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For many years, automotive investment in Mexico has remained rather strong. The Latin American country is a strong competitor on a global scale and partners with leading carmakers from all over the world.

As was the case with most industries last year, Mexico’s automotive production took a hit in 2020. But as the world climbs out of the crisis, Mexico is leading the way for sustained growth and innovation in automotive manufacturing.

Recently, there have been a string of announcements from leading automotive companies, reaffirming or adding to their automotive investment in Mexico. Uncertainty in the Biden tax proposals has led leading US automakers to strengthen their holdings in Mexico. And this renewed push seems to lean heavily toward the electronic vehicles (EV) sector.

Mexico’s Automotive Manufacturing Industry

Mexico is currently the 7^th largest automotive producer in the world with one of the largest automotive workforces of any nation at around 1.7 million skilled laborers. As a trading partner with the US, Mexico is a major market for US light vehicles, trucks, buses, parts, and more. The country is currently the 5^th largest producer of automotive parts in the world.

According to the USMCA rules, automotive manufacturers operating in Mexico may export duty free so long as their product is at least 75% made in North America. 90% of the country’s automotive production is exported. Mexico has over 40 free-trade agreements and manufactures for leading automotive OEMs like:

• Audi
• BMW
• Aston Martin
• Ford
• GM
• Honda
• Kia
• Mazda
• Nissan-Daimler
• Toyota
• Volkswagen

The automotive sector is primarily established in northern Mexican states:

• Baja California
• Sonora
• Chihuahua
• Coahuila
• Nuevo Leon
• San Luis Potosi

Within the industry, Mexico’s electric vehicle (EV) market is growing. The country is actively involved in manufacturing in the EV sector, both for export and the domestic market – and new investments are being made regularly in this space. At home, Mexico’s government incentivizes hybrid and electric vehicle consumption. The market grew over 43% in 2019, representing more than 25,000 units.

Recent Automotive Investment in Mexico

After first pledging to invest $900 million in their Avon Lake, Ohio plant, Ford reversed course in the first quarter of 2021. They recently announced they will instead produce the as-yet-unnamed product line in Mexico.

This renewed commitment to the Mexican automotive industry was met with disapproval among US labor groups, but it comes as no surprise in light of Ford’s heavy involvement in the Latin American country. The US automotive powerhouse is one of the leading sources of FDI in Mexico’s automotive industry.

But the biggest announcement of 2021, so far, is the one General Motors made in late April. The US automotive giant announced plans to invest $1 billion in a Mexican manufacturing complex in Ramos Arizpe. The plant will be tasked with manufacturing batteries and EV parts and components as well as potentially building two Chevrolet electric SUVs. The site will also be home to a new paint shop. This Mexican complex currently employs 5,600 direct employees.

Francisco Garza, President of GM’s Mexican operations commented:

I’m sure this investment will contribute to continue boosting Mexican manufacturing while bringing development to the region, the industry and the country.

In May, the world’s largest car parts supplier, Bosch of Germany, added to the string of announcements of new automotive investment in Mexico. Bosch announced plans to invest up to $100 million in its Mexico operations.

This represents a 15% increase in Bosch’s current Mexico investments. Last year, the German company spent $87 million there, resulting in $2.7 billion in sales from Mexican production. The supplier plans to spend the additional investment on new manufacturing lines and digitization projects at its operations in Toluca, Mexicali, and Hermosillo.

Mexico’s industrial outlook in the near future looks promising. These recent investment announcements only underscore the ongoing growth the country has experienced in the automotive sector. With new FDI pouring in, Mexico will likely continue to grow its share in the global marketplace, producing even greater quantities of quality vehicles for export to the US and around the world.

While many US firms understand the advantages of outsourcing operations, the specific benefits of contract manufacturing in Mexico are unfamiliar to them. Because there are a number of ways to lower manufacturing costs, it pays to explore all the different options to determine which is most advantageous for your particular situation.

When paired with the obvious advantages of manufacturing in Mexico, contract manufacturing is especially effective at maximizing efficiency and cost savings for companies within a particular set of circumstances. Let’s explore the pros and cons of contract manufacturing to better understand if this outsourcing option is right for your firm.

