In my last posting I wrote about the emergence, at least according to New York Times writer, Chris Anderson (“Mexico: The New China”), of a San Diego / Tijuana industrial hub that he believes will rival the Hong Kong / Shenzhen nexus.
What might make San Diego / Tijuana as an alternative for US manufacturers? Anderson sites several reasons:
- A shorter supply chain allows for small batch production and shorter lead times.
- Just in time manufacturing allows for running changes rather than having to wait until current inventory has sold through.
- Reduced risk from a constant on-site presence reduces downstream costs. If there is something wrong in production, the company learns about it as it happens rather than waiting to discover it once the order is received.
- Wages in Mexico, due to Chinese inflation over the last decade, are now more in line with China’s pay rates.
I would add that:
Producing near the US border can result in one or two additional product turns for companies and retailers.
Company principals can, if they wish, shuttle to the factory on a daily basis. This constant presence on the manufacturing floor can reinforce that company’s business culture.