June 9, 2009

A new study finds the manufacturing costs in Mexico are becoming more competitive with countries like China, which has dominated the industry in recent years.

Research firm AlixPartners found that in 2005, Chinese-made parts were 22 percent cheaper on average than American-made parts. By the end of 2008, however, the price gap had narrowed to 5.5 percent. Furthermore, while manufacturing in China was about 5 percent cheaper than in Mexico three years ago, manufacturing in China is now about 20 percent more expensive. Compared with the U.S., the savings in Mexico have widened to 25 percent, from 16 percent.

"A couple of years ago, outsourcing to China was a no-brainer," remarked the managing director for AlixPartners, but that’s no longer the case, he said