Manufacturing in Mexico

Since the 1990s and the protections of NAFTA, US firms have leveraged Mexico’s strategic advantages for manufacturing. The primary mode of manufacturing was through Mexican factories called maquiladoras. These manufacturing plants are unique in that they are incorporated under and subject to Mexican regulations, employ a Mexican workforce, but are owned by a US firm for producing exported goods.

There are many benefits and reasons US companies might want to utilize the maquiladora system to manufacture their products. Some of the more obvious benefits of manufacturing in Mexico include the following:

• Plants are located near the US border, allowing for quick and easy access.
• US firms retain full control over their product and factory operations without the administrative hassle under the maquiladora system.
• Manufacturing labor in Mexico costs substantially less than in the US and at less than $3/hour is even competitive with China.
• Because of free trade agreements, Mexico is able to export goods duty free to many nations around the globe, and not just the US.
• Manufacturing in Mexico also benefits the US economy as around 40% of the inputs used for made-in-Mexico products are created inside the US.
• Mexican maquiladoras can manufacture nearly any product from anywhere in the country, so long as they are sold outside of Mexico.
• Manufacturing in Mexico greatly reduces transportation costs associated with offshoring in Asia or other offshore locations.

Maquiladora manufacturing allows mature companies with existing, established manufacturing facilities to transition to an outsource option to cut costs without losing oversight over day-to-day operations. Opening a maquiladora operation typically takes only around 90 days, and companies with the capital can have their own Mexican factory taking advantage of the country’s duty-free manufacturing for export.

Contract Manufacturing in Mexico

But not every company has this kind of capital or is at this stage in the business life cycle. For early-stage or growth-stage companies with an existing product, it’s much simpler and convenient to utilize contract manufacturing or subcontract manufacturing. Essentially, a US firm may simply place an order with a contract manufacturer in Mexico, eliminating factory management entirely.

For the most part, late-stage companies prefer the control and long-term benefits of owning a Mexican maquiladora operation. Utilizing this option, they can manufacture most of their products at this plant. But for smaller or newer companies lacking the infrastructure or capital, contract manufacturing allows for more flexibility with less commitment.  Contract manufacturing is a very low-risk, short-term investment for companies wanting a more cost-effective manufacturing solution.

The Pros and Cons of Contract Manufacturing

Contract manufacturing in Mexico affords unique advantages over even the cost-reductions and flexibility of maquiladora manufacturing for certain firms. Below are some of the pros and cons of contract manufacturing to consider when evaluating Mexican manufacturing options.

• Greater Efficiency: Contract manufacturing requires less square footage of manufacturing space, allows greater economies of scale through combined purchasing, spreads overhead costs among multiple clients, and reduces overages through smaller batch orders.
• Reduced Control: For companies seeking full control over product standards and workplace practices, contract manufacturing is not the best option. But for smaller companies, the hands-off approach is often preferred.
• Minimum Learning Curve: Ordering through a contract manufacturer in Mexico circumvents the need for knowledge of local import/export regulations and labor laws.
• Faster Startup: While opening a maquiladora takes only a few months, ordering from a contract manufacturer may only require a few weeks.
• Increased IP Risk: Handing over your intellectual property and proprietary specifications over to a 3^rd party comes with the risk of having this information stolen or compromised. However, Mexico has a stellar record of high IP protections and enforcement.
• Minimum to No Regulatory Risk: Because contract manufacturing in Mexico places all the regulatory compliance burden on the contract manufacturer, US firms have virtually no obligation to implement Mexican standards in the factory.
• Reduced Long-Term Savings: Owning equipment, facilities, and a dedicated maquiladora operation affords greater cost savings long term than contract manufacturing in Mexico.
• Improved Scalability: Placing orders as needed means greater flexibility to meet changing market demand.

If your company has demand for a developed product and a need for flexibility and speed, contract manufacturing in Mexico may be the perfect option for you. If you’re not quite ready to commit to a full-scale maquiladora operation, but are attracted to the many benefits of Mexico, these are the factors to consider in weighing options. Contract manufacturing is not for every company. But for many, it provides the perfect balance of speed, affordability, and flexibility.

Aerospace manufacturing is without a doubt one of Mexico’s key industries. The Latin American country has been involved in providing assembly and manufacturing services in this market for decades. But recent years have seen a huge rise in production as infrastructure and other critical factors combined for maximum growth potential.

