Mexico Shelter Company: A Key Partner to Reduce Risk

Manufacturing in Mexico has experienced quite a surge in growth over the past decade, thanks to a combination of factors. The trade war between the U.S. and China motivated many manufacturers to consider diversifying their portfolio or completely moving operations from China to Mexico to avoid retaliatory tariffs.

Additionally, the trade bloc between the U.S., Mexico, and Canada has continued to strengthen, encouraging renewed interest in nearshoring to Mexico. However, one unique reason why it continues to be a competitive manufacturing strategy is the availability of Mexico shelter services.

When expanding to a foreign country, there’s associated risk when navigating duties, labor laws, and trade compliance. Working with a Mexico shelter company is valuable in helping U.S. and other foreign manufacturers reduce this risk so they can fully reap the rewards. Here’s a look at some of the key benefits:

A Unique Way to Do Business in Mexico

U.S. and other foreign manufacturers operating under a shelter are protected from having a legal presence in Mexico. It is the safest way to do business and helps to reduce the learning curve of manufacturing in a foreign country.

A range of shelter services, including site selection, HR, accounting, daily trade operations, and more, are in place to get production up and running quickly and efficiently. Furthermore, in addition to minimizing risk and liability, there is also significant cost savings on labor, permits, and license fees.

Experience a Quick Startup with a Solid Infrastructure

U.S. and other foreign manufacturers benefit from the established infrastructure of a Mexico shelter company. Manufacturing in another country requires a whole other level of expertise and experience compared to expanding to another state. For instance, labor laws and customs compliance under the IMMEX program are especially challenging and complex.

With various administrative departments already in place as part of the shelter model, manufacturers can confidently delegate these responsibilities while fully focusing on production. This simultaneous approach results in a start-up timeline of three to four months versus the six or seven months (or more) it takes to launch production as a standalone entity.

Engage in Flexible Services and Maintain Operational Control

Manufacturers maintain production control under the shelter model and can transition to a standalone entity at any time. Generally, a company operates under the shelter legal umbrella for a couple of years until they’re ready to phase out of the shelter model. The next step is to transition to their own legal entity, a process in which IVEMSA provides advice and support throughout.

Once a company is confident to emerge on its own, a Mexico shelter company advises on when to make the transition and ensure all the necessary pieces are in place to avoid any disruptions. However, most still see value in Mexico shelter services with regard to compliance, management, and administration, and continue to work with a shelter company even beyond the initial few years.

IVEMSA’s shelter services are flexible and can be adjusted to meet a company’s specific needs, though the average customer retention rate is 15 years.

Getting Started with a Mexico Shelter Company

Manufacturing in Mexico already has several advantages, including a close proximity to the U.S. market, access to a highly skilled workforce, and protections under trade agreements, including the USMCA. However, the availability of Mexico shelter services adds competitive value to these built-in benefits to seamlessly launch production with the support of local expertise.

Wondering if working with a shelter company is the right strategy for you? Contact IVEMSA to discuss options.