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Why Should You Outsource Product Design?

When US companies set out to become more competitive, they inevitably come to the question of outsourcing. And of course, one of the first things to outsource is manufacturing. There are numerous reasons why successful companies nearshore manufacturing to Mexico and other foreign destinations. 

outsource product design

But that’s not the only part of the value chain that should sometimes be outsourced. 

Product design is vitally important, even though it can be quite difficult to outsource this critical stage. But companies can’t always afford to keep each phase in house. There’s a balance to be struck. And sometimes the best way to remain competitive is to understand the strategic importance of outsourcing product design.

Questions to Ask Before You Outsource Product Design

Product design – sometimes called industrial product design or IPD – is an incredibly important phase of the manufacturing process. In fact, this is the most crucial phase of bringing a product to market. It’s when you determine how to meet a market demand in a cost-efficient and attractive way. It’s when you envision every aspect of the product, both inside and outside, creating something new that will create a lasting impression on the customer and a profitable revenue stream for your company.

But it can be difficult to decide how to approach this phase. One way to home in on the right answers is to ask the right questions.  Examine whether or not your company’s situation is equal to the task. For example, what about your engineering staff? If their expertise is limited to only a few core industries, you might benefit from the expansion of outsourcing.

How about internal resources? Are they becoming more limited? Then it’s possibly a smart move to outsource product design. Likewise, if development budgets are typically over budget, this is a good indicator that outsourcing this phase will positively impact your operation.

Another good question to help you determine which route to go is, can you keep up with competitors in this market? If your new product is in a space already dominated by someone else, this might mean you need some outside help – specialists can bring more to the table than your already limited internal resources. And chances are, they will create more cost-effective manufacturing processes than your own R&D team.  

Top Reasons to Outsource Product Design

Obviously, if you answered in the affirmative to any of the questions discussed previously, it’s time to consider the many advantages of product design outsourcing. But to better understand why this is, let’s discuss some of the many reasons outsourcing this phase makes sense

One of the most compelling advantages lies in the simple cost savings. By outsourcing, companies sidestep the hefty expenses tied to maintaining an in-house design team, such as salaries, benefits, and the ongoing investment in state-of-the-art tools and training. Instead, they can tap into specialized expertise on a project-by-project basis, converting fixed costs into variable ones. And this model not only cuts overhead but also grants access to global talent pools brimming with experience across industries.

But that’s not the only reason to outsource product design. There is also the critical advantage of tapping into the external perspective brought by outsourced design firms. In-house teams, no matter how skilled, can sometimes fall into predictable patterns or become overly focused on specific niches. 

Outsourced designers, on the other hand, approach projects with fresh eyes, integrating insights from various disciplines and industries. This multidisciplinary input is what can lead some companies to discover innovative solutions that resonate more effectively with diverse markets. And what’s more, these teams are also often attuned to global trends, which enables businesses to design products that appeal to international audiences and stand out in competitive markets.

Speed and scalability further solidify the case for outsourcing. External teams, dedicated solely to design, can fast-track development timelines, helping businesses bring products to market faster. This agility is especially valuable in dynamic markets where timing can make or break a product’s success. 

Last, but not least, outsourcing the product design phase allows for unmatched flexibility. Companies can scale their design capabilities up or down as needed without the logistical headaches of hiring or downsizing staff. 

And these benefits, when coupled with an honest examination of your company’s in-house abilities, often leads to the conclusion that outsourcing product design will bring clear benefits for most companies. And these advantages are only compounded when US companies outsource to a favorable location like Mexico, where skilled teams are highly trained and highly affordable.

Whether it’s a startup seeking a competitive edge or an established company aiming to innovate, outsourcing product design typically provides a strategic pathway to efficiency, creativity, and market relevance.

How Mexico’s Intellectual Property Protections Benefit Manufacturers

US companies interested in taking advantage of the Mexican nearshoring option should have a firm grasp of the country’s intellectual property (IP) laws. While many popular outsourcing destinations do not adequately safeguard IP, Mexico’s intellectual property protections are quite extensive. As a manufacturing country, Mexico has placed considerable emphasis on securing and protecting the IP rights of those doing business there.

Mexico’s intellectual property protections

As a result, the country has a well-established legal framework for foreign companies relocating operations there. And recent laws have only strengthened Mexico’s intellectual property protections, modernizing them and closing loopholes. 

Mexico is focused on manufacturing for export. Their many FTAs give businesses there free-trade access to most of the global market. And these manufacturers benefit substantially from a well-established, well-defined, and effectively enforced IP protection apparatus that makes this success in international trade possible.

The Laws Governing IP in Mexico 

Mexico has a long history of intellectual property (IP) protection, beginning with the 1832 “Law on Property Rights for Inventors.” Over time, this legal framework evolved through multiple iterations, including the 1943 “Law of Industrial Property” and the 1991 “New Law of Industrial Property,” each adapting to meet international standards. The 2020 “Federal Law for Protection of Industrial Property” modernized these protections and introduced stricter patent rules, which enhanced trade secret safeguards and created stronger trademark enforcement.

Today, under the “Federal Law for Protection of Industrial Property,” patents can cover new uses for substances, while trademarks enjoy a ten-year validity with expanded protection against bad-faith filings. Trade secret violations now constitute infringements, entitling victims to damages, and counterfeiting penalties include destruction of goods and significant fines. This law also empowers Mexico’s IP enforcement agencies to work alongside federal and local authorities to combat violations, ensuring a robust defense of industrial property.

To modernize IP protections under NAFTA, the USMCA trade agreement further strengthened IP protections in Mexico, and more closely aligned them with US and Canadian standards. It introduced measures like predefined damages for trademark infringement, improved biologic protections, and a notice-and-takedown system for ISPs. Mexico’s law now allows post-examination patent corrections and enforces stronger safeguards for trade secrets, reflecting the country’s commitment to maintaining competitive IP standards in a globalized market.