Aerospace Manufacturing in Mexico

Aerospace manufacturing runs deep in Mexico. Some companies currently manufacturing in Mexico have been around for more than half a century. This is especially true in Baja California, the primary hub of Mexico’s aerospace industrial operations and assembly.  Especially in the cities of Tijuana and Mexicali, Baja California offers extensive aerospace capabilities, employing over 35,000 skilled workers manufacturing directly for 110 aerospace firms. But the country also has extensive manufacturing hubs in other states, including:

• Sonora
• Chihuahua
• Querétaro
• Nuevo León

It has been the past decade or two in which Mexico’s aerospace manufacturing growth has accelerated the most. In 2004, the country boasted about 100 aerospace manufacturing operations. But in just 15 years, that number swelled to approximately 360 firms and organizations operating in this sector, according to FEMIA (Mexico’s Aerospace Industry Federation).

Aerospace manufacturing is highly fractured and competitive in Mexico. And thus it is considered the best prospect industry sector. It is a major focus for the country’s economic development efforts and is bolstered by three strong pillars: commercial, private, and military aviation.

Growth Trends

Over the past 15 years, Mexican aerospace manufacturing has enjoyed a 14% average annual export growth rate. The country’s skilled but affordable labor force, infrastructure, and strategic location paired with the cost savings of the maquiladora system make it a highly attractive destination for foreign investment funds.  Between the years of 2007 and 2017 alone, the sector achieved accumulated foreign direct investment of over $6 billion USD.  Total exports globally reached $9.5 billion USD in 2019. And in spite of disruptions in 2020, this trend is expected to quickly return to its upward trajectory.

Mexico’s exports make it a favored trading partner with the US. Approximately 80% of aerospace exports go to the United States. But the country is the 14^th largest aerospace supplier globally, with trading partners around the globe, including Canada, France, Germany, and others. Mexico is projected to be in the top 10 aerospace exporters by 2026.

Capacity

Aerospace manufacturing in Mexico is remarkably diverse and extensive. In 2019 alone, aerospace exports from Mexico increased 10%. The country produces the entire value chain and has numerous directions in which to expand. Just a few of the key production areas include:

• Engines and engine parts
• Fuselages
• Cargo doors
• Landing gear assemblies
• Avionics

Commercial aviation has also propelled growth for Mexico’s aerospace operations. This has especially created large demand for maintenance, repair, and overhaul services (MRO). Domestic and international airlines create substantial demand for modernized fleets. And low-cost carriers like Volaris and Interjet are creating even more demand in the commercial aviation space. Likewise, the average age of Mexico’s military fleet is approximately 20 years, so demand is high for MRO services in the public sector.

Because the market is so rich in potential, and so well equipped for success and long-term growth, numerous global leaders are investing in Tier 1, 2, and 3 productions in Mexico. Some of these key players betting on Mexico – particularly in diversified industry clusters along the northern border – include:

• Bombardier
• Safran
• Aernnova
• Meggitt
• ITR
• GE
• Airbus
• Collins Aerospace
• Beechcraft

Additional Driving Factors

There are additional factors promoting ongoing growth in Mexico’s aerospace manufacturing industry. The country’s space program was founded in 2010 to expand the country’s communications satellite network, space science development, etc. In turn, this has opened up numerous opportunities for US space systems and suppliers to manufacture in Mexico.

Mexico has also invested heavily in R&D and supply chains to drive continued improvements and growth in aerospace production. Supplier chains and vendor networks are strong. And virtually every aerospace part and the aircraft itself can be sourced and assembled in Mexico.

The educational environment produces highly skilled manufacturing engineers and assembly laborers at extremely low rates. Mexican workers are adept at performing to US quality standards and requirements. And their productivity rate is high.

The aerospace manufacturing industry in Mexico is truly world class. As the country approaches the top 10 aerospace exporting countries in the world, more and more manufacturers in this space are recognizing the significant growth potential Mexico offers – not only for the industry but for their companies. From turbines to fuselages to upholstery and radar, Mexico will be the home for globally competitive, quality aerospace manufacturing for decades to come.

With historic challenges last year related to COVID, the Mexican industrial outlook remains a mixed bag. While there will continue to be ongoing challenges and the industrial landscape is forever changed, there are positive signs that the Mexican economy is digging out and beginning a successful recovery. 

