How to Manufacture in Mexico

Modes of Entry, Ways to Manufacture in Mexico

While the benefits of manufacturing in Mexico are plentiful, the process of getting started can be complex. There are a variety of modes of entry businesses should consider. Every company's business model, goals and industry will play a part in determining how to launch an operation in the country. There are five main options to consider:

1. Standalone or Greenfielding

The first option is to launch a standalone or greenfield operation in Mexico. By doing so, companies construct a facility where there is no existing infrastructure to work within. Essentially, this mode of entry requires manufacturers to enter the country by establishing a wholly owned subsidiary of their company in Mexico. Businesses who take this approach will need to manage every single detail including human resources, import and export management and compliance.

2. Contract Manufacturing

Contract manufacturing is also known as outsourcing. Through this approach, businesses leverage an operation that already exists within Mexico to manufacture some of its products.

3. Shelter Services

A shelter company is a service provider in Mexico that enables a manufacturer to send its raw materials, equipment and manufacturing know how to the country to set up and completely control its production. Shelter companies handle human resources management, worker payroll and benefits administration, import and export management, tax and fiscal compliance issues, compliance with environmental laws and regulations and the purchase of MBO items.

4. Joint Ventures

Another option is to enter into a joint venture with another manufacturer. This is a good option for businesses that want to try expanding part of their production to Mexico by sharing resources and expertise with another company.

5. Manufacturing Communities

Manufacturers can be more effective by entering the market through a manufacturing community. A manufacturing community is a low-cost manufacturing environment in Mexico that integrates industrial space, support services and a legal framework to enhance productivity. These communities are equipped with a skilled workforce, educational institutions, and facilities and services for foreigners. Often times, manufacturers in Mexico can enter into a manufacturing community by working with a shelter services company.

Infographic: Ways to Manufacture in Mexico