Three Steps to Setting Up a Foreign Operation in Mexico

Mexico has a rich history of manufacturing success, making it an ideal location for many global companies. With advantages like cost-effective labor, quick delivery lead times, and favorable trade agreements with 50 countries, manufacturing in Mexico is quickly becoming the top choice for international trade. All sectors have benefited from their foreign direct investment in Mexico, including leaders in the automotive, aerospace, and electronics sectors, among others.

Setting up a new foreign operation quickly and effectively is much easier with the help of an experienced shelter services provider. The timeline equals three to four months compared to six to seven months when operating as a standalone entity. Additionally, the shelter structure alleviates the regulatory burden new foreign operators often face, which helps speed up the launch and sets manufacturers up for success.

To get your products to market faster, here’s how IVEMSA, a shelter services provider, can help streamline the setup process.

1. Identify Optimal Site Selection

Each region of Mexico has its own benefits when it comes to setting up a new industrial operation. Factories closest to the U.S./Mexico border are the most popular and competitive, which often leads to higher costs and less availability. To determine the site selection most optimal for each company, IVEMSA will compare and contrast several options through a city comparison matrix to help narrow down the choices.

This includes sourcing the region and building which best fits a company’s specific manufacturing needs. Most Class A buildings in established industrial parks cost approximately USD $0.38 and $0.48 per square foot per month depending on where it’s located and the amenities it provides. Other determining factors include distance to commercial ports, recent foreign direct investment, economic growth patterns, and workforce availability.

Read more: FAQ on Moving Manufacturing from China to Mexico.

2. Establish a Recruitment and Retention Plan

Manufacturing in Mexico has been one of the top drivers of the economy, and one of the key advantages of this is the availability of an industrially skilled workforce. However, because the workforce is competitive, the recruitment strategy is important to entice qualified workers to apply. IVEMSA uses a combination of methods to recruit top talent and filter job applicants to only those most qualified for the position. These include online channels, particularly social media, as well as traditional methods like print and radio advertisements. Additionally, IVEMSA helps manufacturers prepare competitive compensation packages and keep current with market trends to continuously attract and retain loyal employees.

3. Ensure Tax and Customs Compliance Is Met

In addition to site selection and employee recruitment, one of the biggest factors when setting up a foreign operation in Mexico is maintaining compliance. Part of IVEMSA’s full suite of shelter services includes the expertise of an experienced customs broker who can oversee import/export administration.

Tax and payroll responsibilities are also part of the shelter service solution, along with HR, legal, and accounting support. This all helps to minimize risk and liability and reduce the learning curve for foreign companies manufacturing in Mexico.

These are the main steps in setting up a new operation in Mexico, although there are several moving parts of each that make up the process. Working with an experienced shelter services company like IVEMSA creates a seamless experience to take care of everything necessary to get up and running as quickly as possible.

Contact us today to learn more about how we can help you achieve your production goals.