Manufacturing Is Booming—South of the Border

Joe Smith

Ecommerce has become the principal, or at least the most fervent, driver of industrial activity in the US and particularly in Southern California, which is home to some of the country’s tightest industrial markets. While ecommerce is dominating industrial activity here, manufacturing activity is still booming—south of the border. Mexico has picked up much of the industrial manufacturing business, and as a result, the North Baja industrial region is seeing record-breaking stats. According to research from CBRE, the North Baja industrial market has a 3.5% vacancy rate, more than 1.7 million square feet in the construction pipeline and rising rental rates, now at $0.45 per square foot.

Low labor costs and the availability of labor is driving the manufacturing activity in Mexico. “The driver is really labor costs. Labor is less expensive in Mexico than it is here,” Joe Smith, SVP at CBRE, tells GlobeSt.com. “There is less reliance in the US on trade schools today, there used to be a lot of trade schools in the US. Today, there are many trade schools in Mexico teaching specific trades. A lot of companies are finding that there are educated and sophisticated employees in the market as well, and there are sophisticated manufacturing capabilities in Mexico that people understand. It is not only entry-level positions.”