Reasons Ford shifted its Manufacturing Facility to Mexico

black and silver ford logo
Photo by Julissa Helmuth on Pexels.com

An essential news that peoples got this month was the plan proposed by Ford to shift its big chunk of manufacturing operation to Mexico. The decision of the company has experienced both praises and criticism from their customers. Ford enjoys a great presence in the United States and last year alone, it produced a whopping 2.5 million cars and vans at their US facility.

Ford also stands to be a major investor in the United States engine plants, assembly plants, stamping plants with an amazing investment of over $10 million dollars in the last few years. Even with so much progress, the company plans to expand its manufacturing reach and set up a facility in Mexico. Well, there are so many reasons to do this. Some of them are given below:

Trade agreements

Mexico, at present, is in several trade agreements with countries across the globe and this is beneficial for businesses. With a trade agreement, businesses can easily export their products to the cosignatory nations with no problem, at a lower financial price. For instance, NAFTA between the United States and Mexico allows products to be traded at extremely slashed tax rates and with lowest fees on products moving out of the nation. All in All, Mexico has 43 trade agreements which open up amazing opportunities to Ford, offering them a broader number of trading partners to select from.

Reduced costs

Another reason to shift to Mexico is the benefits the company will avail from lower costs which can be used in all stages of the production procedure. Mexico is renowned for lower salaries and cost of living which allows businesses to increase their profits. This when teamed with beneficial trade deals that don’t impose hefty export and import taxes enhances the appeal of Mexico for businesses of all shapes and sizes.

Benefits of several deals and trading agreements

Ford’s decision to shift Mexico was criticized because it could cost thousands of Americans their jobs. But the reality is, Mexico and the United States will work better when they work in collaboration, rather than working as rivals. By working together, companies that function in both the nations will be able take benefits of several international trade agreements that may otherwise not be accessible to them.

Quality

Mexico offers top quality products at a lower price. The number of companies that moved to Mexico for manufacturing is proof to the reliability and quality of the goods coming out of Mexico. Automotive manufacturing Mexico already enjoys a great reputation across the world and Ford plans to cash it out too.

Effective logistics

Apart from the above-mentioned benefits, the physical transportation of products is also done easily in Mexico because of its well-planned logistics system. It means businesses can transport their goods to any nation with ease through any means. By speeding their transportation, Ford can ensure that they work with highest efficiency and zero time wasted.

Conclusion

Surely, automotive manufacturing Mexico has a number of benefits and Ford will definitely benefit from it in the long run and enhance its position in the worldwide manufacturing and trade.

Was it worth reading? Let us know.