Key Areas of IP Protection in Mexico

Understanding Mexico’s intellectual property protections is essential for businesses looking to protect their innovations and compete in the global marketplace. Fortunately for US businesses, Mexico offers a robust legal framework not dissimilar to US standards. While structured somewhat differently, Mexican law provides for aggressive protection in key areas like trademarks, patents, trade secrets, and other IP protections, helping businesses safeguard their unique creations and ideas. Some of the key areas Mexican IP law protects include:

  • Trade Mark: Mexico’s IP law protects trademarks for 10 years with indefinite renewals if used; trademarks can include names, shapes, sounds, and other distinctive elements, using a “first-to-use” and “registration” system.
  • Patents: Patents are granted under a “first-to-file” system, with protection lasting 20 years from filing; a one-year grace period is allowed for public disclosures, and non-use may lead to compulsory licensing.
  • Industrial Designs Protection: Industrial designs are protected for up to 25 years through five-year renewable terms; Mexico uses a “first-to-file” system and offers a one-year grace period for public disclosures.
  • PCT Patent: PCT applications allow inventors to seek patent protection in Mexico via international filings, aligning with global standards for streamlined multi-country coverage.
  • Trade Secrets: Mexican law safeguards trade secrets as confidential information providing business advantages, with legal remedies available for misappropriation or theft.
  • Moral Rights: Moral rights in Mexico protect creators’ personal connection to their works, ensuring recognition, integrity, and control over usage, irrespective of economic rights.
  • Transfer of Trade Mark Ownership: Mexican law allows trademark ownership transfers via assignments or licensing, with specific procedures to ensure legal recognition.
  • The Value of Intellectual Property Assets: Mexico’s IP framework emphasizes the economic and strategic importance of patents, trademarks, and other IP assets, supporting valuation and enforcement mechanisms.

Enforcement Bodies

While Mexico’s intellectual property protections are structured differently than in the United States, they are thoroughly enforced and administered by several competent bodies. Manufacturing companies doing business in Mexico benefit from dedicated protection agencies, including the following government departments:

  • The Mexican Institute of Industrial Property (IMPI): This body administers and oversees patent protection and trademark registration as well as enforces intellectual property infringement.
  • The National Institute of Copyright (INDAUTOR): This agency manages copyright registrations and administers disputes between copyright holders.
  • The UEIDDAPI: This unit within the Office of the Attorney General has been tasked with the prosecution of intellectual property related crimes.
  • Mexican Customs Service (Aduanas): This unit oversees the task of restricting the movement of illegal goods across the country’s borders.
  • The Federal Commission for the Protection Against Sanitary Risks (COFEPRIS): This entity is responsible for regulating processed foods, medical devices, and pharmaceuticals.

The Benefits of Mexico

For US manufacturers, Mexico is a land of opportunity that boasts many unique advantages. And with the steps Mexico has taken in creating and enforcing a robust legal framework for protecting IP, manufacturers can invest there with confidence.

Even though this regulatory framework is not the same as that in the US, the USMCA and other recent updates to Mexico’s intellectual property protections have ensured enforcement on the same level and roughly equal to the standards enjoyed in the US. With a strong commitment to ensuring a secure environment for international manufacturing and a history of prioritizing IP protections, Mexico status as a safe and beneficial place to manufacture will endure.

Mexico’s Growing Role in the Electric Vehicle Revolution

Electric vehicles (EVs) are taking the world by storm, and everyone’s scrambling to get in on the action. And while China and Germany are dominating the headlines, this revolution has also found its way to North America. But it extends beyond the United States.

Mexico electric vehicle

Mexico is quietly building its own EV empire. From battery production to final assembly, the Mexico electric vehicle supply chain is emerging as a vital player on the global marketplace. And it’s not by accident – it’s by design.

Why Mexico Is a Big Deal in the EV World

If your company is looking to ride the EV wave, Mexico might just be your golden ticket. Why? Three words: location, cost, expertise. Let’s break it down.

First, Mexico’s proximity to the United States is a no-brainer. It’s like having a factory in your backyard. The concept is known as nearshoring as opposed to offshoring. Plus, thanks to the USMCA (United States-Mexico-Canada Agreement), companies get tariff-free trade on EVs and components. This is a real game-changer for keeping costs low and delivery times fast.

Second, Mexico isn’t new to the automotive game. With decades of experience and a skilled workforce, the country has built a rock-solid manufacturing ecosystem. Companies like Tesla, GM, and BMW aren’t pouring billions into Mexico for nothing. They’re betting on its ability to deliver—and they’re winning.

Mexico didn’t just wake up one day and decide to join the EV revolution. It’s been laying the groundwork for years. Here’s what makes it stand out:

  • Prime Location and Trade Deals: Due to proximity to the US and the sheer number of free trade agreements Mexico has, electric vehicle manufacturers are eager to establish operations in this prime location.
  • Automotive Expertise: As one of Mexico’s top exports, vehicle manufacturing there is a well-oiled machine that is now transitioning from traditional cars to EVs.
  • Skilled but Affordable Labor: Mexico’s workforce isn’t just cost-effective; it’s highly capable of handling the complex demands of EV manufacturing.

Put all this together, and you’ve got a manufacturing environment that’s efficient, adaptable, and ready to take on the future.

Opportunities Across the EV Supply Chain

Mexico isn’t just assembling EVs. The country’s skilled manufacturing workforce and modernized infrastructure, Mexico is stepping up across the entire supply chain. Here’s where the action is:

  • Battery Production: Mexico’s lithium deposits, especially in the north, are attracting big investments in battery plants. 
  • Charging Infrastructure: Mexican companies are ramping up production of EV chargers and components, helping pave the way for electric mobility.
  • Components Galore: From electric motors to lightweight materials, Mexico’s factories are making nearly all the high-tech parts that make EVs go.

These aren’t just opportunities. These are signals that Mexico is aiming to lead the way in the unfolding EV revolution.

Because Mexico’s government knows what is at stake, they’re rolling out the red carpet for EV manufacturers. Tax breaks, grants, and other incentives are making it easier than ever to invest. But it’s not just about money. Mexico is also leaning hard into renewable energy. From solar farms to green hydrogen projects, the country is aligning its policies with global sustainability goals—a perfect match for the EV industry’s focus on decarbonization.

Where to Set Up Shop: Top EV Manufacturing Hotspots

Location matters, and Mexico’s got plenty of options. Several regions are ramping up to play a pivotal role in Mexico’s electric vehicle manufacturing industry. Here are some of the primary locations driving this new industry:

  • Bajío Region: Think of this as the heart of Mexico’s automotive industry. It’s got the supply chains and the skilled workers to back it up.
  • Monterrey: Close to the US border, Monterrey is a logistics dream come true.
  • Sonora: Dubbed “Mexico’s Lithium Triangle,” this region is buzzing with activity in lithium mining and battery production.

