Site Selection Challenges When Setting Up Mexico Manufacturing

• Despite tariff uncertainty, the U.S. continues to be the highest contributor of FDI in Mexico.
• More manufacturers are looking for industrial space, and now is an ideal time to secure a lease.
• Implementing shelter services in Mexico helps ease the site selection process.

Tariff uncertainty has controlled the conversation for the first half of the year, but a fact less talked about is Mexico’s record foreign direct investment (FDI). The Economy Ministry reported an increase in new first-quarter FDI by 165% compared to the first quarter of 2024.

Though it makes up a smaller percentage of the total FDI, it portrays the continual investment foreign manufacturers are putting into Mexico manufacturing, including the U.S., which continues to be the top contributor.

In fact, manufacturers looking for industrial space in Mexico have the advantage of available inventory along the border right now. The construction of industrial space has outperformed how quickly it’s been filled, making it a good time to find a building.

But the question is: where to start?

Finding Solutions to Meet Location, Transportation, Talent Needs

Site selection is the first step to launching production in Mexico. However, common challenges can quickly make the process feel overwhelming.

A key advantage is implementing shelter services in Mexico to find a space that meets every manufacturer’s primary needs, which include being near quality supply chains, transportation, and talent.

Challenge: Sourcing Reliable, Local Suppliers

One of the reasons why the U.S. continues to contribute the highest FDI in Mexico, both new and reinvestment, is proximity. However, the challenge is sourcing a space that has a reliable supply chain in place.

Choosing a factory location with convenient access to suppliers supports lead times and creates a steady production to meet delivery demands, all of which is necessary to stay competitive.

Part of shelter services in Mexico is to source viable buildings with reliable supply chains that already support other manufacturers in the same or similar sectors. With a shelter’s local knowledge and expertise in place, it makes it easier to narrow down the location of active manufacturing hubs.

Challenge: Finding Convenient Transportation Close to the Target Audience

While the area around the U.S./Mexico border continues to be a competitive area for industrial leases, there are several manufacturing hubs throughout Mexico with the infrastructure to meet transportation demands.

Rather than focusing only on the most popular manufacturing areas, it’s important to consider how close the facility is to the target audience to save on transportation times and expenses.

For instance, manufacturers with U.S. headquarters on the West Coast often look to Tijuana or Mexicali due to the convenient location. However, for those exporting to other areas of the U.S., a space in central Mexico may make more logistical sense for quicker and less costly deliveries.

Challenge: Recruiting Qualified Industrial Talent

Though there is qualified industrial talent available throughout Mexico, certain cities are already set up with thriving hubs by sector. The challenge is knowing where to look and how to navigate fully burdened Mexico labor rates.

For example, Monterrey maintains a strong presence, particularly in automotive manufacturing, making it easier to find experienced workers available to fulfill welding, electrical, and other mechanical jobs as necessary.

However, because of the competitive demand, it’s important for manufacturers to understand what benefits and incentives will attract the best talent.

Diving Into the Details of a Space

After deciding on a city, the next step is evaluating buildings and contracts based on manufacturing processes and unique project needs.

IVEMSA will analyze a company’s profile, including its infrastructure and target audience, to create a site selection matrix that offers a comparison of several areas and spaces. Seeing the space availability side by side helps narrow down the choices to confidently make a final decision.

Continuous Support of Shelter Company Once a Site Is Secured

Following site selection, IVEMSA supports manufacturers with other administrative responsibilities necessary for a quick and efficient launch, such as:

• Recruiting workers
• Handling taxes and payroll
• Customs compliance preparation

Without the support of shelter services in Mexico, it can take twice as long (and can be far more costly) to start production.

Manufacturing in a foreign country always comes with challenges. IVEMSA is here to streamline the transit and make it less stressful.

Interested in setting up production in Mexico? Let us help you get started with site selection. Contact our team today.

Source:  https://mexiconewsdaily.com/business/new-foreign-investment-mexico-fdi/