Unique Benefits of Nearshoring to Mexico for U.S. Manufacturers04.18.22
Transportation, shipping, and fulfillment costs make up a significant portion of operational expenses which are calculated depending on where a factory is located. The close proximity to Mexico often means U.S. companies can significantly reduce these costs, especially when compared to operating in China.
In addition, Mexico’s infrastructure and supply chain uphold a history of success for foreign manufacturers and solidify it as one of today’s top business strategies. Though there are universal benefits of manufacturing in Mexico, there are certain advantages U.S. companies alone maintain.
#1: Lower Logistical Costs
In many cases, nearshoring to Mexico offers the same shipping schedule as distribution in the U.S. but at a lower cost, particularly for factories located closest to the U.S./Mexico border. Furthermore, the strength of supply chains leads to greater oversight for on-time and accurate deliveries for customers in the U.S. Whereas, shipments from China often cost thousands of dollars and take weeks before arriving at a port of entry.
#2: Section 321 Benefits
Another advantage of manufacturing in Mexico is applicable Section 321 benefits. Per Section 321, goods with a retail value equaling less than $800 are not subject to taxes or duties and with approved certification, goods can be approved at customs more quickly. For many manufacturers that operate internationally, shipping finished products to Mexico first before direct shipment to the U.S. results in significant cost savings.
#3: Reduced Shipping Times
Shipping time from Mexico to the U.S. often occurs within one or two days, if not within the same day. Whereas, shipping time from China to the U.S. can take weeks to transport and further be delayed once container ships reach the port. Manufacturing in Mexico provides the ability to work similarly to factories in the U.S. creating more efficient processes and greater prediction of when goods will reach their final destination.
#4: Faster Market Entry
Mexico holds numerous free trade agreements with several countries around the globe, including with the U.S. and Canada. The benefits of the USMCA, in addition to the proximity of Mexico to the U.S., support faster market entry and preferential trading between these countries. Additionally, because Mexico has similar time zones to the U.S., quality assurance of operations and delivery is easier to resolve during business hours than with foreign operations in Asia.
Nearshoring to Mexico provides several cost- and time-saving benefits which help sustain business growth, though operating in a foreign location can demand a high learning curve. By partnering with a shelter service company like IVEMSA, U.S. and other foreign manufacturers have the opportunity to work with experienced professionals who can provide all the advantages with none of the hassles.
IVEMSA handles all administrative responsibilities necessary to get an operation up and running in as little as three to four months, leaving manufacturers the time and resources to focus solely on the day-to-day production. Whether you’re relocating your operations to Mexico or expanding internationally for the first time, we can tailor our shelter services to what works best for your business.