Each spot has its own perks, so it’s all about finding the right fit for your operation. Some of the major players in the EV industry have already set up shop in these regions, including:

  • Tesla
  • General Motors
  • BMW

Mexico Electric Vehicle Manufacturing Challenges

Of course, no venture is without its hurdles. And Mexico’s EV sector is no exception. But the good news? The challenges of doing business in Mexico’s EV industry are manageable:

  • Supply Chain Snags: Limited lithium refining and material shortages mean you’ll need strong partnerships and careful planning.
  • Energy Infrastructure: Renewable energy is growing, but gaps remain. Collaborating on energy projects can be a smart move.
  • Regulatory Maze: Permits, labor laws, and customs can be tricky, but shelter service providers can help you navigate the red tape like a pro.

Face these challenges head-on, and you’ll be primed for success.

Ready to Make Your Move?

For US manufacturers, Mexico isn’t just a cost-saving option. It’s a strategic powerhouse for innovation and resilience in the EV market. With the state of EV manufacturing in Mexico primed for explosive growth, the time to act is now. Start with a feasibility study, scout your ideal location, and partner with experts like shelter services to ensure a smooth entry.

The EV wave doesn’t appear to be slowing. Forward-thinking manufacturers stand to gain by investing in a Mexican operation. With its unbeatable mix of location, expertise, and industry-friendly policies, the country is poised to be a leader in the global EV market. Dive in and let Mexico be the launchpad for your EV success story.

How Many Free Trade Agreements Mexico Has

With incoming President Donald Trump talking about levying 25% tariffs on Mexican goods, many are concerned that manufacturing in Mexico may be a risky move. But what they don’t understand is just how embedded the Latin American country is on a global scale. And this brings up the important question, just how many free trade agreements (FTAs) does Mexico have?

free trade agreements Mexico

While Trump is unlikely to start a trade war with the United States’ top trade partner, it’s nevertheless quite noteworthy just how extensive the country’s trade network extends and how many free trade agreements Mexico has. 

Mexico trades with many countries, and not just North America. In fact, Mexico holds the crown for the most FTAs of any other nation in the world, giving manufacturers access to a vast global market. If you’re thinking about nearshoring your production to Mexico, here’s why its trade network is a game-changer – in spite of the chatter about US tariffs.

The Power of USMCA

Let’s start with the big one: the United States-Mexico-Canada Agreement (USMCA). This updated version of NAFTA modernized trade rules for the 21st century. It’s absolutely packed with provisions that incentivize North American manufacturing while offering strong protections for workers and intellectual property. For example:

  • Country of Origin Rules: Vehicles with 75% North American-made parts qualify for zero tariffs.
  • Labor Standards: Manufacturers must pay a percentage of their workforce at least $16 per hour to maintain tariff-free status on goods.
  • IP Protections: Digital products like software and e-books are duty-free, and source code sharing requirements are restricted.

The result? A robust agreement that fuels regional trade while giving US businesses an incentive to operate just across the border.

Beyond North America: A World of Opportunities

While USMCA simplifies trade within the region, Mexico’s global network of FTAs is what truly sets it apart. Indeed, Mexico holds the crown for the most FTAs of any nation, with 13 free trade agreements (FTAs) spanning at least 50 countries, giving manufacturers access to a vast global market. 

No other country in the world has this many FTAs. And these agreements open doors to major markets across Europe, Asia, and Latin America, offering businesses flexibility and resilience in their supply chains. Mexico is a signatory to most of the major FTAs of the world. But let’s break down every one of the free trade agreements Mexico has signed.

  1. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

When the U.S. opted out of the Trans-Pacific Partnership (TPP), Mexico stepped up to join. This agreement slashes tariffs across all sectors, creating lucrative opportunities for businesses targeting the Asia-Pacific region. This agreement gives Mexico preferential access to:

  • Canada
  • Australia
  • Chile
  • Japan
  • Malaysia
  • New Zealand
  • Peru
  • Singapore
  • Vietnam
  1. The EU-Mexico Association Agreement

Europe is another powerhouse market Mexico has tapped into. The EU-Mexico FTA eliminates duties on 99% of traded goods, excluding a handful of categories like dairy and some auto products. Plus, the agreement aligns with the Paris Climate Agreement, ensuring sustainable trade practices. This agreement grants trade access to all European Union countries:

  • Austria
  • Belgium
  • Bulgaria
  • Croatia
  • Cyprus
  • Czechia
  • Denmark
  • Estonia
  • Finland
  • France
  • Germany
  • Greece
  • Hungary
  • Ireland
  • Italy
  • Latvia
  • Lithuania
  • Luxembourg
  • Malta
  • Netherlands
  • Poland
  • Portugal
  • Romania
  • Slovakia
  • Slovenia
  • Spain
  • Sweden
  1. The European Free Trade Association (EFTA)

This FTA progressively removes tariffs between Mexico and all the northern European member states of the EFTA:

  • Iceland
  • Liechtenstein
  • Norway
  • Switzerland
  1. The Pacific Alliance

Mexico’s ties to its southern neighbors are just as impressive as any others. The Pacific Alliance has eliminated 90% of tariffs among member states. This makes it easier for manufacturers to source materials and export finished goods across the Americas. This agreement opens up Mexican free trade to 35% of Latin America’s GDP with member states:

  • Chile
  • Colombia
  • Peru
  1. The Mexico-Central American Free Trade Agreement

This FTA creates an economic zone and reduces tariffs for all of Central America, giving free-trade access to:

  • Costa Rica
  • Nicaragua
  • El Salvador
  • Guatemala
  • Honduras

Other Bilateral Agreements

But it’s not just these major conventions and alliances that give manufacturers in Mexico such a leg up. The country also boasts a number of bilateral agreements with major nations of the world, which include:

  1. Japan-Mexico Economic Partnership

Even though both countries are part of the CPTPP, this bilateral FTA adds another layer of cooperation between Mexico and Japan. It’s particularly beneficial for reducing barriers on agricultural and industrial products, though it includes quotas on items like vehicles.

