Doing business in Mexico provides tax and overall cost benefits – and those are best utilized when an incoming company has an experienced hand guiding its operations.
Pedro Valenzuela knows this well. Valenzuela is director of import/export operations for The Offshore Group, a Tucson, Ariz.-based corporation providing business aid to companies in other countries looking to establish low-cost, low-risk production in Mexico.
In the nearly 14 years he has been with The Offshore Group, Valenzuela has seen “a lot of changes” in import/export activities between the United States and Mexico.
“Those changes have come primarily through NAFTA, the duty preferential treatment program that the Mexican, U.S. and Canadian governments have implemented,” he notes. “We have a large operation here, and process (approximately) 160 customs transactions between Mexico and the U.S. daily – including imports, exports and virtual transactions.”
At this point, The Offshore Group assists 63 companies with their Mexico-based businesses, providing manufacturing support, or, shelter services, skilled workers, industrial real-estate options and more. Valenzuela estimates the company’s annual customs transactions are valued at roughly $2.5 billion, which represents import/export services for its Mexico-based manufacturers in various industries, including automotive and aerospace.
While NAFTA, enacted in 1994, attracted more business, other provisions – such as PROSEC and Regla 8 – opened the free-trade floodgates wider.
“By accessing one or more of these programs, companies that are importing goods into Mexico can expect to pay zero in duties,” Valenzuela notes.
Even items shipped to Mexico with markings from a non-NAFTA country often can enter the country duty-free, but participating players have to know the rules and abide by them – which is where the benefit of having an expert coach comes in handy. To that end, OG keeps records for all of its clients manufacturing in Mexico to ensure compliance with both U.S. and Mexican Customs, Valenzuela says.
“We have a database assigned to each and every company that manufactures in Mexico under The Offshore Group’s Shelter Program … (and) we track ins and outs for each client,” he explains. “Based on that information, we provide the reports in accord with the requirements outlines by U.S. or Mexican Customs. We provide financial reporting related to imports and exports shipping to and from Mexico, as well.”
Because of OG’s business support and understanding of Customs navigation, shipments are imported and exported expeditiously with minimal Customs-related issues.
“(As) the importer of record for Mexican Customs’ purposes, the liability is really on us,” Valenzuela affirms. “That’s why we take these issues very seriously.”
More manufacturers are considering moving their plants to Mexico. The Journal of Commerce notes the country provided the lowest landed costs for U.S. importers in 2011, making it a more attractive venue than China, where escalating wages and freight are key concerns for American companies seeking alternate locations. Mexico ranks competitively in its pursuit of low- and no-tariff trade, and its 12 free-trade agreements with more than 40 countries – including the United States – place more than 90 percent of its commerce under free-trade agreements.
Additionally, the NAFTA Office of Mexico in Canada reports total trade last year in the NAFTA Region recorded a value of $1,011.7 billion, representing a 15-percent growth in comparison to 2010 – a historic-level record in regional trade.
Next week: Valenzuela takes a closer look at the intricacies of shipping between countries.