Mexico Production Challenges: Why Manufacturing in Mexico Isn't What It Seems

When companies think about moving production out of China, Mexico production challenges, the real-world obstacles facing manufacturers operating in Mexico, including logistics, labor, and security issues. Also known as manufacturing in Mexico, it's often sold as a low-cost, nearshore alternative—but the truth is more complicated. Many assume proximity to the U.S. means easy shipping, cheap labor, and stable operations. But that’s not the full picture. While Mexico does offer tariff advantages under USMCA and a growing skilled workforce, the hidden costs are adding up fast.

One major issue is supply chain issues Mexico, the fragmented and unreliable logistics network that delays parts and increases inventory costs. Unlike in China, where ports and rail systems are tightly coordinated, Mexican freight moves through a patchwork of private trucking companies, underfunded highways, and congested border crossings. A shipment that should take 24 hours can get stuck for days. Then there’s labor. Wages in Mexico are rising, not falling. Skilled workers are in short supply, and turnover is high. Factories in Monterrey or Tijuana are competing for technicians who can operate CNC machines or handle quality control—but training them takes time, and many leave for better pay in the U.S.

Security is another silent killer. While not every region is dangerous, organized crime and extortion have forced manufacturers to spend more on private security, insurance, and armored transport. Some companies have seen their monthly security bills jump by 30% in just two years. And it’s not just about theft—power outages, water shortages, and bureaucratic delays at customs can shut down a production line overnight. These aren’t minor hiccups. They’re systemic problems that eat into profit margins faster than low wages can save them.

What’s worse? Many businesses don’t realize how much they’re relying on a single supplier or logistics partner. When one trucking company goes out of business or a key factory in Guadalajara shuts down for safety reasons, the whole chain breaks. There’s little redundancy. And unlike in Vietnam or India, where governments are investing heavily in industrial zones, Mexico’s infrastructure upgrades are slow, uneven, and often stalled by local politics.

That’s why some companies are walking away. Others are doubling down—but only after they’ve done the hard work of mapping every risk. The posts below show real cases: a medical device maker that lost $2 million in delays, a furniture company that switched from Mexico to India after security costs spiked, and a electronics assembler that found better reliability in Tamil Nadu than in Nuevo León. These aren’t hypotheticals. They’re lessons learned the hard way.

If you’re considering Mexico for manufacturing, you need to know what’s not on the brochures. The cost savings are real—but so are the risks. Below, you’ll find detailed breakdowns of what actually goes wrong, who’s succeeding despite the challenges, and how to protect your operation before you even sign a lease.