Mexico’s strategic location and cost-effective, skilled workforce have created a successful environment for U.S. and other foreign manufacturers that want to expand their reach. Shelter manufacturing services are available for those new to operating in Mexico as well as those who wish to establish their own legal entity.
When working with a shelter, foreign operators reduce their legal risk and exposure. Plus, there is a reduced learning curve when navigating Mexican laws and regulations. Either way, though, shelter services can be customized to meet the needs of each manufacturer and project.
Here are the main advantages shelter services provide and how they help to ease the transition for foreign companies manufacturing in Mexico.
Manufacturers that choose the shelter route save significantly on operating costs, including labor, infrastructure, and permitting and licensing fees. The need for outside consulting is limited as all administrative departments needed to launch production are already in place.
These include HR and payroll, taxes and accounting, and trade compliance services. Passing these responsibilities to a shelter company allows manufacturers to focus fully on operational processes and fully maintain control over intellectual property rights.
A shelter company also provides instant tax advantages and trade benefits. Every foreign company manufacturing in Mexico must be approved for the IMMEX program before production can start. The program exempts foreign manufacturers from the 16% value-added tax (VAT).
Through a shelter’s certification, this exemption is automatically applied to all temporarily imported goods, equipment, and materials needed for the manufacturing process. Furthermore, duties are not applied when exporting finished goods to the U.S. and Canada if they are marked as “Made in Mexico.”
When implementing shelter services in Mexico, manufacturers can expect to launch production in three to four months. This cuts the setup time nearly in half compared to the time it takes to set up a new legal entity. This efficiency saves costs and allows manufacturers to get products to market faster.
Shelter manufacturing services are designed for flexibility as manufacturers want to scale. Also, they are set up to support companies that eventually want to “graduate” from the shelter and become their own separate entity. With the constant changes that can occur during production, it’s helpful to have the agility to transition as needed.
Manufacturing in Mexico has been a unique advantage for U.S. and other foreign manufacturers for decades, spanning across multiple sectors. For 40+ years, IVEMSA has provided shelter services in Mexico to help manufacturing companies launch and manage their production. With a 15-year average retention rate, there is a reputation and history rooted in success when partnering with clients as they grow their businesses.
Making the transition to Mexico manufacturing can be challenging without the guidance of a local shelter company to streamline the process. Whether you are expanding production for the first time or seeking the support shelter services provide, our team can help you figure out the best route.
Global manufacturing competitiveness continues to rise as new technologies drive higher demand. And Mexico serves as a central hub of industrial support for U.S. and other foreign manufacturers as they seek to expand their production.
For decades, manufacturing leaders have successfully established a presence in Mexico with consistent growth across several sectors throughout the years. As more companies decide to follow suit and grow their own international footprint, they have several competitive advantages thanks to what manufacturing in Mexico has to offer.
Here are reasons why Mexico continues to be a viable option when expanding production and how shelter manufacturing services can make a positive difference.
Mexico is an ideal location for foreign manufacturers serving a U.S. audience. The proximity between Mexico and the U.S. results in quicker deliveries and less expensive shipping than other popular trade areas, such as China. Also, Mexico’s expansive transportation routes and supply chain create greater reliability so companies can get their products to market faster.
The U.S. has faced setbacks in fulfilling manufacturing roles over the past few years. With an entire industrial generation entering retirement and younger generations not as quick to take their vacant spots, there are millions of skilled laborers needed to complete the production demand.
Meanwhile, Mexico is known for its industrial workforce availability and low cost of labor, which makes it an optimal choice for foreign operators when recruiting and retaining qualified workers.
Large-scale production and quicker delivery times don’t take away from the commitment to quality when manufacturing in Mexico. There are several quality assurance protocols in place to ensure manufacturers stay competitive and keep their reputations intact.
Additionally, the relatively quick travel time between the U.S. and Mexico allows project leaders to provide in-person production oversight more easily and manage adjustments as needed.
After gaining speed for several years, Mexico surpassed China in 2023 as the top trading partner with the U.S. This is partially due to the incentives detailed by the trade agreement between the U.S., Canada, and Mexico which sets requirements regarding content origins and intellectual property protections. In addition to the USMCA, Mexico has 12 free trade agreements with 48 other countries, making it one of the most open and competitive markets in the world.
