U.S. vs. Mexico Site Selection Case Study

PROJECT

Validation of a manufacturing onshoring decision

WHAT WE DID

Evaluated potential sites between the US and Mexico

CLIENT

Electrical Components & Power Infrastructure Manufacturer

TIMELINE

A total of 3 months to deliver and calibrate the analysis

How a Global Electrical Manufacturer Evaluated U.S. vs. Mexico for Reshoring

When a multinational electrical equipment manufacturer sought to transfer select operations from Asia to North America, it required a data-driven framework to evaluate country and state-level viability.

Prodensa was engaged to conduct a comprehensive Country & State Evaluation Study—integrating operational feasibility, cost modeling, labor analysis, infrastructure review, and USMCA origin qualification.

The Challenge

The client needed to:

Transfer selected manufacturing operations from Asia to North America
Identify viable U.S. and Mexico locations for brownfield heavy manufacturing
Ensure labor availability and technical depth

Validate industrial power and infrastructure capacityModel total operating cost exposure
Assess USMCA origin qualification and tariff implications
Maintain long-term operational stability and scalability

This was not a simple cost comparison. It required a structured decision framework aligned with executive priorities.

Pre-Selection & Industrial Ecosystem Screening

Nine states were shortlisted based on:

United States

Kentucky
Tennessee
West Virginia
Ohio
Indiana
Illinois

Mexico

Nuevo León
Coahuila
Chihuahua

Selection criteria included:

Industrial ecosystem robustness
Supplier footprint proximity
Strategic logistics corridors
Heavy-manufacturing suitability

“Must-Have” Operational Evaluation

Each location was evaluated against non-negotiable operational drivers:

Labor availability & absorption capacity
Manufacturing skill base depth
Power availability & electrical infrastructure
Supplier proximity
Customer distance
Industrial zoning & permitting efficiency
Brownfield readiness for heavy manufacturing
Total operating cost structure

A structured scoring model (1–3 scale) ensured objective comparison across all states.

Total Cost Modeling (Steady-State Simulation)

Rather than comparing unit prices in isolation, Prodensa built a normalized manufacturing scenario using standardized assumptions:

Operational Assumptions Modeled

100 lower-skilled roles
50 skilled manufacturing roles
50 engineering roles
150,000 sq. ft. facility
250,000 kWh electricity
2,500 MMBTU gas
5,000 m³ water usage
Multi-state inbound/outbound logistics flows

This enabled:

Real monthly operating cost comparison
Cost driver visibility
Total exposure modeling
Cross-country cost differential analysis

USMCA Origin & Tariff Qualification Analysis

A dedicated USMCA review was conducted for the product category:

Finished goods classification
Bill of Materials origin breakdown
Product-Specific Rules of Origin (Annex 4-B)
Tariff shift validation
Article 4.2, 4.3, and accumulation analysis
Substantial transformation review

Key Finding:
The evaluated products qualified as originating goods under USMCA and were eligible for preferential tariff treatment when produced within the USMCA region.

This ensured tariff risk mitigation in the event of relocation to Mexico.

Weighted Executive Decision Framework

A Weighted Pugh Matrix was applied, prioritizing variables based on strategic importance:

Operational Cost (35%)
Labor Availability (15%)
Manufacturing Skill Base (15%)
Supplier Proximity (10%)
Customer Distance (10%)
Infrastructure & Zoning Variables

This allowed leadership to align the final decision with business priorities rather than raw cost alone.

The Approach

01 Pre-Selection

02 "Must-Haves"

03 Cost Model

04 USMCA Analysis

05 The Decision

Pre-Selection & Industrial Ecosystem Screening

Nine states were short-listed:

United States

Kentucky
Tennessee
West Virginia
Ohio
Indiana
Illinois

Mexico

Nuevo León
Coahuila
Chihuahua

Selection Criteria

Industrial ecosystem robustness
Supplier footprint proximity
Strategic logistics corridors
Heavy-manufacturing suitability

"Must-Haves" Operational Evaluation

Each location was evaluated against non-negotiable operational drivers:

Labor availability & absorption capacity
Manufacturing skill base depth
Power availability & electrical infrastructure
Supplier proximity

Customer distance
Industrial zoning & permitting efficiency
Brownfield readiness for heavy manufacturing
Total operating cost structure

A structured scoring model (1–3 scale) ensured objective comparison across all states.

Total Cost Modeling (Steady-State Simulation)

Rather than comparing unit prices in isolation, Prodensa built a normalized manufacturing scenario using standardized assumptions:

Operational Assumptions Modeled

100 lower-skilled roles
50 skilled manufacturing roles
50 engineering roles
150,000 sq. ft. facility
250,000 kWh electricity
2,500 MMBTU gas
5,000 m³ water usage
Multi-state inbound/outbound logistics flows

This enabled:

Real monthly operating cost comparison
Cost driver visibility
Total exposure modeling
Cross-country cost differential analysis

USMCA Origin & Tariff Qualification Analysis

A dedicated USMCA review was conducted for the product category:

Finished goods classification
Bill of Materials origin breakdown
Product-Specific Rules of Origin (Annex 4-B)
Tariff shift validation
Article 4.2, 4.3, and accumulation analysis
Substantial transformation review

Key Finding:

The evaluated products qualified as originating goods under USMCA and were eligible for preferential tariff treatment when produced within the USMCA region.

This ensured tariff risk mitigation in the event of relocation to Mexico.

north-american-site-selection-comparison-analysis

us-mexico-site-selection-usmca-origin-tariff-qualification

The Results

Mexico emerged as a highly competitive alternative.

From a cost and operational standpoint:

Mexican states demonstrated lower total operating cost exposure
Strong industrial labor depth in selected regions
Competitive supplier regionalization potential
Brownfield readiness and heavy-manufacturing suitability
USMCA compliance validated

However:

Both the United States and Mexico remained viable platforms. The final decision depended on the client’s priority weighting—cost optimization vs. labor dynamics vs. supply chain resilience vs. long-term scalability.

Strategic Outcome

The client received:

A structured executive decision model
Total cost visibility across nine states
USMCA origin validation
Risk-adjusted operational comparison
A replicable site-selection framework

Should Mexico be selected, a secondary site-level deep dive was recommended for precise location optimization.

Onshoring decisions are no longer based on wages alone.

They require:

Trade agreement validation
Total cost modeling
Infrastructure reliability
Skilled labor pipeline analysis
Logistics footprint integration
Risk-adjusted scoring frameworks

This case demonstrates how structured methodology replaces anecdotal site selection.

Country & State Evaluation for a
North American Onshoring Initiative

How a Global Electrical Manufacturer Evaluated U.S. vs. Mexico for Reshoring

The Challenge