- Manufacturing in Mexico
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As a savvy manufacturing executive, you’ve probably considered the various outsourcing options, including Mexico. But if, like most who first encounter this possible option, you still have questions about the ins and outs of managing a maquiladora operation south of the border, this complete guide is for you.
Making the decision to outsource the manufacturing function to a foreign country comes with risk factors and other serious considerations. One such consideration is how to go about managing a foreign operation while remaining profitable and what taking on a foreign factory will entail. Below, we will detail just what it looks like to manage a maquiladora factory in Mexico safely, effectively, and profitably.
Nearshoring as opposed to offshoring removes certain factors from the equation of outsourcing. From a management perspective, there is greater hands-on potential for a factory located just south of the border, reachable within a few hours by plane or car in some cases.
Furthermore, nearshoring in Mexico:
Additionally, manufacturing in Mexico:
Mexico is home to state-of-the-art industrial parks and manufacturing infrastructure. These parks are urbanized areas dedicated to optimal manufacturing and logistics activity. They typically include all the necessary utilities, permits, and infrastructure. They are available for either lease or purchase and often include special certifications to ensure maximum potential for tenants.
Consider the following factors when choosing your Mexican manufacturing site:
Properly entering the world of Mexican manufacturing is crucial for long-term success and profitability. Mexico’s IMMEX program allows foreign entities to establish and own factories within their borders for export manufacturing under special duty considerations.
In order to establish a maquiladora (or maquila) operation under IMMEX, you must properly complete all paperwork and provide all necessary documentation. The process of opening a maquiladora can be quite daunting, but below is a checklist of necessary items:
Managing a maquiladora in Mexico means stepping into a completely different workplace culture. Fortunately, the cultural divide is not as stark as with managing in an Asian culture. Nevertheless, there are certain distinct differences with workplaces in the USA.
When travelling in Mexico to oversee your business operations and relationships, there are certain important considerations for managers:
And speaking of safely conducting business in Mexico:
Take the Shelter Shortcut
You can forego much of the guesswork, planning, costs, and exposure by taking a shortcut. Rather than performing all of the necessary research, site set-up, workforce hiring, and compliance paperwork, many US executives find managing a maquiladora much simpler via a proxy.
This proxy comes in the form of a shelter service provider, which provides you with numerous advantages. A shelter company acts as the owner of record of a Mexican corporation and typically has existing workforces and supplier networks already in place. In fact, often, these services already have factories in place awaiting an owner. Additionally, the shelter will have competent labor and top tier suppliers on tap and handle all necessary tariff, tax, and compliance forms, hiring and administration, maintenance, logistics, security, and more.
You can speed up the process of entering the Mexican manufacturing scene, eliminate the headache of sourcing materials and personnel, and devote your management time to core activities like maximizing quality, profitability, and ongoing product design.
Regardless of how you set up your operation, managing a maquiladora in Mexico can be a highly effective and profitable alternative to offshoring. And with the insights contained in this guide, you are ready to experience the Mexico advantage for yourself.