To help U.S. and other foreign operators with Mexico manufacturing, there is the unique advantage of shelter manufacturing services. Working with a shelter company provides local expertise and experience to help companies make a seamless transition at a lower cost. Shelter services in Mexico include all administrative responsibilities necessary to launch production, including site selection, HR and payroll, taxes and accounting, and trade compliance.
Mexico has played an important role in the global market and has continued to rise in ranking as a quality trade partner for the U.S. and other countries. To benefit from the competitive advantages of manufacturing in Mexico while also saving on costs, contact IVEMSA today.
Sources:
https://ustr.gov/countries-regions/americas/mexico#:~:text=Mexico
https://www.trade.gov/country-commercial-guides/mexico-trade-agreements#
Customization continues to be a business buzzword in 2024, and it’s no different for manufacturing. Though more companies are becoming familiar with the benefit of nearshoring to Mexico, not all business leaders know exactly what it entails and if the solution is a right fit for them.
For decades, global leaders have found success when manufacturing in Mexico as a way to cut costs and improve operational efficiency. Mexico’s geographic location, skilled industrial workforce, and favorable trade agreements have made it a go-to strategy, particularly for those with a U.S. audience.
And, when moving operations to Mexico, there’s the unique option of working with a shelter company. A shelter company handles all the administrative duties necessary to launch production. Their services include everything from HR and accounting to trade and legal compliance.
However, to optimize the opportunities available, companies must recognize how Mexico manufacturing is different, who benefits most, and how Mexico shelter services can be tailored to fit their changing needs.
There are specific rules, regulations, and benefits associated with Mexico manufacturing that aren’t applicable in other countries. The most notable is the IMMEX program which offers a generous tax benefit to U.S. and other foreign operators. Those who qualify receive exemption from the 16% value-added tax on temporarily imported equipment, materials, and goods.
While manufacturers may apply for IMMEX certification and permits as a standalone entity, it can take several weeks before they are approved. Whereas, a Mexico shelter company provides this tax savings from the start.
Automotive, aerospace, and electronics manufacturing, in particular, are among the top sectors exploring Mexico as part of their growth strategy. And, typically, it’s small to mid-sized operations that benefit most from what a shelter company offers.
Shelter services allows business leaders to leverage local expertise and networks to streamline their operational setup. For foreign manufacturers, it is the most cost-effective way to do business while minimizing legal risk and exposure.
Additionally, when partnering with a Mexico business shelter, companies can remain flexible depending on growth. They can scale up production or switch gears as needed. Shelter services are tailored to each operation, and manufacturers maintain full control over production and intellectual property rights.
With cost-effective labor, steady supply chains, and lower transportation costs, it makes sense for U.S. operators to expand their production to Mexico. Plus, the close proximity between the U.S. and Mexico allows companies to get products to market much faster.
Due to ever-increasing competition, operating under quick timelines (without compromising quality) is essential. A shelter company in Mexico helps manufacturers launch production within three to four months. Whereas, those operating as a standalone entity take closer to six to seven months.
Furthermore, a shelter company also provides:
● Built-in departments (versus individual outsourcing) for HR, accounting, and trade
● Cost savings on administrative and back office responsibilities, compliance, labor, infrastructure, and permitting and licensing fees
● Reduced learning curve regarding international customs compliance
Manufacturing in Mexico already provides an advantage for U.S. and other foreign operators wanting to save on costs and expedite production. However, it’s working with a shelter company that can give companies the extra competitive edge.
There are typically two ways of doing business as a foreign manufacturer in Mexico. Companies can either operate as a standalone entity or partner with a Mexico shelter company. The latter serves as a unique advantage for U.S. and other foreign manufacturers, especially for smaller operations in their first years.
However, regardless of the size of the operation, all companies need to have compliance. Working with a shelter company reduces the risk and liability of operating in a foreign country. Plus, there’s flexibility, so if after three to four years, a manufacturer decides they want to be an independent entity, there is an established process to help them graduate out of the shelter.