Mexico’s economy is driven by manufacturing and industry, which have undeniably suffered from the COVID crisis. And economic data indicates a rocky road to recovery. Yet there is plenty of optimism and several areas of growth already developing as vaccines roll out in Mexico and consumption for Mexican-made products increases to previous levels. 

We will explore some of these economic indicators in hopes of providing a rough outlook for the future of industry and manufacturing in Mexico. 

The Contraction

Mexico was already in a mild contraction prior to COVID. While it was not sharp enough to cause alarm, Mexico’s economy was nevertheless experiencing a downturn. Several factors contributed to this, including uncertainty surrounding the USMCA, the looming possibility of a trade war, as well as a deceleration of private spending. 

However, as was true in most countries, COVID was a proverbial wrench in the spokes of an economy already cooling.  This drastically compounded trends already in progress. Amidst the crisis, annual GDP growth for 2020 ground into the negatives at approximately -9%. In the sharpest contraction since the Great Depression, Mexico’s economy declined 17% in Q2. 

The Aftermath

However, Mexico’s economy began to recover almost immediately. In fact, the Mexican industrial outlook is positive on several points based on data from the last half of 2020. The GDP softened less in Q3, and quarterly economic recovery was vigorous.  In fact, the last half of 2020 recorded the swiftest economic recovery in history. 

Still, there are causes for concern. Mexico’s all-important services sector has lagged behind, and the recovery is somewhat uneven. Unemployment is still high. GDP continued to decline in Q4, albeit at an even softer pace than Q3. Yet manufacturing PMI is now growing at a modest rate, foreign demand is up, fixed investment is up, and there has been a near total recovery in exports. 

Due to the rollout of vaccinations and easement of COVID-related business restrictions, 2021 is looking better. Q1 will likely reflect an additionally positive economic outlook for industry and manufacturing. According to Focus Economics Consensus Forecast analysts, 2021 is expected to see GDP growth of 4.3% in 2021. 

Mexico’s Labor Market

In Q2 of 2020, approximately 12.5 million people left the Mexican workforce, driving unemployment up to 4.5%. 10.2 million of those workers have since returned to the labor force, but over 2 million have not. And of those who have returned, the majority have joined the informal market. Still others have opted for part-time work. Around half of the country’s workforce remains economically inactive – up from around 40% prior to the crisis.  

Energy

The Mexican industrial outlook in the energy sector looks particularly bullish. In December of 2020, Mexico’s natural prices hit their highest in 22 months. 

It should be noted that Mexican energy prices tend to move in lockstep with US prices due to reliance on pipeline imports from the US and Canada, and US energy prices are looking rather bullish. According to the EIA, spot price for natural gas in the US is projected to average $3.01/MMBtu for 2021. This represents almost a $1 increase over 2020 prices.

Mexico has vast untapped natural gas reserves. This makes energy one of the significant drivers of a potential recovery for Mexican industry. However, the national government will have to revive private bids on oilfields to increase production, which currently penetrates the residential market only 7%.

The Road Ahead

The Mexican industrial outlook seems promising, but it will require careful policymaking by the federal government. While the current administration has announced no plans for fiscal stimulus, the domestic economy must rebound to sustain continued economic growth. Some are calling for short-term concessions and relief packages to ensure the Mexican economy gets back on its feet. But the 2021 budget calls for austerity, no tax increases, and reliance on a near depleted Budgetary Income Stabilization Fund.

Yet, as oil and gas prices rise, construction activity increases, and industry rebounds, the overall Mexican economic recovery seems likely to continue. Factors driving this positive outlook include normalization of trade relations with the US, as the two neighbors get back to work and renewed demand for made-in-Mexico products rises. 

There are clear signs this is so. For example, the automotive market – one of Mexico’s primary manufacturing industries – which fell from 320,000 units produced in January 2020 has since rebounded to 347,000 units in October, 2020 – even higher than the year prior. This is after units plummeted nearly 100% to just 3,000 in April 2020. 

In light of the strong infrastructure and pro-business government in the Latin American country, the Mexican industrial outlook is promising. Mexico remains one of the most popular manufacturing destinations in the world – despite the global crisis of 2020. 

US companies wanting to cut production costs are finding more benefits with maquiladoras in Mexico. Instead of offshoring to some remote region across the globe and reducing oversight and control over their manufacturing process, these US manufacturers find a ready-made solution awaiting them just south of the border.

