Shelter services manufacturing began in the late 1960s as a way to support the surge of new foreign direct investment in Mexico.
Since then, it has evolved and adapted to the industrial landscape, but has seen an influx of significant changes over the past decade. Specifically, it’s become increasingly challenging to obtain the required permits to launch production.
The application process for Mexico’s IMMEX program and receiving VAT certification is complex. Approval delays and/or denials are common, often without reasons identifying why, causing disruption and frustration.
As a result, more manufacturers are leaning on the unique support shelter services provide in helping to streamline setup and secure permits in a timely manner.
A shelter services company is one of several business models available for manufacturers in Mexico.
It is a local legal entity that serves as an “umbrella” for manufacturers to operate without establishing their own standalone entity.
Shelter services encompass administrative and compliance-related responsibilities necessary to launch production. These include five key areas:
Technically, manufacturers do not maintain a legal presence while partnered with a shelter services company. This makes it the safest way to do business, as manufacturers aren’t exposed to authorities.
A shelter company also helps manufacturers navigate and maintain compliance throughout the setup phase and ongoing production.
The cost structure of shelter service manufacturing factors in the number of production employees and is designed to easily scale up or down as needed.
Generally, a shelter company will provide a cost estimation analysis, which helps manufacturers decide if it’s the best business model for them.
Get a more detailed overview of costs for shelter services in Mexico.
Because a shelter company has established administrative departments in place (versus having to hire individuals separately), this expedites the setup process.
Manufacturers can expect to launch production within three to four months from the time of a factory lease signing versus six to seven months or longer as a standalone entity.
Shelter services in Mexico encompass a wide range of administrative and compliance tasks for production. They include:
Shelter services can also be customized per project, scaled up or down as needed, and can serve manufacturers operating as a standalone entity, in addition to those working fully within the shelter model.
AerospaceAutomotiveElectronicsMedical DevicesInformation TechnologyGeneral ManufacturingSemiconductorData and AI InfrastructureIn addition to handling all administrative responsibilities, a shelter company’s local expertise and experience help to minimize risk and liability for manufacturers operating in a foreign country.
Therefore, manufacturers can focus solely on production while also maintaining full ownership of their processes. Though other options, the majority of manufacturers choose to work with a shelter services company due to the extensive list of benefits it provides, such as:
Manufacturers operating under a shelter save on administrative infrastructure, local compliance platforms, and, in general, great value through economies of scale that apply to local resources.
Moving production to Mexico requires many moving parts, but with shelter company support, manufacturers don’t have to figure anything out alone, particularly when it comes to compliance.
A shelter company also helps with research and can create a site selection matrix and labor cost analysis, providing manufacturers with recommendations and estimates based on different viable regions throughout Mexico.
Shelter services manufacturing allows for agility as production needs change. Manufacturers can easily scale production and/or eventually graduate from the shelter program and transition to a standalone entity.
Manufacturers maintain full intellectual property rights as well as complete ownership and control over processes and equipment.
A shelter services company has already been approved into the IMMEX program and can add manufacturers it works with to its permits. This cuts down on waiting time and expedites the implementation of the 16% VAT savings.
Shelter services do not include production expenses such as:
While these expenses are paid by the manufacturer, they are distributed through the shelter company.
No. Shelter services provide a cost-competitive way for manufacturers across multiple industries and sizes to launch production in Mexico.
This applies to companies expanding production for the first time, those reshoring production, and operators that may have run production in Mexico in the past but aren’t up-to-date with the current landscape and may benefit from local expertise to get started.
Manufacturers that choose to work with a shelter company save approximately 20-25% compared to the administrative overhead costs of establishing a standalone entity.
This includes salaries for HR, accounting, and trade compliance personnel, among other administrative departments, as well as expenses like manufacturing software fees.
Though both business models allow companies to benefit from the cost-effectiveness of manufacturing in Mexico, the majority choose to work with a shelter.
Read more about comparing a shelter company vs. a standalone entity.
Before production begins, a shelter company can provide a:
Researched information comparing the current availability and costs of viable industrial buildings and other pertinent production data in Mexico, such as industrial labor pools by sector and leasing rates by region.
Cost estimations of fully burdened salaries based on job descriptions and production needs. A shelter company also has access to recruiting networks, helping manufacturers to secure qualified employees more quickly.
This data is delivered prior to an official commitment, giving manufacturers the information they need to make a decision that will benefit their current strategies and long-term growth goals.
A misconception of shelter services manufacturing is that it limits a company’s ability to establish a standalone entity in the future.
In fact, this business model is designed to streamline the transition to manufacturing in Mexico and eventually allow operators to “graduate” from the program.
While the majority of clients stay with their shelter partner for several years, others still benefit from shelter services even after they’ve become their own legal entity.
In addition to identifying the hard costs associated with shelter services, consider the level of support and resources a shelter company has to offer.
Confirm the list of included shelter services and associated costs is clear. Also, ask questions about the process for scaling production and/or exiting the shelter model.
Establish clear expectations for key milestones, including site selection, recruiting and hiring employees, and coordinating compliance requirements leading up to production.
Check for years of experience operating as a shelter company, client reviews, and general presence in the industry.
Verify proof of current permitting, including IMMEX program and VAT certification. There are instances when shelter companies can have their IMMEX programs suspended or canceled due to non-compliance or bad faith practices.
There are multiple business models to choose from when manufacturing in Mexico, as well as several shelter services companies to partner with.
What sets IVEMSA apart is a history of service excellence, instilling client trust and transparency for the past four decades and maintaining an average client retention rate of 15+ years.
Our team of experts is dedicated to providing insights, cost estimations, and recommendations manufacturers need to make a confident, informed decision about the growth of their business.
IVEMSA is a comprehensive administrative services provider with nearly 45+ years of supporting foreign companies’ manufacturing operations in Mexico. We offer both shelter and standalone support services with a dedicated team of professionals in six functional areas. Many of the IVEMSA team members have been with the company for many years, building and mining the resources and network necessary to provide the smoothest manufacturing operations and shipping possible for companies from around the world. And no matter how the company has grown, the core values of honesty, integrity, hard work and customer satisfaction, remain at the heart of everything IVEMSA does.
Calzada Abelardo L. Rodríguez 885
Colonia Calles, Mexicali,
Baja California, México 21226
Torre Vinta, Piso 17 Oficina 1701
Blvd. Diaz Ordaz # 3065, Colonia
Santa Maria
Monterrey, Nl CP 64650
Via Corporativo Building
Misión de San Javier 10643, Zona Rio
Suite 421. 4to Piso
Tijuana, BC, Mexico 22010
1111 6th Avenue
Suite 300
San Diego, CA 92101
1778 Carr Road
Suite 1
Calexico, CA 92231
Contact us today and see how we can help you take advantage of all the benefits of manufacturing in Mexico - without the hassle.