Often, U.S. project managers are already tasked with overseeing multiple projects before the decision to expand to Mexico is confirmed. It can quickly become overwhelming when trying to learn new compliance regulations, tax laws, and business and cultural norms while in the process of relocating.
Without Mexico shelter services, manufacturers miss out on the local expertise and administrative assistance necessary to launch production. Additionally, it is far more costly and takes longer to set up the various departments and ensure compliance is met. Whereas, a shelter company streamlines the process and is more cost-effective overall with many businesses saving up to 30% on labor-related administrative functions alone.
Furthermore, when operating as a standalone entity, manufacturers are responsible for leasing their own facilities and setting up utilities, securing permits and certifications, recruiting and hiring labor, and learning Mexico tax and trade regulations. They also face greater legal exposure and risk and nearly double the setup timeline compared to working with a shelter company.
A Mexico shelter company can help foreign manufacturers launch production in as little as three to four months versus the six to seven months it takes to set up as a standalone operation through a new legal entity. Also, rather than relying on U.S.-based project managers to automatically become experts in Mexico manufacturing, a shelter company provides a team of industry experts with an established infrastructure in place.
While administrative tasks are handled, manufacturers can fully focus on and maintain control of production, and they retain full intellectual property rights. Most foreign companies depend on shelter services in Mexico to get their operations up and running quickly and efficiently. It allows them to reduce costs without compromising manufacturing quality.
However, IVEMSA can help even if a company is already running its own standalone entity and needs assistance, such as with payroll processing or implementing a trade compliance department best practices. Every manufacturer has its own specific needs, and we are here to support any way we can. Our 15-year average customer retention rate shows how dedicated we are to those we work with.
Whether you require full shelter services or need to outsource only certain administrative departments, we provide cost-effective solutions that support long-term success.
The current state of manufacturing has shown China is no longer the attractive location it once was. In decades past, its cheap labor costs and quick production times made it advantageous for U.S. operators. However, the past few years have highlighted many of the persistent issues with outsourcing to China, leaving many to consider nearshoring to Mexico as an alternative.
U.S. and other foreign manufacturers have faced problems with China regarding intellectual property theft and dwindling supply chains. Additionally, labor and transportation costs have risen to a point where they no longer offset the inconvenient logistics.
Alternatively, the proximity between the U.S. and Mexico is one of the most appealing factors for U.S manufacturers. There is also a solid infrastructure in place, as well as an industrial workforce, who is trained to work across a variety of sectors and roles. And, with the availability of global suppliers and speedier delivery times, the benefits continue to add up.
It will be particularly easier for sectors that already have a strong presence in Mexico to make the transition, such as automotive, aerospace, and medical device manufacturing, among others. Continual foreign direct investment and the historic success of manufacturing in Mexico also show the country can handle a large volume of goods similar to China.
Plus, the trade agreement between the U.S., Mexico, and Canada adds further motivation for U.S. operators to reshore production closer to home. Among the many provisions under the USMCA include a required amount of automotive content to be produced in North America, as well as stronger enforcement of intellectual property protection.
Though shifting production from China to Mexico likely presents a new learning curve for business leaders, many rely on a partnership with a Mexico shelter company to reduce risk and liability and save on labor, transportation, and permitting costs when making the transition.
Shelter services in Mexico include all the administrative departments and tasks necessary to launch production. These include site selection, recruiting and hiring employees, tax and trade compliance, and HR and accounting. With the help of a Mexico shelter company, manufacturers can expect to launch production in as little as three to four months versus the six to seven months it takes as a standalone entity. Shelter services also frees up time for manufacturers to focus solely on production while maintaining control over all processes and equipment.
The industrial shift from China to Mexico has happened slowly but steadily over the past few years, and as more production is planned for 2024 and beyond, China will change from being the global export hub it once was. And, for those focused on the U.S. market, it provides greater opportunity to grow at a cost-effective rate.
Having the support of a local shelter company to guide manufacturers through the process saves on time and costs, while adhering to production timelines.
Manufacturing in Mexico has prevailed as a leading business strategy, especially over the last few years. Though most are aware of the benefits this opportunity provides, there’s quite a bit of confusion that comes with making the move as well.
