Reisman recently printed a useful anecdote that goes against the grain that Mexico can once again beat China on price -- at least in some categories. According to Lisa, "Several weeks ago, a gentleman that we know ... mentioned to us that he was looking to re-source a number of different assemblies that he currently has in China, hopefully to Mexico. The assemblies are fabricated parts, quite heavy by weight, powder coated with some welds. It's a classic mid-market assembly ... relatively low volume (less than 10,000 assemblies annually), high individual dollar value but low aggregate value (a couple of hundred thousand dollars). The gentleman leading the effort at the company shared his frustration over not identifying a single source in Mexico that was remotely competitive. How uncompetitive were the Mexican sources? Nearly double the delivered costs from China!" I won't give away the rest of the post, but it suffices to say that the nuances of the Mexican market -- as well as margin requirements of some suppliers -- suggest that the country might not be competitive across the metals industry board as an alternative to China. But in some categories, you can't beat the South of the Border option given what's happened to the China price of late. To wit, "If you have a machined part or a stamping or something not made of steel, try Mexico on for size. No hay una problema!"

- Jason Busch

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