How Working with a Mexico Shelter Company Helps Manufacturers Optimize Cost Savings

Nearshoring to Mexico comes with its own built-in benefits compared to operating in the U.S. or China. Lower labor costs and lease prices, as well as unique tax exemptions, are the main areas where manufacturers can save.

Moreover, partnering with a Mexico shelter company can expand upon these advantages, resulting in even further cost savings and benefits. Here’s how:

Lower Labor Costs

Mexico’s competitive labor market is one of the key reasons why U.S. and other foreign manufacturers set their sights on nearshoring to Mexico when they want to expand. With a highly skilled workforce to recruit from and a lower cost of labor, operators can fulfill the technical roles they need while reducing their expenses.

Additionally, when working with a Mexico shelter company like IVEMSA, manufacturers can save thousands of dollars in monthly costs associated with HR management and payroll, and labor compliance, among many other administrative responsibilities necessary for production setup.

Competitive Lease Prices

U.S. manufacturers also benefit from competitive lease prices in Mexico. Industrial leases are approximately $.70 per square foot per month for Class A buildings. These are well-constructed facilities in state-of-the-art industrial parks located near main transportation routes for convenience.

Furthermore, thanks to the close proximity between Mexico and the U.S. market, manufacturers can save on shipping expenses compared to operating in China. Also, as the competition spikes to find viable industrial space, shelter services in Mexico can help manufacturers cut down on costs and maximize resources when choosing a site.

Shelter services start with the site selection process, which involves a matrix of potential factories in Mexico based on the company’s specific needs. A shelter company works within a manufacturer’s budget and limits the legwork of visiting multiple sites. This accessibility to local expertise and experience creates a more seamless transition when securing a project site and setting up operations.

IMMEX Program Tax Exemption

The IMMEX program was first introduced as a way to entice foreign manufacturers to invest in production in Mexico. Since then, it has helped global leaders expand their companies and receive unique tax benefits.

Those approved under the IMMEX program are exempt from the 16% value-added tax (VAT) on all temporarily imported equipment, materials, and raw goods being used for production. However, it can take several weeks, possibly months, before a standalone entity is approved.

Whereas, manufacturers operating under the shelter model can take advantage of these tax benefits from day one since all permits and certifications needed to operate are already in place.

Safest and Most Cost-Effective Way to Operate in Mexico

For those operating in Mexico for the first time, the learning curve can be steep, which is why the majority of manufacturers choose to work with a Mexico shelter company. Shelter services include HR, accounting, taxes, trade compliance, and more.

By delegating these tasks to a shelter company, manufacturers can fully focus on production and maintain ownership of all equipment, processes, and intellectual property rights. It also allows for a quicker timeline of three to four months before production is launched, which is nearly half the time needed for setup as a standalone entity.

It’s a competitive landscape, and manufacturers are always looking for ways to enhance their efficiency and cut down on costs. Nearshoring to Mexico is a strategic solution that achieves both of these goals and has proven successful for U.S. and other foreign manufacturing companies for decades.

To learn more about the benefits of working with a shelter company, contact IVEMSA today.