Fortunately, in addition to cutting production costs and boosting profitability, the maquiladora system can be quite simple and easy to plug into. No need to lose out because of a steep learning curve. Here’s what you need to know.

What Are Maquiladoras?

In the 1960s, the Bracero Program came to an end. Previously, this program had allowed for skilled Mexican laborers to work on US farms. However, when the program ended, unemployment rose in Mexico. Out of this need came the Maquiladora program (IMMEX).

Maquiladoras – or maquilas, as they are also called – are manufacturing facilities in Mexico that operate on a tariff-free or favored duty basis. Sometimes called a twin plant, US companies maintain an administrative facility in the US while conducting manufacturing at the maquiladora facility in Mexico.

Under the IMMEX program, equipment and inputs may be imported for assembly in Mexico mostly duty-free and exported for distribution in the US (and globally) with little to no VAT taxes.

Benefits of Maquiladoras in Mexico

There are numerous benefits to US companies through this approach to outsourcing manufacturing. And these benefits extend beyond financial savings. Among them are:

• Ease of Access: Focusing on quality standards and processes is easy, as plants are typically located a quick flight or even drive away.
• Lower Labor Costs: Skilled manufacturing labor in Mexico is substantially less than in the US and even less than in many Asian countries.
• Regional Strength: US companies manufacturing through maquiladoras in Mexico are not competing against Mexican companies, but rather leveraging their strengths to compete together on a global scale.
• Supporting American Industry: Approximately 40% of inputs in Mexican-made products were made in the US. Economic data shows outsourcing to Mexico actually benefits US industry.
• Flexibility: As long as the goods are sold outside of Mexico, maquiladoras can be located anywhere. Likewise, almost any product can be manufactured there.

Cost Savings

In an increasingly competitive global economy, cutting costs is always an important consideration. Many of the most successful companies in medical devices, automotive, aerospace, electronics, and other industries have increased market share by leveraging maquiladoras in Mexico.

Specifically, they reduce tax and liability exposure, labor costs, and other operational costs to produce high-quality products more efficiently. Here are the major ways they do that:

1. Reduced Shipment Costs
Maquilas located along the border can typically ship products to US markets within days, not weeks. Trucking is the most common form of transporting goods. This represents numerous cost savings, including:

• Less fuel
• Less time in transit
• Quicker market response
• Less opportunity cost
• Lower inventory requirement (less warehousing)

2. Quicker/Easier Startup
Because the Maquiladora program (IMMEX) is decades old and codified in USMCA/NAFTA, the process is well established and relatively simple to follow. US companies can be up and running within just a few months (less if using shelter services).

3. Lower Skilled Labor Costs
The average US company saves about $1 million USD per year due to the low cost of skilled manufacturing labor in Mexico. The average manufacturing wage in Mexico is a little over $2/hour, with skilled technicians making around $4. This strikingly low cost of labor in Mexico is augmented by the fact that labor in Mexico is more productive than in other outsourcing destinations.

4. Tax Savings
Tax savings may represent the most substantial way US companies cut costs with maquiladoras in Mexico. If done right, a maquila operation may eliminate or greatly reduce the following tax liabilities for US companies manufacturing for export in Mexico:

• VAT
• Raw materials import duties
• Finished product export tariffs
• Duties on equipment and machinery

The Hack

While maquiladoras offer significant savings in themselves, most successful US companies do not go it alone. It can pose quite the challenge to open a factory in a new country, source vendors and equipment, hire a qualified workforce, and navigate the red tape associated with import/export. While the maquiladora solution is handy and lowers costs, there even greater benefits in combining it with a shelter service.

A shelter service is typically a US company that already has the infrastructure in place in Mexico, has years of experience sourcing vendors and materials, and has a fully functioning workforce and HR department ready to go to work for you. A shelter partnership compounds the cost savings by allowing a US company to take advantage of the shelter’s momentum and insider access.

Some of the services a shelter service handles for you include:

• Import/export
• Recruiting
• Human resources
• Payroll
• Labor relations
• Accounting
• Environmental, health and safety
• Regulatory compliance
• Legal compliance
• Site selection
• Vendor sourcing
• US cross dock

These and other convenient service areas allows the average shelter client to save around $1.5 million USD per year and get up in running in just 90-120 days.

