Do You Have Questions About Manufacturing in Mexico?
With many companies now aware of the strengths of Mexico as a nearshoring destination, here are some answers to common questions about manufacturing in Mexico, shelter services, shared services and others.
What are shelter services in Mexico? What is a maquiladora?
- A shelter service operation – maquiladora in Spanish – is a foreign-owned factory in Mexico, established under special regulations that allow the owner to import materials and equipment, and export finished products without tariffs or duties.
How long does it take for a company to set up manufacturing in Mexico?
- You can be up and running in as little as 90 days with a shelter services provider like Entrada. That’s because an established, dedicated facility is already up and operating in a desirable location. There is no need to go through the time, expense and bureaucratic hassles of setting up a manufacturing location and negotiating with the Mexican authorities.
Is it expensive?
- Your maquiladora handles most of the start-up process, so companies can quickly begin production with minimal expense. Most of the initial start-up investment is from adapting the manufacturing facility to suit your existing production and quality requirements, and transporting equipment and machinery to the facility.
What is offered by the shelter services provider?
- A provider of shelter services establishes the legal infrastructure, recruits a dedicated workforce – including directs and indirects – operates the shared service center, develops and manages the industrial park and dedicated facilities for the Mexico manufacturing operation.
What is the client company responsible for providing?
- The client manufacturer provides the material, equipment and machinery, and the manufacturing system and processes.
Wouldn’t it be cheaper to establish our own plant in Mexico?
- For some large Fortune 500 companies, setting up an independent factory might make more sense in the long run. But it takes a substantial investment in time and resources, not to mention legal know-how and patience, to establish your own manufacturing facility in Mexico. Furthermore, you would need to have a very large factory in place to realize economies of scale. By opting to go through a shelter provider, you divide the costs of the facility, operations and utilities by all the tenants on-site.
How much does it cost?
- Fees for shelter services providers vary, but typically involve one or more of the following types of charges:
- Shelter fee, which covers the overhead of the maquiladora. It’s typically based on the hours worked per week by the client company’s dedicated workforce in Mexico. As the workforce is flexible, adjusting to accommodate peaks and valleys in workload, this fee rises and falls weekly per the volume of work.
- Facility fee, which covers the monthly tenant occupancy costs and is based on space used.
- Reimbursements made for expenses on behalf of the client in Mexico.
Is manufacturing in Mexico sensible only for large multinational companies?
- Not at all. Thousands of small- and mid-sized companies are set up in Mexico to take advantage of the labor savings. Companies with as few as 20 people could benefit from a Mexican manufacturing nearshoring solution.
How can I be certain that quality levels will be maintained?
- Your maquiladora provider will put an appropriately skilled, highly dedicated workforce at your disposal — complete with a turnkey system that allows you to be up and running with your offshore Mexican manufacturing operation quickly. Mexico has a large, accessible pool of talented engineers, designers and technicians, willing to tackle complex production needs to your expectations.