Can us locations compete with low‐cost Mexican labor? a location cost analysis of North Carolina and the Yucatan in the sewn bag and case industry

Abstract

Several international investment theories hold that production costs in developing countries should be lower than in developed countries for facilities that utilize globally standardized production technology and semi‐skilled labor. This analysis tests this expectation by estimating the relative production costs in a North Carolina site and a Yucatan site of a sewn bag and case manufacturer. Interestingly, no overall location cost advantage is found for the Yucatan site. 1997 John Wiley & Sons, Inc.