  1. Mexico-Colombia: This FTA focuses on agricultural trade and intellectual property.
  2. Mexico-Chile: This longstanding deal removed most tariffs decades ago.
  3. Mexico-Peru: This arrangement gradually phased out tariffs between the two countries since 2011.
  4. The Mexico-Israel Free Trade Agreement: Since 2000, Mexico and Israel have been in alliance to give Israel access to the Mexico’s market and to facilitate Israel’s investment in several sectors like technology.
  5. Mexico-Panama: This deal was ratified in 2015, and normalizes trade and methodologies for resolving disputes. 
  6. Mexico-Bolivia: This trade deal is the second iteration of an early agreement between the two Latin American nations. It promotes free trade and fair competition between both countries.

Why FTAs Matter for Manufacturers

Mexico’s free trade agreements are about more than just lower tariffs. They create streamlined processes for importing raw materials, exporting finished goods, safeguarding intellectual property, and maximizing profitability. For businesses, this means:

  • Cost Savings: Reduced or eliminated tariffs make products more competitive globally.
  • Market Access: Companies can reach over 1.5 billion consumers in markets like Europe, Asia, and Latin America.
  • Supply Chain Resilience: Sourcing materials from FTA partners keeps costs low and logistics efficient.

Even with the US occasionally hinting at tariffs on Mexican imports, the sheer number of free trade agreements Mexico has ensures its manufacturing base remains globally competitive. Businesses operating in Mexico don’t just gain access to the US; they tap into an entire world of opportunity for export manufacturing success.

For US companies looking to nearshore, Mexico’s FTAs are a golden ticket. By establishing operations in Mexico, these businesses can enjoy the benefits of affordable labor, geographic proximity, and unparalleled market access. And with a framework that includes robust protections for intellectual property and sustainable trade practices, Mexico isn’t just a cost-saving alternative—it’s a gateway to innovation and growth.

The Pros and Cons of Mexican Nearshoring

Today’s marketplace is complicated. Global supply chains are increasingly strained. And this has led to many US companies to re-evaluating their strategies. Mexican nearshoring, in particular, has emerged as a compelling alternative to traditional offshoring. 

Mexican nearshoring

In an era defined by geopolitical tensions, health crises, and disruptive technologies, nearshoring offers a unique blend of cost savings and logistical advantages, all while helping businesses become more resilient.

But what exactly is Mexican nearshoring, and is it the right move for your company? Let’s dive into the pros, cons, and key considerations before making the shift.

Just What Is Nearshoring?

Nearshoring refers to relocating business functions—often manufacturing—to a nearby country rather than one that’s oceans away. It’s essentially a more localized form of outsourcing. While offshoring has long been the go-to strategy for companies looking to lower costs (think outsourcing to China or other Asian countries), nearshoring brings operations much closer to home.

In the past, businesses flocked to Asia for its cheap labor and low production costs. But over the years, things have shifted. Global economic conditions, rising shipping costs, and unpredictable geopolitical situations have caused companies to rethink their offshore setups. Enter Mexican nearshoring.

By relocating operations to Mexico, businesses can maintain many of the benefits of offshoring—like affordable labor costs—while also reducing shipping time and gaining more control over their supply chains. But while the upsides are clear, there are also important challenges to consider.

The Pros of Mexican Nearshoring

So, why is Mexican nearshoring becoming such a popular choice? Here are some of the key benefits:

  1. Lower Transit Times

Unlike offshoring to faraway locations like Asia, nearshoring to Mexico drastically reduces shipping times. Products made in Mexico can reach US distribution centers in just a few days, compared to the weeks it might take from China. This speed is crucial for companies looking to get products to market quickly.

  1. Comparable Time Zones

The time zone difference between the US and Mexico is minimal, which makes communication and coordination much smoother. Teams in the US and Mexico can work on the same schedule, allowing for more efficient collaboration without the usual hurdles of a 12-hour time gap.

  1. Greater Supply Chain Control

With manufacturing operations just across the border, Mexican nearshoring gives companies more oversight of their supply chain. You can quickly adjust production, respond to market shifts, and address issues as they arise—all with less risk of disruption.

  1. More Flexibility

The proximity of Mexico allows for greater flexibility and scalability. You can ramp up or down based on market demand without the delays and complexity that often come with offshoring to distant locations.

  1. Cost Effectiveness

Labor costs in Mexico remain rather competitive, and businesses can still take advantage of the country’s lower wages without sacrificing quality. Additionally, the reduced shipping time and proximity to the US market further enhance the cost-saving benefits.

  1. Increased Cultural Compatibility

While cultural differences still exist, working with a neighboring country like Mexico makes cross-cultural communication easier than working with distant Asian suppliers. Shared borders often mean shared business practices, making collaboration smoother and less prone to misunderstandings.

  1. More Favorable Tariffs

Thanks to agreements like the USMCA, manufacturing in Mexico often comes with reduced tariffs and other trade advantages, making it a more cost-effective option for US companies compared to offshoring to other regions.

The Cons of Mexican Nearshoring

Like any business decision, Mexican nearshoring isn’t without its challenges. While most companies who choose to manufacture in Mexico find the positives overwhelmingly outweigh the negatives, there are some hurdles companies might face when considering this strategy:

  1. Potential Supply Chain Disruptions: Even with proximity, disruptions can still occur. Businesses need to have contingency plans and ensure they’re working with reliable partners.
  2. Regulatory Compliance: Operating in a foreign country means navigating a different regulatory landscape. Mexico’s labor and environmental laws may differ significantly from those in the US, so manufacturers should take steps to streamline compliance in a foreign country. 
  3. Cultural Differences: While the cultural gap is narrower than when working with distant countries, there are still important nuances to consider.
  4. Transportation & Infrastructure: While Mexico’s infrastructure is generally reliable, challenges can arise at border crossings or in certain regions. Ensuring that transportation routes are optimized and that customs processes are efficient is key to maintaining supply chain integrity.

Steps to Make Nearshoring in Mexico Work for You

Now that you understand the pros and cons of nearshoring to Mexico, it’s time to think about how to implement it successfully. Here are a few tips to help you get started:

  1. Define Your Goals

Before jumping into nearshoring, take the time to clarify what you want to achieve. Whether it’s reducing costs, improving supply chain agility, or gaining access to new markets, understanding your objectives will guide your decision-making process.

  1. Choose Your Mode of Entry

There are multiple modes of entry for companies outsourcing to Mexico. From contract manufacturing to using a shelter partner, you have options that best fit your current needs. Get to know these different ways of accessing to Mexico.

