THOUGHTS

Why Top US Brands are Turning to the Manufacturing Industry in Latin America

Jul 30, 2019

Earlier, many top manufacturing companies in the US heavily relied on Chinese manufacturers due to the availability of low-cost labor. However, with the rapid economic growth in China and a larger section of the Chinese population moving to middle-class and demanding higher wages, several global brands are turning away from China in search of lower-cost alternatives from emerging markets. The manufacturing industry in Latin America is one such market that has become highly lucrative for companies in the US. Everything from medical supplies, to pharmaceuticals, to apparel, aircraft and computer machinery is now manufactured in Latin America, and the political and economic policy adjustments have significantly contributed to the manufacturing industry growth in Latin America.

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Benefits of manufacturing in Latin America

Proximity

One of the key benefits of the manufacturing industry in Latin America is its proximity to the US. When American brands do business with suppliers in overseas regions like Asia, it requires officials from the company to travel to the foreign nation. This is primarily because they may want to gain a firsthand view of where and how their products are manufactured.  One of the key benefits of manufacturing in Latin America for companies in the US is their proximity to Central America. Another challenge that proximity helps solve is the disconnect from the manufacturing process.

Lower turnaround time

By relying on the manufacturing industry in Latin America, companies in the US can ensure faster shipping of the final products than that from overseas. Often, businesses that have their manufacturing units in Asian countries like China re-stock only once a quarter it takes at least a month for an order to ship overseas. This lack of flexibility in ordering can lead to over- or under-stocking of products. Shipping from the manufacturing industry in Latin America gives a lot more flexibility to companies in the US when it comes to placing orders.

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