Nearshoring: A Real Look at a Company’s Transition to Mexico

Shelter services in Mexico have become a key part of a comprehensive strategy for many U.S. and other foreign manufacturers. Though every company has specific operational needs, many start the discovery process well in advance of deciding whether the shelter model is the best option.

In early 2020, a well-established aluminum extrusion company (AEC) reached out to IVEMSA regarding the possibility of manufacturing in Mexico and how IVEMSA could help. Being based in Los Angeles, the company was facing a difficult time hiring new workers to perform the heavy manual work necessary to meet the demands of their ongoing growth. They were also quickly outgrowing their current facility and faced complications obtaining the required environmental permits. Meanwhile, inflation made it difficult to source new spaces that would fit their operational budget.

During the discovery phase, before shelter services in Mexico even began, IVEMSA provided options and information the company needed to make decisions. For instance, the AEC needed a facility built from scratch due to the amount of production space required but wasn’t sure which area was best. Therefore, IVEMSA created a site selection analysis to guide them in the right direction and help narrow down the choices before the AEC eventually decided on Mexicali.

After assessing the needs, processes, and production of the client for over a year, it was decided IVEMSA would be the best partner to move forward with for expansion. Though the AEC was part of a larger group already operating a standalone entity in Mexico, they decided their plan would benefit most by working under the shelter model.

As a result, the 2021 partnership has continued and the AEC recently celebrated a multi-million dollar expansion with IVEMSA at the helm to handle all their shelter services.

What to Look for in a Shelter Partner?

Not every shelter partner is the same. To make the transition to manufacturing in Mexico as seamless as possible, there are many factors to consider to find the right fit. In addition to a proven history of success and favorable reputation in the industry, it’s also important for a shelter to have:

Proactive communication

IVEMSA provides a wealth of resources in advance to help companies decide whether shelter services in Mexico make sense for them. With so many moving parts to consider, IVEMSA connects prospective clients with local government departments, schedules site tours, and makes vendor introductions, all to help companies make the best decision. Therefore, it’s important for manufacturers to communicate all needs, processes, and production goals, and continue to update them, even in the initial phase.

Pricing transparency

Pricing is the top priority for most manufacturing clients, which is why the cost-effectiveness of nearshoring to Mexico is so alluring. IVEMSA provides transparent estimates pertaining to cost of labor in Mexico, current lease and transportation rates, and other operational expenses. These estimates can also be quickly updated as needed for planning purposes.

Due diligence

At IVEMSA, our team is driven by helping U.S. and other foreign manufacturers transition to Mexico at the most opportune time. Therefore, we are thorough in our due diligence to include the most accurate, up-to-date information and adhere to timelines set forth by the client.

The shelter-client relationship starts from the initial consultation, which is often a year or two in advance of the official transition to Mexico. We want manufacturers to feel confident in their decision and feel prepared as they expand their operations.

To learn more about how a shelter partnership with us can benefit your company, contact IVEMSA today.