Why do we manufacture in Latin America?
Every year, more and more companies all over the world start working with Latin American suppliers to manufacture different types of products. And this trend does not seem to stop. Actually, in the past 2 years, the United States imported more from Latin America than it has from China.
The region has been on the rise since the 1980s and has the fastest-growing industrialized countries on the planet. Additionally, it has experienced recent government investment and private improvements in its technology and production infrastructure, leading to an increase in manufacturing contracts. It’s not just volume, Latin American suppliers can offer buyers what they are looking for.
By choosing to manufacture in Latin America, companies can have access to a large network of high-quality factories that offers good prices, technical innovations, and smoother communications. The Latin American manufacturing industry already has a network of factories that supply for some of the world's largest brands with higher quality products.
Trading in the Americas can allow many companies to take advantage of the Free Trade Agreements the United States has signed with at least 11 nations of the region. Under these deals, the merchandise from Latin American nations can enter the US tax-free with the guarantee of fair working conditions and ethical trade.
These agreements not only enable corporations to save millions on customs duties, but also allow a general commercial aperture that facilitates private business and increases the disposition of many local industries to receive foreign clients.
When comparing manufacturing in Latin America to other regions, competitive prices are also present. In general, the labor rates in many countries in South America are similar to those in China.
Mexico, for example, offers much more stable wages. This makes it easier for companies to anticipate manufacturing costs. However, in the region, the labor cost doesn't translate into poor working conditions, since the wage is only one part of total labor compensation. This factor also makes it possible for Latin America to have higher labor productivity associated with a stable average wage.
A classic reason that forces companies to disconnect from their production processes is the pains of sourcing from suppliers across the globe. However, by producing in a neighboring region many of these factors, such as different time-zones, culture gaps, and language barriers are minimized, facilitating companies to be more involved in their production and to strengthen the relationship and trust with suppliers.
The proximity also enables a faster delivery in the supply chain and lower shipping costs. When sourcing from Latin America the lead times can be reduced to less than half from Factory Asia.
This means that the funds will be unused for less time and the cash flow will be smoother, as the goods will have less time on the road, will be received faster, and will be able to go on sale with customers sooner.
Sourcing from Latin America is much more than good prices and proximity. The industry of the region has plenty of benefits in terms of design quality, raw materials, work environment, ease of communication, and fair local regulations.
As the region still has a lot of factories that remain unexplored for mass production, the businesses that source in Latin America takes advantage of having more unique designs and higher standards in production. In these processes, the general quality in the final goods is well cared for and monitored, from raw material to product finishing and appearance.
When choosing to manufacture in Latin America, you will also be contributing to an industry with better treatment for employees, fairer wages, and companies with corporate responsibility and social impact.
Also, the local manufacturers work with fair trade standards and environmentally-friendly practices, a factor that is very hard to find in low-cost companies from Asia.
Best Products You Can Source in the Region
Thanks to technology and technical innovation, there is a huge variety of industrial manufacturing in Latin America that is emerging in the international market as a solution for sourcing cost-effective products.
According to the United Nations Industrial Development Organization, the strongest sectors in the region are textiles and wearing apparel, vehicle manufacturing, furniture, rubber and plastic products, machinery and industrial equipment, pharmaceutical products, chemical products and paper packaging.
The textile manufacturing sector is especially important since the region is home to some of the major textile-producing factories. From Peru's organic pima cotton to compression fabrics from Colombia, you will be able to find quality suppliers in different nations.
Also, plastic and paper packaging are emerging as some of the most innovative sectors. In this sector, Brazil and Mexico are the major markets for packaging solutions in the region, providing unique products with the best technology.
With our Latin American supplier network, we want to maximize these benefits and allow buyers in the United States to access them quickly and digitally.