5 Factors to Consider During Site Selection in Mexico
09.22.23Nearshoring to Mexico has become an increasingly popular option within the past few years. Though China has been the frontrunner for foreign production for decades, recent developments, such as the enactment of the USMCA, have motivated U.S. manufacturers to bring their operations closer to home.
Fortunately, because manufacturing in Mexico is not a new concept, there are several established industrial areas throughout the country. They have the infrastructure and supply chains to support sectors such as aerospace, automotive, medical device, and electronics manufacturing.
Deciding where to set up a facility is the crucial first step before any production can begin. With Mexico becoming an increasingly competitive manufacturing space and each area offering its own benefits, it helps to have shelter services in Mexico to help narrow down the options. However, when determining site selection, here are five general factors to include in the analysis:
1. Cost: Usually the most important factor, find out the typical wages and real estate lease prices of the areas of interest.
2. Reach: Determine the proximity to the current audience base and the access to vendors and suppliers.
3. Labor: Consider the availability and competitiveness of the labor market to ensure there are enough qualified workers to fulfill the roles needed.
4. Logistics: Identify ease of traveling to the site and how costly transporting goods will be.
5. Appeal: Evaluate the growth and safety of the area and if the region will appeal to people working there long-term.
Exploring the Border Region and Beyond
It should come as no surprise the most popular area for site selection in Mexico is the region along the U.S./Mexico border, which includes Tijuana, Mexicali, and Juarez. The proximity to the U.S. audience base is the main allure of this area, which helps to reduce transportation costs and increase delivery time. Additionally, since this region has been well-established for several decades, it’s easier to find skilled labor and quality services and industrial facilities.
However, with high demand comes higher costs and a greater possibility of limited space compared to other regions. Therefore, it’s beneficial to look beyond the border and consider other areas to include in a complete site selection analysis.
For example, Mexico’s central area, which includes Queretaro, Guanajuato, San Luis Potosi, and Aguascalientes, is a hub of manufacturing operations, especially in the automotive and aerospace industries. And typically, labor rates and leases are less expensive than options in the Mexico-U.S. border cities.
However, there are industrial site opportunities available throughout Mexico. Once you have an idea of what you’ll need for production, our Mexico shelter services team can create a site selection analysis comparing potential areas. This will give you an in-depth look into viable locations and their benefits, as well as any drawbacks, as they pertain to your company’s specific needs.