Why Do U.S. Manufacturers Expand Manufacturing to Mexico?

• The cost of manufacturing growth in America continues to increase, with fewer factories and industrial workers available than even a decade ago.
• For companies with U.S. leases expiring within the next few years, it may be time to consider adding Mexico manufacturing as a key part of the next phase of production.
• Mexico offers a cost-effective way for manufacturers to expand and meet demand in their respective sectors.

Automotive, aerospace, and electronics manufacturing have been among the leaders experiencing substantial growth over the years, partly due to the availability of manufacturing opportunities in Mexico.

These opportunities include implementing Mexico shelter services, which offer unique benefits to U.S. manufacturers ready to expand and wanting to save on costs.

Benefits of Mexico Manufacturing

Expanding manufacturing to Mexico has been a key part of the growth strategy for global producers for decades. There are several reasons why this trend continues and how those new to nearshoring can benefit, including:

• Proximity – Faster shipping times and convenient logistics make Mexico an ideal place to set up manufacturing, particularly when compared to alternatives like China, for those needing to quickly reach the U.S. market.
• USMCA – U.S. manufacturers have the added benefit of incentives and Rules of Origin set forth by the trade agreement between the U.S., Mexico, and Canada, making the expansion of production in Mexico a cost-competitive strategy.
• Industrial Labor – The U.S. faces a shortage of qualified industrial labor to fulfill the roles currently in demand. Whereas, Mexico has continually invested in its technical schools and programs to ensure a steady, qualified industrial workforce year after year.

Why Mexico Shelter Services Matter

Another one of the key, unique benefits of U.S. manufacturers expanding production to Mexico is the availability of shelter services.

Working with a shelter company in Mexico offers multiple advantages for small to medium-sized manufacturers that want to scale, such as:

• Lowered Risk & Liability – Operating under a shelter means U.S. manufacturers are not legally exposed to Mexico’s authorities, which is why it’s considered the safest and most efficient way to do business.
• Reduced Learning Curve – Launching production in a foreign country is challenging. However, with the support of expert industry consultants, compliance and administrative responsibilities are fully handled so manufacturers can focus solely on their processes and production.
• Operating at a Lower Cost – With all administrative departments already in place as part of the full scope of shelter services in Mexico, manufacturers immediately save on infrastructure and hiring for HR, accounting, payroll, trade compliance, and other associated areas.

Start the Conversation with IVEMSA

There are several factors that go into deciding whether a company is a good fit for manufacturing in Mexico. And, eventually, U.S. manufacturers that partner with a shelter company often go on to graduate as their own standalone entity.

For 40+ years, IVEMSA has maintained an average 15-year customer retention rate, offering clients flexible solutions and services for whatever the next stage of their business calls for.

To get an idea of the cost benefits of manufacturing in Mexico, the first step is to speak with a shelter services company well-versed in what it takes to scale and succeed.

Contact IVEMSA today.