Reverse Globalization May Bring Manufacturing Back to Mexico

Outsourcing work to China has gotten costlier due to increasing fuel and labor costs. As a result, some American companies are pondering a return to Mexico to manufacture their goods instead.

"Many companies targeting the US market wonder whether outsourcing in Asia is still worth it."

"'China was like a recent graduate, hitting the job market for the first time and willing to work for next to nothing,' says German Dominguez, who advises companies that are considering producing in Mexico from his base in Ciudad Juárez. Now, China's experiencing the 'perfect storm,' he says. 'It's making Mexico, a country that had been the ugly duckling when it came to costs, look a lot better.'"

"'There is increasing cost of labor in China. China still handles the textiles and apparel, but a lot of people on the margin are looking at the exchange rate moving slowly but unfavorably. The quality of labor in China is probably increasingly suspect as well,' says Bill Gilmer, vice president in charge of the El Paso Branch of the Federal Reserve Bank of Dallas. 'This is all positive for Mexico.'"

Full Story: Is Mexico the new China?


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