For decades, many U.S. and other foreign manufacturers have outsourced production to China without owning their own factories or equipment. Now, these same companies want to replicate this process in Mexico. What they often don’t realize is this requires a third-party company to build what they need; otherwise known as contract manufacturing.
Though contract manufacturing can be a favorable solution for certain types of operations, it does not have the same advantages as working with a shelter company under the IMMEX program.
Here are key differences to help identify the best solution for your production goals.
With contract manufacturing, companies work with third-party suppliers. They are quoted by the number of units produced. Therefore, the more units there are, the more it will cost.
Whereas, with a shelter services company, there is one fee for the administrative work and team that will be assisting with the production launch. Regardless of whether a company produces $1M or $100M of goods a month, the fee doesn’t change.
Companies that choose contract manufacturing are typically exposed to more quality issues, shipping delays, and employee challenges. Employees are not hired to work solely for one company. Typically, they’re assigned to multiple companies on a rotating basis and may not have the specific skills or investment in what is produced.
On the other hand, through a shelter company under the IMMEX program, the manufacturer hires employees solely for their company and project(s). These employees are part of their regular payroll and benefits. And the manufacturer maintains control over hiring, onboarding, and retention with the support of the shelter company, and without worrying about splitting time with other companies.
Companies with high-volume, low-mix production typically choose contract manufacturing. They are less concerned about maintaining ownership of the building and equipment and will outsource to a third-party vendor.
Whereas, manufacturers with proprietary technology and/or products value control over all things production, including the building, equipment, and intellectual property. They want to be in charge of their own destiny and will maintain ownership with the help of a shelter services partner.
A shelter services partner then handles all the administrative duties necessary to get production up and running. This includes everything from HR and accounting to trade compliance and IMMEX program certification.
Though manufacturing has standard processes and protocols, each company is unique and requires varying levels of assistance in order to be successful. Operating under the IMMEX program through a shelter services partner delivers comprehensive support from a team of local experts.
For decades, China has been a leading international trade partner with the U.S., due to low labor costs. However, in recent years, more manufacturing companies have chosen to diversify their portfolios and expand their production to Mexico, if not move it altogether.
The trade conflict between the U.S. and China quickly caused major concern. Then, the instability of the subsequent pandemic years made many U.S. companies rethink their strategies. Due to these significant drawbacks, it’s no surprise that Mexico recently jumped ahead of China as the largest U.S. trading partner.
Though it’s been effective for decades, manufacturing in Mexico has become the preferred choice for U.S. operators looking for cost-conscious, localized solutions. Though each company has its own specific needs and requirements, this route is currently the most alluring, and here’s why:
The low cost of labor is what initially attracted manufacturers to move operations overseas. However, a generation of industrial workers in China are entering retirement age and younger people entering the workforce are unwilling to replace them. Therefore, there’s not the same influx of workers willing to work for low wages as before, which is similar to what the U.S. is experiencing.
Whereas, manufacturing continues to be a popular industry in Mexico, with tens of thousands of engineering graduates entering the workforce every year. Additionally, U.S. companies work in collaboration with universities in Mexico to get the skilled workers they need in a range of roles. This kind of work availability leads to cost-effective labor rates, with wages much lower than U.S., and in many cases, China.
Despite China’s low labor wages, the cost of shipping is high. For a long time, these costs offset each other, but with transportation and shipping costs at historic highs, and labor rates on the rise, it’s not the value it once was.
U.S. manufacturers prefer the close proximity that comes with manufacturing in Mexico. Depending on where their facilities are, they are often able to receive their shipments on the same or next day. This convenience and efficiency allow them to get products to market faster and eliminate additional costs when shipments are delayed.
The trade war between the U.S. and China quickly caused manufacturers to reevaluate their options due to retaliatory tariffs. Soon after, the USMCA was officially enacted, which gave incentives to those operating within the three countries. In fact, certain provisions require that manufacturing content be produced in the U.S., Mexico, or Canada.
Additionally, another advantage unique to Mexico is the country’s IMMEX program. This allows U.S. and other foreign manufacturers to temporarily import tools, equipment, and machinery needed for production with exemption from the 16% value-added tax.
