Mexico Manufacturing: Why "Cheap Labor" Isn't the Real Reason Brands Are Moving | Javier Zarazúa
Ecommerce On Tap · with Javier Zarazúa · September 15, 2026 · 61 min
Summary
Ecommerce brands are increasingly looking to Mexico for manufacturing, but the primary driver isn't "cheap labor." This episode reveals that while Mexican labor costs are only marginally lower than China's, the real advantages lie in strategic access to the US market, tariff benefits, and the ability to redesign distribution models for speed and efficiency. Understanding these deeper economic and logistical factors is crucial for brands considering nearshoring.
Key takeaways
Recognize that "cheap labor" is not the primary driver for nearshoring to Mexico; the wage difference compared to China is often minimal ($1-$2/hour), making market access and strategic advantages more critical.
Prioritize market access and supply chain redesign when evaluating nearshoring locations, as proximity to the US market allows for faster delivery and more flexible distribution models than Asian manufacturing.
Understand the significant role of tariffs in manufacturing location decisions; unfavorable tariffs on raw materials or finished goods in one country can make a seemingly more expensive location like Mexico economically viable.
Factor in the geopolitical stability and trade relationships when considering manufacturing locations, as potential changes (e.g., US-China trade relations) can dramatically impact supply chain viability and costs.
Kicking off our Mexico season with Javier Zarazúa Ruiz, Managing Partner of JL Nearshoring Mexico and a 25-year veteran of manufacturing operations at Caterpillar and Adient. Everyone assumes brands are moving to Mexico for cheap labor — the real gap is about a dollar an hour. Javier and Aaron break down what's actually driving the shift: tariffs, transit time, and 60 years of industrial infrastructure most people think started in 2018.]]>
What does this episode say about supply chain & operations?
Recognize that "cheap labor" is not the primary driver for nearshoring to Mexico; the wage difference compared to China is often minimal ($1-$2/hour), making market access and strategic advantages more critical.
What does this episode say about finance & fundraising?
Prioritize market access and supply chain redesign when evaluating nearshoring locations, as proximity to the US market allows for faster delivery and more flexible distribution models than Asian manufacturing.
What does this episode say about dtc strategy?
Understand the significant role of tariffs in manufacturing location decisions; unfavorable tariffs on raw materials or finished goods in one country can make a seemingly more expensive location like Mexico economically viable.
What does this episode say about supply chain & operations?
Factor in the geopolitical stability and trade relationships when considering manufacturing locations, as potential changes (e.g., US-China trade relations) can dramatically impact supply chain viability and costs.
