Looking to Grow Your Manufacturing? Consider Setting Up Operations in Mexico07.20.22
There are a number of reasons why U.S. manufacturers are considering growing their operations in Mexico versus continuing to expand in China. The trade war between the U.S. and China, as well as pandemic-related supply chain delays position Mexico manufacturing solutions as an optimal choice. Now, in addition to these economic challenges, manufacturers are also simply running out of affordable industrial space.
Increases in demand combined with inflated leasing expenses in the U.S. have companies seeking more cost-effective opportunities. Moving operations to Mexico doesn’t have to mean relocating the entirety of production but rather sending the most labor-intensive operations to where labor rates are cheaper and there is greater access to an industrial workforce.
Maximize Opportunity While Minimizing Risk
To minimize risk, foreign manufacturing companies can start small by working with a shelter company in Mexico that can help them scale capacity as needed. A shelter company serves as a foreign manufacturer’s legal entity and is responsible for obtaining all permits and licenses necessary to operate. Responsibilities also include leasing the production facility, hiring and paying employees, and ensuring all other administrative requirements are handled efficiently in preparation for launch.
Maintain Access to a Skilled Workforce
The access to technical labor compared to availability in the U.S. is another way Mexico manufacturing solutions help companies grow. Mexico invests in advanced technical education and manufacturing training programs to support a continuously growing and skilled workforce. A shelter company like IVEMSA helps to recruit the talent necessary to quickly fulfill job roles while allowing manufacturers the flexibility to easily scale up or down based on production needs.
Partnering with IVEMSA also gives manufacturers access to in-depth knowledge of how to retain the best workers. Though the cost of labor in Mexico is less expensive, workforce competition is still high. IVEMSA guides companies with regards to salaries and benefits that will help to sustain a strong work culture, in addition to explaining differences in labor laws between Mexico and the U.S. Ultimately, the role of a shelter helps to bridge any gaps by having a full suite of services and an administrative support team in place to ensure best practices are followed and costs are minimized.
Grow Closer to Home
Setting up operations in Mexico has already served as a successful strategy for thousands of global manufacturers throughout the years, which means companies looking to grow can rely on this precedent. The U.S. remains Mexico’s main source of foreign direct investment totaling over $100 billion USD. and bilateral trade growth has risen by 482.2% between 1993 and 2020.
U.S. manufacturers considering diversifying operations but want to stay close to home, should evaluate the benefits of working with a shelter in Mexico. For border states, specifically, the close proximity translates to less expensive transportation costs, faster delivery to meet production timelines, and greater oversight capabilities onsite. Plus, in addition to minimizing risk and exposure, as well as accessibility to a strong industrial workforce, Mexico manufacturing solutions also provide an established infrastructure, tax advantages, and favorable trade relations with the U.S. and other foreign countries.
Learn why setting up operations in Mexico could be the right strategy for your company. Contact IVEMSA today.