Technology is changing at a rapid pace, and protecting intellectual property has always been a concern for U.S. operators in China. Whereas, in addition to tax incentives, the USMCA has specific provisions that enforce violations regarding intellectual property protection and copyright infringement. Companies developing sophisticated equipment and patented products can feel confident in maintaining ownership without fear of illegal reproduction.
U.S. and other foreign companies also have the option of manufacturing under the legal umbrella of a shelter services operator. This minimizes a company’s risk and liability and provides them with administrative support and expertise during the setup process.
Shelter services in Mexico include site selection, trade compliance, taxes and accounting, among other responsibilities necessary to get production up and running. Manufacturers maintain complete control over their processes and ownership of their intellectual property rights.
These are a few of the many ways Mexico outshines China. The competitive edge is hard to ignore, which is why an increasing number of companies are choosing to hop on board. Manufacturing in Mexico saves on production time and costs while maintaining convenience and quality for U.S. and other foreign operators.
Tension between the U.S. and China has been on the rise for years. Between a history of unenforced intellectual property protection and retaliatory tariffs, it all hit a turning point during the shutdown of the pandemic. As a result of the continuing complications, many U.S. manufacturers who had been operating in China for years had begun moving their operations to Mexico.
Global companies like GM, Kia, and a slew of others have paved the way for new factories to be built. According to Bloomberg, foreign direct investment in Mexico is notably up by more than 40% in 2023. And, as a result, China has ceded its manufacturing leadership position to Mexico, as Mexico takes the top spot as the main trade partner with the U.S.
This switch in positioning hasn’t occurred since the enactment of the North American Free Trade Agreement (NAFTA) in 1994, and those who take advantage of the nearshoring benefits can be part of this historic shift. Since the revamping of NAFTA to become the United States-Mexico-Canada Agreement (USMCA), the idea of “friendshoring” has become the newest trend.
North American leaders are capitalizing on the opportunity and promoting the trade bloc to keep manufacturing in Mexico as the preferred option over China. There’s been a significant surge in automotive, aerospace, and medical device manufacturing, and the increase in semiconductor production has put Mexico ahead. However, leaders eager to take advantage of this strategy should implement the right support to reach their long-term goals.
An increase in foreign production makes shelter services in Mexico all the more important. Without an established strategy or knowledge of what’s required, it can cause foreign companies to lose time and money before even getting started.
Since manufacturing in Mexico can’t begin without securing a facility, site selection is the first necessary step. The industrial parks in Mexico nearest to the border are the ones most in demand due to their proximity to the U.S. And consequently, high demand means there’s also a high price to follow.
A shelter service company can create a customized site selection analysis and provide multiple options based on a manufacturer’s unique needs. They can help identify viable facilities with easily accessible transportation in various parts of the country. However, Tijuana and Mexicali remain the most competitive, especially for manufacturers who are exporting to the U.S. Though lease rates may be higher compared to other areas, they are still the best option due to lower transportation costs.
In addition to site selection, shelter services in Mexico also include HR and recruiting, taxes and accounting, and trade compliance, among other necessary administrative tasks that are necessary when moving operations to Mexico. This availability of local expertise and experience is invaluable to streamline production setup and maximize opportunities associated with manufacturing in Mexico.
With the support of a shelter services company, U.S. and other foreign companies can significantly save on costs, launch production quickly, and maintain long-term success. Having a proven roadmap of success makes the transition smoother and allows manufacturing leaders to focus fully on production.
Source:
https://www.bloomberg.com/news/newsletters/2023-09-12/mexico-seeks-to-sustain-manufacturing-boom-big-take
When nearshoring to Mexico, there’s the option of setting up a standalone entity or operating under a shelter company. Most U.S. manufacturers agree working with a Mexico shelter services partner is key to their production strategy. However, there are several to choose from, all which may offer similar services and benefits.
Therefore, it’s best to first assess if a shelter model is the most beneficial option and then, decide which shelter company is the best fit. Here are five questions to help make the right choice.