Manufacturing with maquiladoras in Mexico is rich in savings potential. At each point along the value chain, savings are realized and profitability is maximized. And utilizing maquila manufacturing with a shelter service can greatly magnify these savings while simplifying the process even further.

With economic risks and complexities of globalization on the rise, US companies are increasingly manufacturing in Mexico vs China. There are numerous factors driving this trend, but they all come down to this: a Mexico-based supply chain is simply more resilient and cost-effective.

The Shift

In the 1990s, offshoring and globalization were in. US manufacturers found a virtually limitless labor supply for pennies on the dollar in Asian markets – particularly China. But this trend has been shifting over the past decade. And recent world events have only accelerated the exodus out of China, spotlighting the benefits of relocating operations to Mexico.

Major companies like Nike, GoPro, Panasonic, and Toyota – who for years leveraged Asia’s lower wages and deep labor pool – are now announcing relocation from China and Asian factories. Offshoring is now becoming nearshoring. As of 2020, Mexico is now competing closely with China for the position of top US trade partner.

US companies are now considering the rise of regionalism as a superior model to globalism. Rather than competing against each other, the US and Mexico have become powerful teams. As Mexico becomes increasingly modernized and business-oriented, their maquiladora manufacturing system offers US companies a robust tool for foreign manufacturing just over the US border.

The Benefits of Manufacturing in Mexico vs. China

Before the changes in the global economic order surrounding 2020, Mexico was already an attractive alternative to manufacturing in China. Indeed, the country has a rich manufacturing history spanning many decades. The reasons the Latin American country is such an attractive manufacturing location for US companies are numerous:

• Low, Stable Wages
  While China’s labor costs have dramatically risen since the 1990s, Mexico’s remain stable and competitive. Currently, the average wage for a highly skilled machinist in Mexico is about $6/hour. Less skilled manufacturing labor costs around $2.5/hour.
• Highly Skilled Workforce
  Mexico boasts an extremely trained and highly skilled labor force. The country boasts numerous academia-industry partnerships that churn out thousands of specialized engineers and skilled manufacturing experts each year.
• Strong IP Protections
  China’s legal framework for protecting intellectual property and enforcing patent law is notoriously problematic and complicated. However, Mexico has taken a strong stand on protecting proprietary information and technologies. It is far less likely in Mexico for US products to be replicated. And legal recourse is much simpler should it occur.
• Comparable Time Zones
  The convenience of managing operations in Mexico from the US is significant. Rather than dealing with time zones on the other side of the globe, US executives can typically work within usual business hours of their home time zone managing Mexican operations.
• Proximity to US Market
  Manufacturing in Mexico vs. China means much shorter lead times and more responsive access to the world’s largest consumer market. Shipping is measured in days, not weeks. US executives are typically a short commuter flight from their Mexican operations, or they can often just take a car since locations like Tijuana and the Baha California region are right across the border.
• Free Trade Hub
  Manufacturing in Mexico allows US companies to not only take advantage of NAFTA/USMCA free-trade protections. They can also leverage Mexico as their passport to free trade with literally dozens of global markets. Mexico has signed more free-trade agreements than any country in the world, and currently has preferential access to around 50 countries.

Mexico’s Advantages Magnified

Recent events in the world have only magnified these and many other advantages of manufacturing in Mexico vs. China. These global changes brought new factors to the forefront that will both accelerate and cement Mexico’s strategic advantage for the long term. These factors include:

• Risk
  As the United States entered a trade war with China a few years ago, tariffs became a serious concern. It became an obvious risk to depend on importing goods from China. Since then, US companies have looked for ways to diversify and mitigate risk. Mexico’s duty-free import status through NAFTA/USMCA makes it an attractive alternative. In the wake of rising tariffs on Chinese-made goods, border cities in Mexico like Tijuana are booming.
• Resilience
  On top of the tariff problem with manufacturing in China, the world awoke in 2020 to COVID, a virus from China. Demand for medical and sanitation supplies changed and skyrocketed. The ability to adapt to global supply shocks and crises became front of mind for US manufacturers. Sourcing and manufacturing in Mexico vs. China dramatically shorten lead times, allowing US companies to respond to an ever-changing market more quickly and effectively.