  1. Select the Right Location

Mexico offers a variety of manufacturing hubs, from border cities like Tijuana and Juarez to industrial centers further inland. Evaluate the location based on factors like labor availability, transportation links, and proximity to key markets.

  1. Partner with the Right Providers

Once you’ve chosen a location, the next step is to find the right partners to help you navigate the process. Consider working with shelter service providers or experts who specialize in Mexican nearshoring. They can help you handle everything from regulatory compliance to facility setup, allowing you to focus on scaling your business.

  1. Plan for Flexibility

The beauty of nearshoring is the flexibility it offers. Work with partners who can quickly scale your operations up or down depending on market conditions. This agility is crucial in today’s fast-paced global economy.

Mexican nearshoring offers a strong solution for companies looking to optimize their manufacturing strategies. With its lower transit times, cost-effective labor, and improved supply chain control, it’s no wonder more businesses are moving their operations to Mexico. However, like any strategic shift, nearshoring comes with its own set of challenges, from regulatory hurdles to infrastructure concerns. So, move strategically.

By understanding these benefits, challenges, and best practices, businesses can make informed decisions that set them up for long-term success. Whether you’re looking to enhance resilience, improve flexibility, or just save on shipping costs, nearshoring to Mexico could be the next step in building a more agile and competitive business.

Do Trump Tariffs Pose a Risk to US-Mexico Trade?

On the campaign trail, Donald Trump promised to raise tariffs on foreign-made goods. And since winning the presidential election, he has threatened severe tariffs on America’s closest trade partners, Canada and Mexico. 

Trump Tariffs

What risk do the proposed Trump tariffs pose to trade between Mexico and the United States? Will a Trump presidency actually achieve these high tariffs? And if so, what can we expect in the next several years of US-Mexico trade?

Trump Promises Tariffs on Mexico

Newly elected President Trump took to Truth Social the week after the election to promise tariff hikes on Mexico and Canada. He vowed that his very first day in office – January 20th – he will sign all the necessary paperwork to levy a 25% tariff via executive order.

Regardless of the fact that Mexico is a member of the USMCA (formerly NAFTA), which guarantees duty-free imports from Mexico on most goods, Trump claims all goods coming into the States from Mexico will be subject to 25% duties.

Trump also proposed a 10% increase in tariffs on China until the country stops allowing fentanyl to enter the United States. He maintained that the tariffs on Mexico and Canada would also remain in effect until they stop the flow of illegal immigrants and drugs into the country.

Mexico’s new president, Claudia Sheinbaum, responded to the Trump tariff threat by implying that Mexico is prepared to respond with equal tariffs on US-made goods. She also pointed out that there is a problem with US-made firearms being illegally smuggled into Mexico, with as much as 70% of firearms used by criminals being brought to Mexico illegally from the US. She underscored that the US and Mexico should work together to resolve these cross-border problems. 

Impact of Trump Tariffs on Trade

In addition to being a member of USMCA, Mexico is also the United States’ biggest trading partner. And it’s reciprocal. The US exports more to Mexico than any other country, and Mexico exports more to the US than any other country. 

A full 80% of exports made in Mexico are bound for US ports. As such, a 25% tariff could cripple the country, significantly depressing their export-driven economy. But it’s not only the Mexican economy that would suffer. Binational companies that have built the Mexican-US partnership into their business model like Ford and GM would also suffer from increased costs. In fact, the automotive and other industries would see a dramatic rise in the cost of doing business with the US.

  • Cars, Trucks & Parts: The automotive manufacturing industry stands to suffer the most.
  • Electronics: Electronic devices and components comprise a huge portion of US-Mexico trade, with $1 billion USD in phones and wireless devices alone being exported to the US annually.
  • Industrial Equipment: Machinery and industrial equipment are heavily traded from Mexico, with their high level of precision and quality making Mexican-made products desirable in the US.
  • Food & Drink: Agricultural products and alcoholic beverages are among Mexico’s top exports to the US.
  • Furniture: Mexico exports around $9.4 billion USD annually in furniture and appliances.
  • Medical Devices: Mexico supplies US hospitals and health centers with approximately $1.1 billion in medical instruments and devices every year.

Will Trump Succeed?

With the extensive damage to US-Mexican trade that a 25% tariff would bring about, it begs the question: will we actually see tariffs like this on Day 1 or in the near future? Is President Trump bluffing in order to get some concession out of Mexico, or are we about to see a trade war break out with our top trading partner? Just what does Trump’s second term hold for Mexican export manufacturing and trade?

Trump has already indicated that he wants a renegotiation of the USMCA. He was notoriously outspoken in his criticism of NAFTA when he first ran for president. And when he brokered its replacement in the USMCA during his first term, he insisted on a renegotiation clause. According to that clause, the option exists to renegotiate in 2026, and Trump has already stated he will exercise this option to improve the deal even more.

He could be angling for a redo of USMCA. Trump’s bellicose rhetoric and threats to trade partners in the past have done well by him in bringing these trade partners to the negotiation table. In fact, Trump’s threats of starting a trade war with China resulted in his brokering a trade deal with them soon after. And in this case, there’s another aim he may be shooting for.

In fact, he already stated it plainly in his threat for a 25% tariff on Mexico: reducing the flow of illegal drugs and immigrants.

As everyone is aware, thousands of people are pouring through Mexico and Canada, bringing Crime and Drugs at levels never seen before…This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!…and until such time that they do, it is time for them to pay a very big price!

– Donald Trump, Truth Social post

From this post to his social media platform, Truth Social, it would seem the reasoning behind the Trump Tariffs is pretty straightforward. The incoming president is seeking leverage over Mexico in the effort to curb illegal immigration and fentanyl crossing the border. 

It may well be that the tariff threat everyone is talking about right now and calculating the damage and repercussions of, will never actually come to into being. Certainly they could, and any serious talk about a 25% tax on goods from Mexico should be weighed.  

However, according to his own words, Trump is likely seeking to start a serious negotiation on measures the Mexican government can take to address migrant caravans and illegal drugs crossing the border. And the 25% tariff is just his opening offer.