The answer is probably not. For U.S. manufacturers nearshoring to Mexico for the first time, it’s best to work with a shelter services partner. Even industry experts aren’t sure about where to start in terms of site selection, recruiting, and compliance.
All of the administrative responsibilities necessary to launch production are included when operating under a shelter. Plus, it minimizes a manufacturer’s risk and liability of doing business. There is a learning curve when operating in a foreign country, and it’s beneficial to have a qualified team to ensure everything is set up smoothly.
Though some may consider operating as a standalone entity or employing contract manufacturing as a solution, a shelter company provides benefits the other options do not. If maintaining operational and intellectual property control is a priority, then the shelter model is the way to go.
Though a shelter company can also provide Mexico shelter services to standalone entities; ultimately, they still assume all risk and liability without the protection of the shelter umbrella. Additionally, manufacturers that choose contact manufacturing do not maintain full oversight over their production, processes, or property.
A key part in working with a shelter services partner is to improve economies of scale. This is achieved through access to supply chain management and inventory technology that maintains compliance and allows operations to run more smoothly.
In addition, having both U.S. and Mexico trade and compliance experts is necessary to keep current with changing regulations to avoid penalties and avoid setbacks. Usually, U.S. and other foreign manufacturers don’t automatically have the compatible technology or local expertise necessary to operate in Mexico.
Pricing is a key factor when evaluating a shelter services partner. IVEMSA is transparent and offers one price for the full suite of Mexico shelter services. There are no hidden costs or surprise fees, as is often the case with other shelter companies. Therefore, manufacturers can plan and budget according to their specific needs.
Though industry expertise should be assumed with any shelter services partner, a longstanding reputation in the industry helps manufacturers make the connections they need to be successful. With everything from expansive recruiting networks to established government contacts, IVEMSA provides nearly 40 years of shelter services experience and solutions.
Nearshoring to Mexico has been a successful strategy for global manufacturers throughout the years. Though China has historically been the leader in trade with the U.S., there’s been increased competition with Mexico over the past decade. And, it was recently reported Mexico has now surpassed China (and Canada) as America’s top trading partner.
China held steady in the number one spot throughout the 2010s, up until the start of the pandemic. Yet, challenges over the past few years have resulted in a change of heart for many U.S. manufacturers, with more choosing nearshoring to Mexico instead.
In the first four months of 2023, trade between the U.S. and Mexico reached $263 billion without any signs of slowing. With trade activity between the two countries reaching economic highs, the majority of U.S. manufacturers are relying on Mexico shelter services to quickly get them set up for success.
Mexico’s shelter model allows U.S. and other foreign manufacturers to operate in a cost-effective, low-risk way. Plus, manufacturers maintain full control over their equipment, processes, and intellectual property. Whereas, those who outsource production to China are responsible for setting up a Chinese entity, which puts their intellectual property and production quality in jeopardy.
When U.S. operators are nearshoring in Mexico, they have the option of partnering with a shelter company or hiring individual employees/departments. Shelter services in Mexico provide a valuable way for U.S. manufacturers to get an operation up and running without any additional cost. These services include:
Those new to nearshoring to Mexico typically don’t know where to start. Therefore, it’s beneficial to hire a shelter company who has the local expertise and experience. With a full administrative team already in place, it results in a quicker startup time of three to four months, compared to the six or seven months it may take launching production as a standalone entity.
Additionally, shelter costs are estimated to be 30-35% less than hiring their own personnel. There’s also production flexibility so manufacturers can scale up or down as needed. Plus, consulting and collaboration is provided throughout the entire process to help meet companies’ changing needs.
It’s important to note there are a few different ways to launch production when nearshoring to Mexico. Those interested in contract manufacturing are different from those who would benefit from shelter services.
With contract manufacturing, companies don’t retain full control or oversight over production quality and output. It may be an optimal choice for those with a higher product demand than production capacity, but most manufacturers value the benefits of Mexico shelter services to ensure all responsibilities and liabilities are handled.
Source:
https://businessinsider.mx/us-mexico-china-trade-world-economy-changing-2023/?r=US&IR=T
Mexico shelter services began in the 1960s, introducing a way for foreign manufacturing companies to be “sheltered” under the IMMEX program; thereby, reducing the risks and liabilities typically associated with production. For decades, industrial sectors such as automotive, aerospace, medical device, and electronics manufacturing have used shelter services as part of their operational strategy.
