“Having a manufacturing location in a low-cost country helps us to win business,” said Jeff Trosper, CBC Connect Branch Manager. “In addition, the La Angostura Industrial Park, where our plant is located, provides room for us to grow. They owners (The Offshore Group) have plenty of land, so we won’t outgrow our available space because the space is virtually limitless.”
CBC Connect has been manufacturing wire harness and value-added electrical products in Mexico since 2004. The company uses a shelter company in Mexico, The Offshore Group. In addition to the La Angostura Industrial Park in Saltillo, The Offshore Group operates industrial parks in Guaymas/Empalme, Sonora. The company has also begun to offer its outsourced manufacturing support, or “shelter,” services in Guadalajara, Jalisco.
Fundamentally, the Mexico shelter business model mimics outsourcing, but the manufacturer maintains control of critical functions such as manufacturing processes and quality control, strategy planning, hiring decisions and product-specific parts and materials procurement. The shelter company handles the non-core function administrative side of setting up and managing a plant: permitting and regulation, the import and set-up of production machinery and raw materials used in production, utilities relationships, the recruitment of both direct and indirect labor and even the payment and benefits administration of employees.
Beyond economies-of-scale cost savings, the biggest benefits of the Mexico manufacturing shelter model are that manufacturers can launch production much faster; the entire process of setting up a foreign site is simplified and handled by experts; and the producer can devote resources to core manufacturing competencies and serving customers.
“The shelter company takes care of everything from human relations to provision of manufacturing space to local purchasing for MRO and more,” Trosper said. “It would be very difficult for us to assume these responsibilities state-side, and do them correctly according to local regulations. The shelter company comes at a cost, but being able to focus our efforts on other facets of the business is beneficial.”