How Do Mexican Shelter Operations Work?
Here is what you need to know to get started with a Mexican Shelter operation for your manufacturing business. Obviously, your goal is to reduce costs while still maintaining the quality levels that your customers expect from your products. A well-managed shelter services provider will allow you to lower your labor costs, save on transportation costs in comparison to an offshore manufacturer in China and keep indirect costs to an absolute minimum. A shelter service provider that has been in Mexico for a long time, as Entrada has, and has experience navigating the local bureaucracy, hiring and training staff and is already established in a well-equipped industrial park can allow smaller manufacturing firms to realize the same economies of scale typically only generated by large companies.
When you opt to use a shelter service company, you still maintain responsibility over processes, production and quality control, while the shelter provider takes care of administrative and support services. In other words, under a shared services arrangement, companies manufacturing in Mexico are freed to focus directly on their core business. This makes for better, more efficient manufacturing at a lower labor cost than would be possible in the US/Canada or most of Europe.
What Services Are Provided?
Nature and type of services can vary among Mexican shelter service providers, with a wide range of options dependent on client needs. Here are just some of the services you could expect to be provided by your Mexican manufacturing shelter service provider:
- The shelter service provider manages all staffing, recruitment, labor relations, medical services and benefit administration.
- Support for accounting services; management of Mexican taxes, licenses and permits; monitoring of manufacturing staff performance.
- Regulatory compliance, assistance in identifying class of pay, management of time and attendance, Social Security and federal housing reporting.
- Entrada has C-TPAT certification (expedited border crossing, similar to pre-clearance through security at the airport – see here for more) and Mexican Custom Certification. These valuable certifications will save you a lot of time and aggravation, and they’re difficult to obtain on your own. They will not only put you in the fast lane through the border crossing, they will help you avoid the many complexities and potential holdups in shipping materials and products to your Mexico manufacturing operation.
- The shelter provider coordinates all trucking/shipping movement, with departure/arrival as often as every day. A large and efficient shelter service specializing in Mexican manufacturing will hold down your LTL (less-than-load) shipping costs because they are consolidated along with shipments by other clients – leveraging volume pricing with transport companies. This allows a small manufacturer to appreciate the same benefits of a larger player.
- Many providers provide on-site technical support staff (networking, deskside support, etc.) as a courtesy to their Mexico manufacturing clients, enabling them to focus on core manufacturing objectives.
- As part of your agreement with a shelter provider, you will receive an equipped manufacturing facility, customized for your processes; day-to-day maintenance of the facilities; and 24/7 park security. A good provider also allows you to scale up as your requirements grow.
- Shelter service providers support their Mexico manufacturing clients with the sourcing and purchasing of indirect materials and services in Mexico. This saves manufacturing companies time and also results in big discounts from suppliers, as the purchasing power of all clients at the nearshore manufacturing facility are combined for volume pricing.
Financial and Accounting Services
- Depending on the size and scale of the shelter provider, they may offer their clients legal and accounting services. Shelter companies that are registered as legal entity of record in Mexico are entitled to offer this service to their manufacturing clients.
Government and Community Affairs
- This could include grants for workforce training, contracts with the appropriate authorities, and special Customs programs that facilitate a wide range of products manufactured in Mexico.