As the region became a hub for the automotive industry and specific electronic products like televisions in the late 80s and early 90s, more skills were in demand and training programs were soon set in place by many of the large organizations. However, once they were adequately trained, employees could then jump from one factory to the next, commanding better wages as they went since they wouldn’t have to be trained but would also have an immediate impact on production.

It was a rude awakening to many when many operations began to transfer to lower cost regions like China in the mid to late 1990s, causing the employment bubble to burst.

Today, there is a much greater mix of industries creating an increased demand for more well rounded skills. Electronic manufacturers are strong and new industries such as biotechnology, medical devices, and aerospace are following on the heels of the automotive industry in Mexico.

Electronics is one of the fastest growing industries in Mexico in terms of export potential and employment generation.  Mexico is the 2nd largest suppliers to the U.S. electronics industry followed by China. Mexico’s electronic products vary from audio and video, telecommunications, computer equipment, equipment parts and other industrial units such as medical and commercial.

The labor pool for this industry concentrates in Ciudad Juarez, Chihuahua, Tijuana Baja.California., and Guadalajara Jalisco.

The Mexican government launched an initiative called PCIEAT (Programa para la Cometitividad de la Industria Electronica y de Alta Tecnologia) = programs for the electronics and high technology industry competitiveness, which objective is to turn Mexico into a manufacturing world center of electronic goods.

Mexico’s PCIEAT goals for 2010:

1. Become one the top 5 global exporters of electronic goods
2. Increase electronic exports up to $80 billion dlls. By 2010
3. Increase direct sector jobs by 60,000 jobs
4. Promote technology transfer
5. Promote design and development of technology “Made in Mexico”
6. Develop suppliers for electric and electronic components
7. Develop 250 local suppliers of:
     1. Electric and electronic components
     2. Metal and Plastic Parts
     3. Complementary and Service Materials
8. Invest between 5, 000 and 10,000 million dollars in the industry
9. Develop own technology in Mexico and to have the opportunity to transfer it to other sectors

 Strategies to promote competitiveness:
   1. Competitive tariff structure
   2. To make foreign trade processes more efficient
   3. To develop a standardizing and regulating framework
   4. To develop supplying chains

 Strategies to strengthen this sector:

   1. Competitive fiscal policies
   2. Promotion of technological development
   3. Promote the skilled labor force
   4. Create an appropriate infrastructure
   5.  Own competitive operational and macro-economic environment

The main factors influencing the volatility in the Mexican currency are the decline of Mexican Exports to the U.S. caused by a weak U.S. demand; oil prices the international investment environment.

In today’s situation U.S. exports to Mexico are being negatively impacted, as U.S. products become more expensive for Mexico residents; however the demand on Mexican output is now more attractive for North American companies.

A study done by KPMG in 2008, titled "Competitive Alternatives", has a list of facts and comparisons of businesses locations in North America, Europe and Asia Pacific, with a primary focus on international business costs.

The countries studied in this report, were Mexico, Canada, U.S., Australia, France, United Kingdom, Netherlands, Italy, Japan and Germany. Out of those 10 countries, Mexico ranks num. 1 as the preferred lowest-cost country to do business; with a business cost advantage of 20.5 percent on average, relative to the US baseline.

Mexico ranked highest in the comparison of cost components. Labor is the most significant component of a location. Total labor costs, including wages,salaries and all benefits, are lowest in Mexico, followed by the United States and Canada.

Among other major cost components, industrial facility costs are lowest in Mexico and in the United States, office leasing costs are lowest in Mexico and in Italy, transportation costs were lower in the UK and Netherlands and Canada, while costs for non-income taxes are lower in Mexico, Netherlands and Australia.

Source: KPMG's