These factors ensure that Mexico will continue to be the most cost-effective and strategic choice for US manufacturers for years to come. This is especially true when companies partner with a shelter provider to get up and running quickly without the hassle of regulatory compliance and import/export concerns. US companies are finding they can focus on quality and growth in Mexico while enjoying a stable, pro-manufacturing environment and cost savings. In a world full of increasing complexity, manufacturing in Mexico simply makes more sense.

US and Canadian based businesses have been moving their manufacturing facilities to Mexico for decades because of the incredible advantages and cost savings.

So you’ve decided to move your company’s manufacturing to Mexico in order to take advantage of the numerous financial benefits. How do you proceed from here?

Well, there are two viable options for moving forward. The first is to go with a standalone operation and figure it all out on your own. The second option is to seek help from a shelter services company, like what we provide at Tacna Services, Inc.

Creating a manufacturing facility in Mexico which imports raw materials duty free and exports the finished goods to a non-Mexican foreign market requires a business to register as an IMMEX facility (also known as a maquiladora). In addition, a company will need to seek out a factory for manufacturing. Then you will need to source, hire, train, and manage the employees along with navigating payroll, logistics, tax requirements, labor laws, obtaining many permits, complying with environmental, health and safety regulations and complying with customs requirements on both sides of the border, all the while dealing with a language barrier and cultural barrier (assuming you and your team are not fluent in Spanish and conversant with Mexican cultural norms).

Although it is worth it, moving your manufacturing to Mexico can be overwhelming for most businesses, particularly, if going it alone. The hurdles of tackling this endeavor by oneself is too much for many businesses to endure on their own. Mexico is regulatorily complex.

Inexperience in trying to start up a Mexico manufacturing operation by oneself, not only makes the transition difficult, but it also slows down the process. A very large company may have the resources to hire expensive attorneys, accountants and other professionals directly to learn on their own the ins and outs of doing business in Mexico. However, for most companies, increasingly including larger ones seeking manufacturing in Mexico, there needed to be a better option.

Thus, shelter services companies became a necessity for many of these US, Canadian and other globally based businesses to help bridge the gap.

Shelter services help to make the process of manufacturing goods in Mexico much easier for foreign companies. Shelter services already have multiple  IMMEX permits in place and the foreign companies, using shelter services companies, can enter Mexico and begin manufacturing production of goods as a division of the shelter service with a much reduced timeline and cost..

We have the experience and knowledge needed to get you up and running quickly and save you from the headaches that you would otherwise have to deal with. We can help with a variety of processes and complexities that you would otherwise need to take on by yourself – or we can handle nearly everything!

There are various types of shelter companies out there. Some are more flexible than others. It is important to know how a shelter services company will benefit your business.

Here are a list of advantages you can expect from working with TACNA Services, Inc, Shelter Services for Manufacturers in Mexico:

– Manufacturing and entering Mexico under our IMMEX permit
– Experience helping hundreds of companies manufacture goods in Mexico
– Manufacturing can be up and running in as little as 12 weeks
– Assistance before, during, and after transition to Mexico
– We operate in all major cities of Baja, California Mexico
– We save you money

We create a “shelter” for the companies we work with to insulate them from direct legal and regulatory issues and complexities, so that you can focus on the operations within the four walls of your factory. We minimize your liability and risk in this undertaking. You will not need to learn spanish or have a detailed understanding of Mexico’s laws in order to take advantage of the lower costs of manufacturing in Mexico.

You can focus on your core operations under the shelter model. Do what you do Best! We manage the Rest!

When you enlist TACNA Services, Inc, Shelter Services for Manufacturers in Mexico to help you begin your Mexico manufacturing, we remove our clients’ roadblocks and get their maquiladoras operating very quickly.

You focus on moving your equipment and technical expertise and manufacturing processes, and we will handle the rest.

If you are looking for help from a shelter services company, TACNA Shelter Services in Mexico is the partner you need. Contact us at 619.661.1261 or sales@tacna.net and let us show you how easy it is to establish a maquiladora in Mexico with our shelter services.

The House passed a new North American trade deal on 12/19/19, ending a more than year long slog to iron out Democratic concerns about the agreement.

The chamber approved the United States-Mexico-Canada Agreement, one of President Donald Trump’s economic and political priorities, in an overwhelming 385-41 vote. Thirty-eight Democrats opposed it. The trade pact now heads to the Senate, which is expected to ratify it next year.