Manufacturers Express Similar Reasons for Considering Central Mexico During Tour of Locations Hosted by Entrada Group
By Doug Donahue
Entrada Group recently hosted C-level executives from five companies on a tour of strategic manufacturing locations in central Mexico. Though these companies are from very different industries and parts of the US, they share similar motives for exploring manufacturing in central Mexico. As your company contemplates Mexican manufacturing, you may find helpful some of their experiences and feedback from our three-day tour of Querétaro, Guanajuato and Zacatecas. First, here is a bit about our guests.
The participants on the tour hosted by Entrada Group were C-level executives from
- A power transmission and motion control manufacturer
- A global contract manufacturer that develops and makes a wide variety of machined parts and gearing mechanisms for global medical and food/beverage service industries
- A manufacturer and supplier of irrigation and agricultural products
- A residential and commercial hardware and repair and replacement parts manufacturer
- A recreational water products manufacturer
Manufacturing Executives Looking at Mexico – Key Areas of Interest
Here are the common things our guests were most interested in:
- Central Mexico Has an Immensely Broad Range of Service Offerings: Our three-day tour included stops in Guanajuato, Querétaro and Zacatecas, showcasing the diversity of manufacturing options in the area. Guanajuato and Querétaro are two of the most desirable cities in central Mexico, both for manufacturing and as attractive places to live. Our visitors from companies that are heavy machinery- (i.e., capital-) intensive found the level of skill sets, services and the supply chain there as good as anywhere in the world. By contrast, our visitors from companies specializing in more labor-intensive processes were more interested in the lower overall operating costs in Zacatecas, home to the Entrada Group industrial park and shared service center. We visited companies operating in these cities, giving our visitors the opportunity to talk directly with plant managers face to face and see the differences within the region.
- Professional development efforts are impressive: We stopped at three centers dedicated to training and professional development, and our visitors remarked on the level of commitment by the government to developing technical skills as well as the in-depth level of professional training offered by companies in central Mexico. We visited RYMSA S.A. de C.V., a Mexico-owned and operated CNC manufacturer that supplies to the worldwide oil and gas industry, and competes with larger global companies by hiring entry-level directs, training them onsite and emphasizing retention through training as a reward for performance. They saw how a German manufacturer, part of a joint venture with Ford that builds transmissions*, trains staff by an innovative method incorporating one-on-one, hands-on, problem-solving skills on transmissions that have been bisected to expose the inner workings of the cutaway. This helps mechanics develop not only mechanical skills but also an understanding of the reasoning behind the design.
- Producing for the Mexican domestic market: Traditionally, manufacturers set up operations in Mexico in order to 1) leverage cost-effective labor and 2) produce for export to the US (also to South America but to a lesser extent). It is noteworthy that our guests expressed a strong interest in producing for the domestic Mexican market as a strategic priority. It is further proof of the growing level of knowledge foreign manufacturers have about Mexico – not only as a strategic manufacturing location but also as a market for their products. Many have moved past the first phase of Mexico manufacturing, which focused more squarely on export to the US, and are acutely aware of the opportunities Mexico’s growing middle class presents. Entrada can help companies set up a local sales presence in Mexico to take advantage of the growing domestic market, as part of the full range of services we provide.
* If you are interested, please contact us directly for more details on this joint venture.
What our visitors found most valuable
Our C-level visitors greatly appreciated the opportunity to meet face-to-face with plant managers in facilities in Guanajuato, Querétaro and Zacatecas and to hear candidly about the their everyday operations. Our guests heard about the lengths local companies in Querétaro and Guanajuato are going to in order to retain directs (such as offering training, meals and transportation) and indirects (offering housing and automobiles, in extreme cases).
That’s why many of our visitors appreciated the fact that Entrada can also offer an option geared primarily to cost-competitive operations – at our industrial park in Zacatecas – in addition to providing services and minimizing risks if they must set up in a more competitive location like Guanajuato or Querétaro.
Additionally, our visitors appreciated the diversity of companies with whom we met. Our hosts were from 9 different companies and they gave our guests diverse insight from not just a wide range of industries and specialties, but also from countries across the globe.
Home nation of hosting companies:
- Canada (2)
- Germany (2)
- US (2)
A worthwhile trip
All participants were enthusiastic about Mexico’s bright future, young workforce and, above all, the opportunities for topline growth the country offers. They saw both the domestic Mexican market as well as the export market, into North or South America, as areas where they could realize opportunity.