Establishing low-cost, low- risk manufacturing operations in Mexico is becoming increasingly popular for manufacturers in automotive, aerospace, electronics and other industries.
Why not? An abundance of labor – even in the engineering and technical fields – highly reduced shipping times and time-zone compatibility are only just two of the reasons that make establishing a manufacturing presence in Mexico is attractive. But, because culture and business experience differs from the United States and other industrialized countries, some companies choose to partner with shelter companies in Mexico such as The Offshore Group to establish capacity there.
Since 1986, The Offshore Group’s staff and services have enabled executives in the automotive, aerospace, electronics, HVAC, medical device and general manufacturing industries to initiate, maintain and control low-cost and low risk-production, enhancing global manufacturing competitiveness. The Offshore Group’s Mexico Shelter Plan offers autonomy and flexibility to near-shore manufacturers seeking to enhance their competitiveness in the aerospace, automotive, electronics, metal fabrication and other manufacturing industries. With The Offshore Group managing non-core functions of Mexico manufacturing, its clients can fully concentrate on their core manufacturing expertise, while reducing total landed costs.
Establishing a manufacturing presence in Mexico is a big decision. With that in mind, The Offshore Grouip offers some initial points for executives to consider:
• Is partnering in Mexico with a shelter company the best option for you?
Because of a desire to focus fully on manufacturing processes, bridging cultural differences and reducing risk related to customs and other important issues, you may decide it does. Investigate before you leap, however. Look at how long the company has been in business and examine its ownership to determine stability. Consider your primary focus and determine whether its services match your needs – i.e., is your business start-up or an established manufacturing company?
• Does the available industrial real estate in Mexico meet your needs?
There are different checklists for new and existing buildings. While some concerns are the same – such as learning whether buildings are currently in use, how accessible they are to employees and if they are cooled by air conditioning or evaporative coolers – questions about older facilities may include whether heat or adequate power is available. You also want to determine which party is responsible for paying for taxes, maintenance and insurance.
With a newer building, is construction complete? What are the longest and shortest lease terms? Is there an option to buy available?
There are other cost and location considerations, including but not limited to human resource issues, workforce considerations, logistics and distribution details, purchasing concerns, legal and administrative issues. The act of deciding to manufacture in Mexico doesn't have to be a daunting one – and you don’t have to go it alone, or without expert advice.
Executives considering establishing a manufacturing presence in Mexico only incur travel and lodging expenses to visit one of The Offshore Group’s Mexican industrial parks to perform an accurate true cost analysis. A reputable site-selection consulting firm providing “information similar to what we offer may cost in a range from $100,000 to $250,000,” notes Chuck Yahn, The Offshore Group's director of operations.
After meeting and touring a Mexican manufacturing facility, The Offshore Group will benchmark real world numbers against a prospective client’s information to provide accurate cost estimates upon which decision-making can be confidently based.
The Offshore Group has conducted hundreds of cost models for large multinational manufacturers and publicly traded companies as well as smaller, privately owned firms, affirms Eduardo Saavedra, the Group’s vice president of business development. The model works equally well with manufacturers focused on automotive, aerospace, medical devices and electronics as with plastic injection and metal forming and stamping, Saavedra says.
“Typically we find that they are surprised at how inexpensive the Mexico option is when compared to what they are currently experiencing in their existing manufacturing facilities,” Yahn adds, noting that Mexican manufacturing often comes in at one-fifth to one-seventh of the cost of manufacturing in the United States.