3 Common Misconceptions about Mexico Shelter Manufacturing
11.21.21
Mexico shelter manufacturing is not a new concept. Many of the world’s leading manufacturers have operated in the country for decades, yet there are still misconceptions about the process. With an influx of U.S. and other foreign manufacturers considering manufacturing in Mexico for the first time, it’s a good idea to clear up any confusion by shedding light on common myths about what doing business in Mexico is like.
1. Manufacturers Only Choose Mexico Due to Its Cheap Labor
The general sentiment of “cheap labor” doesn’t provide the right context of the value Mexico shelter manufacturing delivers. Though industrial employees salaries in Mexico are more cost-effective in the U.S. and China, the quality of talent is top-notch as well.
Mexico is known for investing in its industrial workforce and graduates tens of thousands of engineers every year. Additionally, there are several other benefits manufacturers choose Mexico as an operating base to keep costs low. These include close proximity to the U.S., which reduces transportation costs and incentives specific to the USMCA.
2. Manufacturing Regulations Are Easy to Navigate
It can actually be difficult to set up manufacturing in Mexico if not well prepared. Mexico’s regulations are complex. There are several permits and certifications required in order to operate in compliance. It’s can be a time-consuming process that limits production levels.
Fortunately, there’s the opportunity to partner with a Mexico shelter company. A shelter is already equipped with the proper permitting and infrastructure that manufacturers can benefit from beginning on the first day of operation. One of which includes IMMEX certification, which offers exemption from 16% VAT on all temporarily imported goods, materials, and equipment for manufacturing. The application process for those working outside a shelter can take several weeks, during which time the imported goods do not qualify for the tax break.
3. Mexico Doesn’t Have the Same Advantages as Manufacturing in China
A few decades ago, manufacturing in China was the premium option for companies that wanted to benefit from low labor costs. However, these low-cost advantages have since been surpassed by Mexico, which now has a lower hourly rate for manufacturing at $4.82 compared to China at $6.50. Plus, Mexico has a highly trained industrial workforce to fill in the roles manufacturers need.
Also, the trade war between the U.S. and China and the recent supply chain shutdowns due to the pandemic have left manufacturers scrambling for more secure options. The low cost of labor may have been a great allure before, but Mexico offers additional advantages of close proximity to the U.S. and free trade agreements China does not.
The manufacturing industry is constantly changing and the benefits of yesterday are not the same as what they are today. These misconceptions only begin to scratch the surface of the benefits of Mexico shelter manufacturing versus operating in China. There are many specifics that can help a company succeed, which a shelter company like IVEMSA can help you uncover.