These special services are provided by shelter companies and include a range of administrative responsibilities necessary to get production up and running, including site selection, HR and recruiting, and legal, tax, and trade compliance, among other tasks. Since their inception, global companies have reaped the benefits and continued profitable growth while nearshoring to Mexico.
Therefore, understanding the benefits, particularly the cost-saving opportunities, of working with a shelter company gives U.S. and other foreign operators an advantage, as Mexico shelter services help to deliver a valuable, flexible manufacturing solution.
One of the goals of operating under a shelter is to create a more seamless transition to nearshoring in Mexico. Delegating administrative tasks allows company leaders to focus on production while still maintaining full control over all processes and ownership of equipment and materials. Under a shelter company, services include:
These shelter services can be customized to fit the needs of each company and are a cost-effective way to launch production for companies new to Mexico manufacturing.
The majority of manufacturers choose to work with a shelter company due to the extensive list of benefits it provides, such as:
These are a few of the many benefits shelter services in Mexico provide. However, to ensure a shelter company is a good fit, evaluate your processes, goals, and needs, and start by asking the following questions:
At IVEMSA, we offer transparency with shelter services pricing so there are no hidden or surprise costs. Additionally, we work collaboratively with our manufacturing partners to meet their unique demands. We support U.S. and other foreign manufacturers as they transition their operations to Mexico and strategize with them as they continue to grow.
U.S. companies manufacturing in Mexico have been historically successful and continue experiencing strong growth across all sectors. The medical device industry, in particular, has become a hub of production, following in the footsteps of global manufacturers like Medtronic, Stryker, and Johnson & Johnson. With the majority of industrial hubs set up along the border of Mexico, the proximity is conveniently close to California, a leader in the U.S. market for medical devices.
However, growth isn’t limited to a single state. Globally, the medical device industry is expected to grow from $536 billion in 2023 to nearly $800 by 2030. This spike in demand is predicted as a result of a rising number of inpatient admissions and surgical procedures. Also, increased research and development investments have allowed for greater development of technologically advanced products and equipment.
Therefore, U.S. manufacturers want to keep pace with the demand and are looking to medical device manufacturing in Mexico as a key part of the solution.
As medical device innovations become more sophisticated, knowing IP protections will be enforced helps drive further advancement in this sector. USMCA provisions secure intellectual property (IP) and copyright protections, which is an important benefit for manufacturers.
Meanwhile, the industrial workforce in Mexico allows U.S. manufacturers to save on costs without compromising production time or quality. This is especially valuable in the current landscape as millions of U.S. industrial roles go unfulfilled. Manufacturing companies are strategizing other ways to meet their production targets, and labor in Mexico is a cost-effective resource.
Mexico also offers quicker, cost-effective transportation compared to manufacturing in China. Though China has been a reliable source of outsourced production in the past, problems with retaliatory tariffs, delayed supply chains, and challenges with intellectual property rights have caused a shift to manufacturing in Mexico over the past several years.
In order to continually meet market demand, the close proximity between the U.S. and Mexico offers a distinct advantage to keep manufacturers competitive. Medical device manufacturing in Mexico allows companies to get their products to their target market faster while saving on costs.
Another unique advantage of manufacturing in Mexico is working with a shelter company. A Mexico shelter company handles all the administrative tasks necessary to set up production for foreign manufacturers. These tasks include:
Partnering with a shelter company can get a manufacturer up and running in as little as three to four months, nearly half the time it takes as a standalone entity. Furthermore, operating under a shelter company minimizes the risk and liability for U.S. manufacturers operating in Mexico.
Medical device manufacturing in Mexico is becoming increasingly competitive with higher demand. As a result, a rising number of U.S. manufacturers are seeing the benefits of nearshoring to Mexico as a way to save costs and meet market deadlines.
Sources:
https://ustr.gov/sites/default/files/files/Press/fs/USMCA/USMCA_IP.pdf
https://www.fortunebusinessinsights.com/industry-reports/medical-devices-market-100085