Companies Re-Evaluating Options & Moving Production

Manufacturing Companies Move Closer To Customers

Shipping costs are causing some manufacturing companies to ship production from overseas back to the United States and Mexico. Shipping costs for a standard, 40-foot container from Asia to the east coast of the U.S. has tripled since the year 2000. In a recent article in the Wall Street Journal, Jeff Rubin, chief economist at CIBC World Markets in Toronto, says that for every 10% increase in the distance of a trip, transportation costs will rise 4.5%. China is also facing other challenges such as higher wages, tougher environmental controls and the appreciation of their currency that is causing companies to look at moving operations closer to their customer base.

This is good news for our region because of our distribution capabilities to the North American market. Keith Patridge, President and CEO of McAllen Economic Development Corporation, comments, “We predicted at the beginning of the year that our region would continue to do well as compared to the rest of the economy and as a result of several global factors we have seen this to be true.” Patridge continues, “Several companies from all over the world have visited because of their concerns about the rising cost of production largely due to currency exchange and the rising costs of shipping products from overseas. Our region provides them with a strategic geographic location and young, available workforce.”

The McAllen Economic Development Corporation is a not-for profit organization under contract with the City of McAllen to create jobs and generate revenues for the citizens of McAllen by attracting new industry and helping existing companies to expand.
“We are the new Texas. Bilingual, Bicultural and Pro Business.”