An Innovative Look into the Real Cost of Off-Shoring

A company recently decided to move an electronics assembly operation from the eastern United States to Mexico.  Why?  Because labor rates outside of the US are indeed attractive in some cases.  Factory direct workers in Mexico, for example, are paid a fully burdened wage rate near $2 per hour.  Many US factories have fully burdened labor costs in excess of $20 per hour. With just 100 positions moved, labor savings for the company were expected to be in excess of $3 million annually.  It’s no surprise that company leaders were tempted by these numbers.  But that’s not the entire story. 

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