Manufacturing In Mexico Offers Canadian Firms Advantages
Manufacturing In Mexico offers companies all over the globe many advantages for offshore production. This is no less true for Canadian companies wishing to become amanufacturer in Mexico. According to a recent Canadian Trade Commission Service release, three options were highlighted for companies to establish production operations in Mexico. They include:
1) Contract Manufacturing – a process typically defined as placing an order through a parent group to perform manufacturing functions for X number of product units at a particular cost.
2) Shelter Services, exampled by Entrada Group’s Zacatecas facility, whereby the manufacturer focuses on producing their product(s) while the shelter provider oversees infrastructure, taxes, local regulations and labor functions.
3) Do-It-Yourself strategies which include establishing operations from the ground-up operation: buying land, building facilities, establishing infrastructure, recruiting labor, and performing all ancillary functions to production.
Speed-to-market and unit costs are most advantageous in outsourcing all manufacturing functions through a parent company but there’s far less control. The sheltering option allows for greater control and growth planning with eventual transitioning to all functions of manufacturing in Mexico while controlling technical competence, product, and possible capital equipment. Finally, since ground-up building and infrastructure establishment is time and expertise-intensive, unit costs are far greater and time to market far slower. Small to medium size companies have greater potential to access cheaper production costs through the first two options, with larger multinationals sometimes choosing the third option.