One of the tropes of romantic comedy is the clueless protagonist who pines for a beauty from afar, unaware that his true soulmate is the "best friend" who was right in front of him the whole time. By the end of the movie, he's seen the light. Are American manufacturers about to shake off their decade-long obsession with China, and discover the charms of Mexico?

They've been there before. Mexico's maquiladora program, offering low-cost labor and duty-free treatment of goods that are imported, then assembled or manufactured for re-export, is more than 40 years old. It received a shot in the arm in 1989, when the government streamlined permit and registration requirements. Maquila facilities really got going following enactment of the North American Free Trade Agreement in 1994.

American manufacturers have a remarkably short attention span, though, and excitement over NAFTA was quickly superseded by the lure of even cheaper labor in China and other parts of East Asia. The mass migration across the Pacific gave rise to huge operations like China's Foxconn complex for high-tech contract manufacturing, with up to 450,000 workers domiciled at a single location. Mexico couldn't hope to match it in size or cost. (Or, for that matter, the nets that prevent despondent workers from throwing themselves off the factory rooftops.)

Now companies are giving Mexico another look. Many are realizing that the price of labor isn't the only factor to be considered when totting up supply-chain costs. Buffer inventory and longer order cycles are needed to offset the risk of siting plants thousands of miles from consumer markets. Wages in China are on the rise, as workers begin their climb up the social ladder to middle-class status. The Great Recession wiped out thousands of small, inexpensive suppliers throughout the country. And the skyrocketing price of oil has added million of dollars to transportation costs. Even the recent earthquake in Japan is a concern, prompting supply-chain managers to weigh the potential impact of natural disasters in faraway locations.

But is Mexico the answer to these worries? You could argue that it's not the same country as it was when maquilas first drew American manufacturers across the border. For one thing, a fresh spate of violence related to drug trafficking has companies wondering whether their Mexican operations will be safe and free from disruption. Multiple deaths attributed to drug gangs have been reported in the states of Chihuahua and Zacatecas, among other locations.

Basic infrastructure for manufacturing is another concern; the number of maquiladoras has shrunk by 20 percent since 2000, to about 3,500 throughout the country, according to Maria Elena Rigoli, president of Collectron International Management Inc.. (Her firm serves as the local administrative and legal representative for foreign companies seeking to manufacture in Mexico.) Current employment at the maquilas is said to be around 1 million Mexicans, down from a peak of more than 1.3 million in 2000.

Steven Belli, chief executive officer of procurement services provider Source One, admits that the illegal narcotics trade presents "a very valid risk" in some border states, especially to engineers and others making plant visits. But Source One, a big fan of manufacturing in Mexico, has been concentrating its efforts farther to the south and west, where drug violence isn't a problem, according to Belli. The city of Manzanillo, in the state of Colima, is an especially ripe location for business activity, he claims.

"It's where [Mexico's] army and navy are based," Belli says. "It's by far the safest state in the country."

Rigoli blames the news media for the "fear factor" that has become attached to Mexico. She claims the so-called danger is largely a matter of perception by U.S. companies. "I'm not underestimating the present situation," she says, "but it's not as bad as it's been [portrayed].... Crime is no different than you will find in the big cities [of the U.S.]."

Victor Gamas, director of Collectron 4PL, says the recent incidents of drug violence - whether or not blown out of proportion - have motivated Mexican companies to take greater precautions and conduct business "in a more secure way." They're beefing up security for workers inside the plant, as well as for the movement of materials both within facilities and between locations. Collectron general manager Roberto Moran says Mexican companies are following the dictates of the voluntary Customs-Trade Partnership Against Terrorism (C-TPAT).

The bigger concern for companies looking at the area around Manzanillo is supporting infrastructure. The region's transportation system "is second to none," says Belli. But he admits that manufacturing and technology resources are "just now starting to get developed."

Gamas says Mexico has made leaps and bounds in developing its transport infrastructure, with major work taking place at ports and airports in Mexico City, Monterrey, Guadalajara and Manzanillo. The seaport of Lazaro Cardenas continues to push itself as an alternative to trans-Pacific cargoes moving over the U.S. landbridge and through the Panama Canal.

William Dorn, director of operations with Source One, says the major challenge for companies looking to produce in Mexico today is finding the right partners in-country. Many don't have an internet presence, and there's no comprehensive directory of local manufacturers. It gets easier, he says, as one builds up a network of connections on the ground. The situation might be akin to the early stages of outsourcing to China, when U.S. companies sought out obscure "mom-and-pop" enterprises to make key products or components. (Many of which weren't strong enough to ride out the recession, it should be noted.)

The Mexican government is trying to lure foreign investment by reforming tax laws. Amendments to the maquiladora program known as IMMEX have reduced or eliminated taxes and import duties on companies doing assembly or production within Mexico, Belli says. The change has allowed for the creation of manufacturing "communities," consisting of multiple plants with goods moving freely (and tax-free) between them. In addition, the IMMEX reforms lower the threshold for U.S. ownership of a Mexican manufacturing venture.

So the overlooked suitor stands by, waiting to be noticed. There are signs of awareness; Nissan recently announced plans to boost production of cars in Mexico for the North American market. Belli says any kind of political unrest in China could serve as the tipping point for a wholesale return of manufacturing capacity back to the West.

Don't expect a major shift in sourcing patterns overnight. "China," says Belli, "has a big headstart." In the meantime, Mexico pines.

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