Earlier this month, Tupperware Brands revealed its decision to shutter its last remaining U.S. manufacturing plant in
Hemingway, South Carolina, and shift production to Mexico. This move, which will result in the loss of approximately 148 jobs,
has raised concerns about the increasing trend of U.S. manufacturers relocating operations to Mexico. Tupperware cited a
“multi-year strategy to simplify its supply chain” as the reason for this decision, with plans to transition manufacturing to its
existing plant in Lerma, Mexico.
Why Tupperware and Others are Choosing Mexico
Tupperware’s decision reflects a growing trend among U.S. manufacturers to relocate to Mexico for various reasons, including:
- Lower labor costs: Wages in Mexico are significantly lower than in the U.S., offering substantial cost savings for labor-intensive
manufacturing processes. - Reduced operating expenses: Costs associated with utilities, taxes, and regulatory compliance tend to be lower in Mexico
compared to the U.S. - Favorable trade agreements: The United States-Mexico-Canada Agreement (USMCA) facilitates duty-free trade between the
three countries, making it attractive for manufacturers to produce goods in Mexico and export them to the U.S. - Proximity to U.S. market: Mexico’s geographical proximity to the U.S. allows for faster and more efficient transportation of
goods, reducing shipping costs and lead times. - Skilled workforce: Mexico has a growing pool of skilled labor, particularly in engineering and manufacturing sectors, due to
government investment in technical education.
Tupperware is not alone in its decision to relocate manufacturing to Mexico. Several other U.S.-based companies have recently
made similar moves:
- Carrier Global Corporation: In 2019, Carrier, a leading manufacturer of heating, ventilation, and air conditioning (HVAC)
systems, announced plans to close its Indianapolis plant and move production to Mexico, resulting in the loss of over 1,400
jobs. - Mondelez International: The maker of Oreo cookies and other snack foods closed a plant in Chicago in 2016, eliminating
600 jobs, and shifted production to Salinas Victoria, Mexico. - Stanley Black & Decker: In 2021, Stanley Black & Decker announced the closure of its Cheraw, South Carolina plant, which
produced power tools, and the relocation of production to Mexico.
The continued exodus of manufacturing jobs from the U.S. raises concerns about the long-term impact on the American
economy and workforce. To reverse this trend, experts suggest several potential policy changes:
- Tax incentives: The U.S. government could offer tax incentives to encourage manufacturers to keep production within the
country. - Regulatory reform: Streamlining regulations and reducing bureaucratic hurdles could make it easier for businesses to
operate in the U.S. - Workforce development: Investing in education and training programs can help develop a skilled workforce that can meet
the needs of modern manufacturing. - Infrastructure investment: Upgrading transportation networks and other infrastructure can enhance the efficiency and
competitiveness of U.S. manufacturing.
The Impact on the Used Machinery Market in Mexico
The increasing number of U.S. manufacturers relocating to Mexico is expected to create a surge in demand for used and
surplus machinery and equipment in the country. As these companies set up new production lines and expand their operations
in Mexico, they will require a wide range of machinery and equipment to support their manufacturing processes. This increased
demand presents opportunities for suppliers of used machinery and equipment to expand their businesses and meet the
needs of this growing market.
While cost savings and other factors play a significant role in these decisions, addressing the underlying issues and
implementing policy changes can help create a more favorable environment for manufacturing to thrive in the U.S. At the same
time, the growing demand for used machinery and equipment in Mexico presents new opportunities for businesses in this
sector.