The 5 Unique Advantages of Manufacturing in Mexico

Mexico’s reputation as a prime manufacturing destination is well established by now. And it’s no surprise just why. The unique advantages of manufacturing in Mexico give it a clear lead among global outsource destinations.

advantages manufacturing in Mexico

The Latin American country’s unique strengths have propelled businesses manufacturing there far past their competition for decades. And today, those advantages are more relevant than ever.

From cost savings to streamlined logistics, Mexico offers a dynamic environment for companies manufacturing for export. Businesses are increasingly leaving Asia to “nearshore” just south of the border, and it’s easy to see why. Mexico has appealing offers unique to this country. 

Here’s a closer look at five of the most significant, standout benefits that make Mexico a manufacturing powerhouse.

  1. Proximity That Boosts Agility

Being neighbors with Mexico gives US manufacturers a major leg up here. Manufacturing in Asia just can’t keep up. The close geographical ties mean reduced shipping times, faster supply chain responses, and seamless communication and management.

Forget late-night calls to factories across the globe—Mexican operations sync with US business hours and time zones. Oversight is easier, too; a quick flight (or even a drive) can put managers on the ground at Mexican factories to keep things moving smoothly.

And shipping times are measured in days, not weeks. This allows businesses to maintain leaner inventories and respond to demand shifts on a dime. In an era where agility is king, Mexico reigns.

  1. Low-Cost, Highly Skilled Labor

When it comes to labor costs, Mexico hits the sweet spot—affordable but packed with expertise. While wages in China have soared in recent years, Mexico’s remain stable and predictable. Today, the average manufacturing wage in Mexico hovers around $3/hour, compared to about $25/hour in the US.

But it’s not just about cost; it’s about quality. Mexico’s education system works hand-in-hand with industry to produce a steady stream of skilled workers. The result? A deep talent pool ready to tackle complex manufacturing needs, from assembly to advanced engineering.

Managing a maquiladora (factory) in Mexico also brings savings in taxes, shipping, and startup costs. It’s a win-win for companies looking to trim expenses without sacrificing quality.

  1. World-Class Infrastructure

The advantages of manufacturing in Mexico extend beyond its location. It’s also just built for business. The country boasts a robust infrastructure designed to support everything from simple assembly to high-tech manufacturing.

Extensive rail networks, modern highways, and world-class air and sea ports ensure efficient transport of goods. Industrial parks, many with cutting-edge facilities, provide safe, collaborative environments for production.

Telecommunications are equally strong. High-speed internet and dependable electricity in major industrial areas mean operations can run as smoothly as they would in the US.

  1. Ironclad Intellectual Property Protections

When outsourcing manufacturing, safeguarding intellectual property (IP) is a top priority. In Mexico, companies can rest easy knowing their innovations are protected by one of the strongest IP frameworks in the world.

Mexico’s commitment to IP stretches back to the 19th century. And today it’s codified in the Federal Law for Protection of Industrial Property. Thanks to updates aligned with USMCA and other international treaties, businesses enjoy protections like:

  • Patent privileges for new substances and components
  • Trade secret violation enforcement with damage claims
  • Protections against bad-faith trademark applications

This robust legal framework ensures your ideas and innovations stay yours.

  1. Unmatched Free Trade Access

Mexico isn’t just great for manufacturing—it’s a gateway to the global market. With 14 free trade agreements spanning over 50 countries, Mexico opens the door to duty-free or reduced-tariff exports that reach 60% of the world’s GDP.

The US-Mexico-Canada Agreement (USMCA) makes exporting to the US and Canada seamless, but Mexico’s reach goes far beyond North America. With agreements in Europe, Latin America, and Asia-Pacific, goods made in Mexico enjoy preferential access to major markets worldwide.

For businesses, this means reduced costs, expanded opportunities, and a competitive edge on the global stage.

Why Mexico Stands Out

The advantages of manufacturing in Mexico go beyond these five unique benefits. From streamlined operations to tax breaks and reduced shipment costs, the country offers a comprehensive solution for manufacturers looking to stay competitive in many key export areas.

And in an increasingly globalized and demanding market, it’s not hard to see why Mexico stands out. As a destination that combines cost efficiency, skilled labor, and strategic location, Mexico offers what many destinations cannot. For global leaders and emerging players alike, Mexico’s advantages elevate export manufacturing and provide the strategic advantage necessary in our modern world. 

 

What Are the Top Exports Made in Mexico?

Made in Mexico is a phrase seen more and more on products in the US and around the world. The Latin American country has been steadily growing their market share of the global economy for decades and using manufacturing as a primary driver for this growth. 

made in Mexico

Exports are on the rise in Mexico, as is the interest in doing business there. Foreign companies seek to outsource manufacturing to take advantage of a cost-effective labor pool and free-trade access to most major global markets. 

So, just what exactly is made in Mexico? What are Mexico’s specialties? And what products does this growing country export to trade partners the most? Read on, because that’s precisely what we’re about to discuss.

Mexican Manufacturing for Export

With nearshoring on the rise, it’s clear that global manufacturers are choosing Mexico in ever increasing numbers. And the appeal is pretty easy to figure out. Mexico offers clear advantages over other destinations when it comes to manufacturing for export. With state-of-the-art industrial parks, cutting edge telecommunications, aggressive infrastructure investment, and more free-trade partners than any other country, Mexico’s industrial regions are locations where manufacturing thrives.  

But it’s not just cheap labor and free trade driving export manufacturing success. The country is also keen on an educated workforce for those manufacturing jobs requiring more sophisticated skills and operations. Mexico’s universities and trade schools partner with industry to produce engineers and skilled labor to fill the specific roles that manufacturing demands. 

As a result, this highly affordable, highly skilled workforce produces quality manufactured goods for several key export industries. Last year, Mexico exported around $593 billion USD worth of products, up from about $460 billion in 2019. Mexico is the top trade partner for the US, but many other countries do business with Mexico as well. While the US imports nearly 80% of Mexico’s exports, Canada, Germany, Brazil, and many Asian countries (including China) also buy exports made in Mexico.

Made in Mexico

Now, let’s look at just what Mexico exports. While Mexico exports products in many industries, there are several that stand out as clear leaders in the country’s economy.

  • Vehicles

Automotive manufacturing is Mexico’s most active source of exports. In fact, vehicles account for over 26% of all exports made in Mexico at around $156 billion USD. In 2005, Mexico made and sold over a million passenger vehicles.

