Crucial Questions to Ask a Mexico Shelter Company03.14.23
Mexico manufacturing has continued to grow over the years, rising 21% between 2020 and 2021. To get production up and running quickly, operators often turn to the expertise of a Mexico shelter company. A shelter serves as a legal entity for U.S. and other foreign manufacturers and provides all the administrative services necessary to do business. As more companies are considering this nearshoring strategy, here are a few important questions to always keep in mind.
Which Option Is Best: Shelter or Standalone?
When exploring the benefits of nearshore manufacturing, there are two business models to choose from: a shelter services partner or standalone entity. The majority of foreign manufacturers opt to operate under the umbrella of a shelter. This turnkey solution minimizes legal risk and exposure in a cost-effective way, while also expediting start-up time.
A shelter services company can get a new operation up and running in as little as three to four months. This is approximately half the time of what it takes for a standalone entity. Plus, a standalone remains exposed to Mexico’s authorities. However, the costs of shelter services are the same for either option, and while most prefer the route of the shelter, there’s value in both.
Where Should I Set Up Operations in Mexico?
The U.S./Mexico border region (North Mexico) is the most popular area for nearshore manufacturing, though it’s not the only viable region available. There are several factors to determine the best regional fit. IVEMSA evaluates all project details including cost, location, and logistics as part of its site selection process. By gathering city and facility data and creating a comparison matrix, it helps manufacturers pinpoint the best region and building based on their specific needs.
What Services Are Provided By a Shelter Partner?
In addition to a site selection analysis, shelter services also include HR and recruiting, tax and legal compliance, as well as trade operations and accounting. These are offered as a comprehensive solution but are also available as “a la carte” services. However, the majority of manufacturing companies realize delegating responsibility to a shelter company saves on both time and cost.
Once I’ve Committed to a Shelter, Can I Eventually Become a Standalone?
Many companies are concerned about the possibility of being “locked in” to a shelter commitment. However, IVEMSA implements a specific “graduation program” for those who eventually want to move on from the shelter model. Every year, there’s an evaluation on whether the client wants to renovate, expand, or start to phase out. This transparency and flexibility give those manufacturing in Mexico peace of mind knowing they have a partner dedicated to their success.
How Do I Choose the Right Shelter Services Partner?
Though most shelter companies provide the same types of services, it’s best to work with one with a proven history of success and a high retention rate among clients. IVEMSA has provided cost-effective, long-term solutions for nearly 40 years, with an average 15-year customer retention rate. Our team is invested in doing what’s best for your business.
Have questions about Mexico manufacturing? Learn more about how our shelter services can benefit you. Contact our team today.