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back to index backLATINtalk March,  2017


4 Factors to Weigh When Evaluating Manufacturing Options in Mexico

When considering offshoring manufacturing operations to Mexico, there are many factors that must be evaluated to make a sound decision that will benefit your business both in the immediate future as well as over the course of the next several years. For all businesses, it is of the utmost concern that the quality of the product being produced is not compromised by moving manufacturing operations and that there are no gaps in production during the move. In order to evaluate manufacturing options in Mexico, there are a few key factors to weigh in your decision making.

Proximity to key geographic markets

One of the reasons Mexico has become a popular offshoring location for many businesses located in the United States and Canada in recent years is its close proximity to the U.S. border. Due to its close geographic location, shipping costs to the United States are comparably much lower than those from China or India to the United States. Prior to offshoring manufacturing to Mexico, it is important to be certain that the location you select is close in proximity to your main distribution location and that the average monthly shipping costs are not too high to support the target profit margin you are seeking.

Availability of skilled workers

Another essential factor to analyze prior to moving manufacturing operations to Mexico is whether there is an availability of qualified workers to perform the necessary tasks to produce a quality product. In Mexico, the implementation of the Maquiladora program has led to a workforce that has adapted and grown with the technological times and is readily equipped to produce high quality items. The increasing technological sophistication of the workforce is specifically strong more recently in engineering including aerospace engineering, making Mexico an ideal place for businesses that have mechanical engineering needs.

Availability for future expansion

One of the final questions to ask when evaluating manufacturing operations in Mexico, is whether or not there is an availability for future expansion. In Mexico, the availability for expansion is omnipresent and has allowed many companies to grow their business steadily throughout the years. Keep your goals for future expansion in mind when selecting a manufacturing location to ensure it meets your current and future needs.

Selecting a manufacturing site

Once you have done an analysis of various factors to ensure offshoring manufacturing to Mexico is the right choice for you, it is time to select a manufacturing location. The process for selecting a location begins with identifying an established administrative and compliance management provider like North American Production Sharing (NAPS).

Step one is to identify potential cities based on what is offered. Throughout the years, NAPS and other companies have built strong local relationships in Tijuana, Rosarito, Tecate, Juarez, Mexicali, Guanajuato, Aguascalientes, San Luis Potosi,          and Queretaro. Before solidifying a city, make sure you develop a clear understanding of the operation and client requirements in order to select locations that can logistically and physically support the manufacturing requirements.

After this phase is complete, lease or purchase negotiations are conducted by a company like NAPS in conjunction with the client. A final analysis will be conducted and the lease or purchase agreement will be finalized and signed.

Compliance management companies will monitor construction and tenant improvements to ensure compliance with environmental regulations, that the necessary permits are acquired and filed, and that the project is completed accordingly to schedule.

Source: EBN - GAI






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