Is Working with a Mexico Shelter Company Best for Your Production Needs?

12.12.24

Partnering with a shelter company is the route most foreign manufacturers take when expanding production to Mexico. Though shelter services offered are generally the same, customizing solutions per a company’s unique requirements is what distinguishes one from the next.

Often, business leaders unknowingly seek the support of a Mexico shelter company when in search of contract manufacturing. Though contract manufacturing may be a good option for companies that do not require oversight over quality assurance or product consistency, a shelter company does not handle production.

Instead, its purpose is to manage all the administrative tasks necessary to set up manufacturing operations. This includes HR and payroll, taxes and accounting, and legal and trade compliance, among others. Meanwhile, actual production, processes, and ownership of all materials, goods, and equipment are left to the foreign manufacturing client.

Alternatively, foreign manufacturers may want to outsource the entirety of their production through a third party in Mexico that can make their product. However, in many cases, there are greater savings from maintaining production in-house and enlisting the help of a Mexico shelter company instead.

There are many benefits their services provide that manufacturers may not be aware of. Once they’ve been evaluated, it may cause them to reconsider if a shelter company is a better option versus outsourcing to a contract manufacturer.

Cost-Competitiveness

For smaller- to medium-sized manufacturing companies, shelter services support economies of scale. They can be adjusted to scale up or down as needed. The level of expertise, experience, and administrative services a shelter company provides is equivalent to a team that Fortune 500 companies enlist to manufacture in Mexico, though at more competitive rates.

Quick and Convenient Setup

Manufacturers eager to launch production quickly can establish an efficient setup with Mexico shelter services. Following a thorough site selection process to establish a viable industrial facility, manufacturers can expect to launch production within three to four months. This cuts setup time nearly in half compared to establishing a standalone entity.

Reduced Risk and Liability

Operating in a foreign country is tricky to navigate, which is why the majority of manufacturers choose to work with a shelter company. It is the safest way for a foreign manufacturer to do business in Mexico.

It reduces risk and liability while also providing tax savings and other cost benefits. Whereas, those operating as a standalone entity face exposure to legal authorities regarding compliance and other challenges that can be costly and time-consuming.

Engaging a shelter company leaves room for growth with enough flexibility to opt-out if manufacturing in Mexico doesn’t turn out to be an ideal option. Though many may think contract manufacturing is the more cost-effective or competitive solution, they find shelter services to be more beneficial.

Secure the Right Fit for Your Manufacturing Needs

Find out if your business fits the profile best suited for a Mexico shelter company partnership versus contract manufacturing. We support companies considering manufacturing in Mexico and help point them in the right direction to fulfill their specific production needs.

Contact IVEMSA today and let our experts guide you to the most favorable option.

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