Why Shelter Services in Mexico Are Key to a Successful Manufacturing Strategy

For decades, manufacturing in Mexico has created expansive opportunities across multiple sectors, including aerospace, automotive, and electronics, among others.

The introduction of the maquiladora program in 1965 served as the initial entry point to boost foreign production in Mexico through incentives, including exemption from the 16% value-added tax (VAT) on qualified temporarily imported goods.

As a result, the formation of shelter companies also emerged to offer U.S. and other foreign manufacturers administrative support and help them experience a more seamless transition.

While manufacturers can take advantage of shelter services in Mexico when operating as a standalone entity, the majority reap the benefits as part of a comprehensive, cost-saving solution.

For companies interested in expanding production to Mexico for the first time, here’s a closer look at the shelter service advantages and how to get started.

Legal and Customs Compliance

Manufacturing in any foreign country is complex. Mexico offers the unique advantage of shelter services which include the set up and management of administrative responsibilities to help the process run smoother and faster.

More importantly, operating under a shelter company minimizes risk and liability while upholding (and being made aware of) ever-changing customs regulations.

Economies of Scale

With many businesses operating under the same shelter company umbrella, this allows manufacturers to save on labor, infrastructure, permits, and license fees.

At the same time, implementing shelter services allows for operational flexibility, so manufacturers can grow and scale efficiently, with cost-effectiveness in mind.

Industrial Talent Recruitment

Partnering with a local shelter company also provides manufacturers access to established networks, including reliable supply chains and qualified labor pools.

Worker availability and the lower cost of labor in Mexico are top incentives for U.S. and other foreign manufacturers. Although due to the demand for industrial talent, the workforce is competitive and can be challenging to navigate without expert guidance.

Navigating the IMMEX Program

The IMMEX program offers tax and duty benefits to foreign businesses that temporarily import goods, materials, and equipment for the manufacturing process. The application process can take weeks before program approval and VAT certification.

Meanwhile, working with a shelter services company allows businesses to have faster access to these benefits, saving time and costs early on.

Getting Started with Shelter Services in Mexico

It’s first best to determine if working with a shelter services company or launching production as a standalone entity is the right path. In the exploratory stage, a shelter company will ask qualifying questions to recommend the optimal route based on a manufacturer’s specific goals.

From there, the next phase includes a site selection and labor cost analysis with estimates to decide whether the return on investment will be worthwhile.

However, with a built-in infrastructure and network, it’s no surprise the majority of foreign manufacturers turn to the expertise and experience of a shelter company.  Although each situation is unique, and therefore, is treated on a case-by-case basis.

Partner with IVEMSA

Shelter services remain a key part of strategic growth for foreign manufacturers. Implementing them reduces costs, streamlines setup time, and allows businesses to stay agile as they grow.

Want to learn how shelter services in Mexico can be tailored to your production goals? Contact IVEMSA to get started.