As the 2nd largest automotive manufacture in the world, most leading automotive brands in the world do business there, including BMW, Audi, Ford, GM, Honda, and others. And as long as 70-75% of the vehicle’s content originates in North America, these companies can export vehicles made in Mexico to the US and Canada duty free.

  • Electrical

Electrical machinery and equipment are one of the primary sources of Mexican exports, totaling about $103 billion in 2023. Computers and other machinery accounted for another $90 billion. And really, electronics manufacturing in Mexico goes all the way back to the 1960s. The sector has grown since then and now encompasses many areas, from consumers electronics to automotive electronics, medical equipment, computing, and more. The electronics industry accounts for 2.5% of Mexico’s total gross domestic product.

  • Medical

Medical devices and related exports are expected to reach an annual average value of $15 billion USD in the near future.  Mexico is already the 7th largest medical devices exporter in the world and exports products to 135 countries globally. Key medical brands like Johnson & Johnson, Medtronic, GEM, and Integer depend heavily on products made in Mexico to propel their global success.

  • Plastics 

Plastics and plastic articles are manufactured extensively in Mexico and account for nearly $12 billion in annual exports. With over 4,000 companies, plastics manufacturing in Mexico is a vibrant export sector. 

Mexico actively makes materials and parts like PVC, acrylic materials, and PP film, as well as plastic resins, capital equipment, and recycled goods. In fact, 50% of plastic resins produced in Mexico are PET, PVC, or HDPE.

  • Metals

Mineral and metal products exported from Mexico total nearly $80 billion USD per year. Mexico’s wealth of natural resources makes it a major exporter of minerals and metals. Mexico is the world’s largest producer of silver, which is used extensively in the construction and electronics industries. Mexico also makes refined metal products like steel for use in automotive, aerospace, and construction applications.

As an industrious nation, rich in natural resources, economic opportunity, and a vision for the future, Mexico has many export industries on the rise. These are only some of their biggest and most active. 

And as the shift from global supply chains to regional and more resilient operations comes full circle, the country’s advantages will become clearer. Manufacturing for export there will become even more profitable. And more and more products we use every day will come with the stamp, Made in Mexico. 

 

How to Access Mexican Manufacturing Via a Shelter

Perhaps you’ve heard of all the companies relocating to Mexico and want to understand how to access Mexican manufacturing for your own business. Maybe you’ve considered outsourcing to Mexico in the past and want to know if now is the time. Or it could be you just want to know more about shelter manufacturing and what makes it such an attractive option for manufacturing.

access Mexican manufacturing

Whatever brought you here, if you’re exploring options to scale your production while keeping costs manageable, shelter manufacturing in Mexico might just be the solution you need. For manufacturers eager to tap into Mexico’s skilled workforce, strategic location, and cost advantages, shelter services provide a streamlined, low-risk way to enter the market. 

Here’s everything you need to know about what shelter services entail, how they work, and why they’re such a powerful option for companies looking to access Mexican manufacturing with minimal setup hurdles.

What is a Shelter Service?

In brief, shelter manufacturing in Mexico is a partnership model that lets you operate in Mexico under a third-party’s legal entity. 

This means you sidestep setting up your own entity, saving time, money, and administrative hassle. Shelter companies take on the heavy lifting—handling compliance, HR, payroll, and even certain logistics—so you’re free to focus on your core production goals. You still control your manufacturing processes and product quality, while the shelter company provides the infrastructure and legal cover to make it all happen smoothly.

The IMMEX program, exclusive to Mexico, further enhances these benefits by offering VAT exemptions on temporarily imported materials, machinery, and parts. This special status alone can speed up production timelines and ease the regulatory load, letting you gain immediate access to Mexican manufacturing without drowning in red tape.

Benefits of Shelter Manufacturing

Opting for a shelter manufacturing service brings some serious advantages:

  • Speedy Market Entry: Forget months of setup; with a shelter, you can get production rolling in a matter of weeks.
  • Cost Savings: Mexico’s labor costs are significantly lower than in the U.S., and the IMMEX program’s VAT exemption cuts costs further.
  • Risk Mitigation: With the shelter service handling legal and regulatory compliance, you avoid the typical risks that come with establishing a foreign operation.
  • Operational Control: While the shelter manages the administrative side, you retain control over the production, quality, and process standards.

This approach offers flexibility for businesses of various sizes, but it’s particularly suited for companies seeking high-volume production without the commitment of full ownership.

How Shelter Manufacturing Works

Shelter manufacturing starts with finding a reputable shelter provider. You provide details on your production needs—such as volume, timelines, and quality standards. The shelter provider then sets up a plan, sourcing materials, overseeing production, and managing supply chain logistics. Throughout the process, you’ll have direct lines of communication, allowing you to monitor progress and address issues as needed.

The shelter service provider essentially becomes your local arm in Mexico, handling day-to-day operations and regulatory challenges. By the time your goods are ready, the shelter company manages export logistics, ensuring they reach your US base or other destinations seamlessly. Starting out on your Mexican outsource journey is an important step to get right, and a shelter service ensures you nail it.

Getting Started: Key Considerations

When you’re ready to explore shelter manufacturing, here are four essentials to keep in mind:

  1. Choose the Right Shelter Partner: Not all shelter companies are created equal. Look for one with a strong track record, IMMEX certification, and a reputation for quality and reliability. This will save time, hassle, and potentially costly missteps.
  2. Know Your Production Requirements: Clarity is key. Before jumping in, define your production goals—whether it’s volume, lead time, or specific quality standards. Clear requirements make it easier for the shelter provider to meet your expectations.
  3. Prioritize Communication: Effective communication from day one is critical for success. Establish clear communication channels with the shelter team to ensure alignment and swift issue resolution.
  4. Be Mindful of Cultural Differences: Working in a new country involves adjusting to a different business culture. Taking time to understand and respect Mexico’s work culture can go a long way in fostering strong relationships with your local workforce and partners.

Why Mexico? The Unique Advantages

Maybe you’re still not clear on why Mexico is the place to setup an outsource operation. You may want to access Mexican manufacturing, but are still considering Asia for their low wages. Here are some unique advantages about Mexico you should understand.

Mexico’s appeal for manufacturing goes beyond low wages. Skilled labor, favorable trade agreements, and the proximity to North American markets also make it a strategic choice. Free trade agreements with over 50 countries mean lower tariffs and faster transit times for goods. Additionally, access to an experienced manufacturing workforce means you’re not just saving money—you’re also tapping into a talent pool that can meet specialized production needs.

