The relatively short distance to the U.S. market gives Mexico a huge advantage in high mix/low volume manufacturing in medical devices. American managers and customers of factories in Mexico are in the same time zone, a short flight away for executives, and a door-to-door truck drive away for products.
The shorter time from order to final delivery means Mexican manufacturers can integrate themselves more easily into the supply chains of cross-border manufacturing operations, without the lengthy turnaround time involved in working with parts shipped overseas.
High mix/low volume contract manufacturers like Oncore, Creation Technologies and SMTC are often global businesses with operations in China and elsewhere, but use their Mexican factories to supply their NAFTA customers. Assembly operations run on a build-to-order basis. A particular assembly line will be configured and reconfigured throughout the week to make different products for different customers.
This allows flexibility throughout the supply chain for large manufacturers and enables companies to get products to customers on an as-needed basis. DJ Orthopedics (DJO), with headquarters in San Diego and 2,000 employees at its manufacturing facilities in Tijuana, uses its cross-border operations to offer customers second-day delivery of custom-built medical devices. DJO can take a customer order in the morning, build the product that day, and drive it across the border to be sent next day via FedEx.
However, no amount of efficiency can reverse the adverse conditions that plague Mexican producers at the border. There, northward trade flows continue to battle with deficient highway infrastructure and thick bureaucracy. Without enough lanes, northbound cross-border traffic jams stretch well into the middle of the business district in Tijuana. Mexican shipping companies are now allowed to operate north of the border, but regulatory hurdles keep many from doing so. Mexican and American companies have profited by the speed of business between the two countries, but there is plenty of room for improvement.
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