All labor markets evolve in terms of cost structure over time. The lowest labor cost markets are often highly inefficient because manual labor is cheaper than the fixed costs of automation. As Table 1 shows, as a market grows in popularity, infrastructure develops and labor costs increase. 1 Efficiency improvements follow. Choosing a region simply on labor cost not only discounts the hidden cost of emerging labor market inefficiency, it also fails to consider the impact of transfer costs when that market is no longer the lowest labor cost option. For shorter lifecycle products with marginal quality requirements, this may be an acceptable set of tradeoffs. However, for products with longer lifecycles with superior quality requirements, the hidden cost equation will significantly outweigh quoted cost savings.
Project migration choices require careful review. Any evaluation should recognize that every region has advantages and disadvantages. This paper looks at regional advantages/disadvantages in Asia, the U.S. and Mexico, from the perspective of SigmaTron International, an electronics manufacturing services (EMS) provider with facilities in those regions. It also makes recommendations for the project types likely to best fit in each region.