But while shelter manufacturing is ideal for many companies, it’s not the only option for entering the Mexican market. Here’s a quick comparison of other manufacturing entry methods you might also consider:

  • Contract Manufacturing: Ideal for simpler production needs, contract manufacturing allows you to partner with an established facility in Mexico that manages production for you. While this is cost-effective, it sacrifices control, making it less suitable if quality or IP protection is a priority.
  • Standalone Factory: Companies looking for maximum independence might consider setting up their own maquiladora (factory) in Mexico. This offers full control over operations and can lead to long-term savings but requires a higher upfront investment, time, and regulatory navigation.

For businesses seeking a balance of control, flexibility, and reduced risk, shelter manufacturing stands out. It combines the ease of entry with cost savings and operational control, making it an ideal choice for many manufacturers seeking to access Mexican manufacturing seamlessly and profitably.

Unlocking the Full Potential of Shelter Manufacturing

Shelter manufacturing in Mexico offers a dynamic path forward for US companies. With its built-in compliance support, risk mitigation, and significant cost advantages, shelter manufacturing removes common obstacles and brings Mexico’s manufacturing benefits within reach.

By choosing shelter services, your business can ramp up production in weeks rather than months, keep administrative burdens low, and focus on building a strong foothold in the global market. So, if you’re looking to expand into Mexico, start by evaluating shelter manufacturing. It’s a shortcut to savings, operational efficiency, and streamlined success.

 

What a Second Trump Term Means for Manufacturing

Last week, Donald Trump defied the odds and was elected to a second term in the White House. After sparking a trade war with China and renegotiating NAFTA in his first term, a second Trump term may likewise generate significant impact on manufacturing.

second Trump term

Already, industry in the US and around the world is leaning in to learn how the incoming administration will act on international trade and manufacturing. A second Trump term is expected to be similar in some ways to the first term, but perhaps bolder and more aggressive. And certainly, signals from the Trump people have confirmed these expectations.

Donald Trump promised on the campaign trail to raise tariffs, bring manufacturing back to the United States, and renegotiate his trade deal, the USMCA. His brand of protectionism stands in stark contrast to the globalism of previous decades, and it has manufacturing sitting up and paying attention.

But just what are Trump’s plans for industry and international trade? How will this incoming Trump term impact manufacturing?

Less Trade with China

In his first term, Donald Trump implemented a 25% tariff on $200 billion USD in goods imported from China. Later he threatened to apply these high tariffs to another $325 billion of China’s exported goods. When he also placed a 10% tariff on steel and aluminum, China responded by raising tariffs on $3 billion of US steel and aluminum exports. But, before Trump’s additional 25% tariffs went into effect, China’s government negotiated an agreement with the Trump administration to delay the hikes indefinitely. 

If Trump’s first trade war with China is any indication, a second Trump term will likely see more tariffs on Chinese goods, resulting in less trade with the country. Already, Mexico has surpassed both China and Canada as the top US trading partner. Due to tariffs that targeted China in response to what Trump said was an unacceptable trade deficit, trade with China has become more expensive. And manufacturers have begun looking elsewhere, considering nearshoring options like Mexico, instead.

Protectionist Tariffs

But it’s not just China that will potentially see higher tariffs. When Trump takes office in January, he is expected to make protectionist tariffs a priority. He has long promised to bring manufacturing back to the states by raising tariffs on internationally manufactured goods, and it seems high up on his list of priorities. 

He has promised 10% tariffs on all imported goods across the board. He has discussed even higher tariffs on China and Mexico, but details here are fuzzy. Currently, goods manufactured in Mexico for export to the US are duty-free by international treaty. And China has already begun to respond to the shifting trend, setting up factories in Mexico for export to the US. This loophole is likely to be addressed during Trump’s second term. 

More Automotive Manufacturing in the US

A key supporter of Donald Trump’s second campaign was Elon Musk, founder and owner of Tesla, the leading US EV manufacturer. Musk is poised to invest significantly in further US-based automotive manufacturing, and Trump’s focus on bringing this industry back to the US may be bolstered by this partnership. 

In all likelihood, the next four years will probably see more automotive manufacturing in the United States due to tariffs overall, but also due to targeted tariffs likely to be placed on automobiles manufactured abroad. Automotive manufacturing states like Michigan were crucial in bringing about a second Trump term, and President Trump is expected to revitalize these clusters in the US. He is also expected to reverse the Biden Administration’s light-duty vehicle emissions standards, sometimes referred to as the EV mandate.

Less Globalization

In this push for reshoring manufacturing to the US, North America at large will likely see a rise in manufacturing. Mexico, Canada, and the US already form a tightly-knit, cohesive and dynamic manufacturing unit. This unit competes, not among member countries, but with other global regions.

This phenomenon is sometimes called regionalism and stands in contrast to globalism. Once the dominant trend, globalization is being replaced. Regionalism stands out as a more resilient and sustainable model for international manufacturing. And this second Trump administration may view this trend as a good thing for the America-first cause. 

Renegotiation of USMCA

While NAFTA set off a wave of free trade and globalism, Trump renegotiated the landmark free trade agreement in his first term and renamed it, the USMCA. One of the main differences between NAFTA and the USMCA was a provision requiring review and amendment every six years. The treaty is due for review in 2026, during Trump’s second term. 

Trump has already stated that he wants to exercise this renegotiation clause to make a better deal, especially regarding the China-in-Mexico loophole and the automotive industry. The goal is to bring more manufacturing to the US without losing Mexico as a valuable trade partner. But allowing China to piggyback on this deal is a concern for an incoming Trump administration.

There are two months remaining before Trump’s second term begins. But already, there are supply-chain concerns in the manufacturing industry that new tariffs on inputs will increase the cost of manufacturing in the US. Many manufacturers are frontloading shipments in order to get them into the country prior to Trump’s inauguration in January of 2025. While this urgency may prove to be uncalled for, shipping stocks have already begun to decline on fears that trans-oceanic trade will diminish long-term.

Whatever policies this second Trump term actually produces, manufacturers in the US are watching for another round of international negotiations, a possible trade war, long-term growth in North America, and maybe a surprise or two along the way. 

It’s easier than you think.

Get in touch and we’ll show you how.