Is Mexico Shelter Manufacturing the Answer to Supply Chain Diversification?

Establishing a strong diversification strategy has become a priority for global manufacturers as supply chain management has shifted, and in some cases, become unreliable.

The effects of the strained trade relationship between the U.S. and China, along with other economic disruptions and logistical delays, have impacted long-term business strategies between the two countries. As a result, Mexico shelter manufacturing has continued to gain momentum as the top choice for American manufacturers.

To mitigate the risks of maintaining a sole reliance on China, more manufacturing leaders are expanding production to Mexico, whether it means moving production altogether or opening another manufacturing facility.

Fortunately, nearshoring to Mexico isn’t a novel idea. In fact, the concept has gained speed over the years with foreign direct investment (FDI) in Mexico hitting a record high of $31 billion in the first half of 2024. $30 billion reportedly came from companies with existing factories in Mexico, while new FDI totaled over $900 million.

Essentially, those setting up production in Mexico are finding success and doubling down on their efforts to continue growth. This includes global powerhouses like Tesla, Honeywell, and AT&T, among numerous others across multiple sectors.

With Mexico’s solid infrastructure and economic growth trajectory, making the move adds resiliency for manufacturing companies that require more cost savings, easier transportation routes, and quicker time to market.

Mexico Shelter Manufacturing Benefits

Logistically, Mexico is already an optimal choice for manufacturers to reach the U.S. market. The proximity, similar time zones, and travel convenience help project managers maintain quality oversight and control over production.

Additionally, Mexico’s IMMEX/maquiladora program was originally set up to encourage FDI and support the global supply chain. The IMMEX program allows U.S. and other foreign factories to set up production in Mexico and temporarily import raw materials and equipment, as long as the finished products are exported within the required timeframe. Once your IMMEX program is VAT-certified, manufacturers are also exempt from the 16% value-added tax.

Another key factor in choosing Mexico as part of diversification strategies is the enactment of the USMCA. The trade agreement favors trade among North American countries with updated rules of origin for automotive products, requirements for higher labor standards, and enhanced IP protections.

Furthermore, Mexico shelter manufacturing helps save on labor and transportation costs, support faster lead times and higher quality, as well as provide greater visibility into the supply chain. A Mexico shelter company handles all the administrative services necessary to launch production, freeing up time for manufacturing leaders to fully focus on processes.

This partnership provides a solution with both short- and long-term benefits, as well as quick start-up time and production flexibility.

Getting Started with IVEMSA

In today’s ever-changing economy, manufacturing leaders must learn to adapt quickly and be proactive regarding the next steps. As more leaders prioritize diversifying their supply chain and exploring new opportunities, their sights are set on Mexico as an affordable, resilient trade partner that will support their production goals.

To learn more about the advantages of nearshore manufacturing, and how a Mexico shelter company like IVEMSA can get your production up and running quickly and efficiently, contact us today.

Sources:
https://finance.yahoo.com/news/foreign-direct-investment-hits-record-110000091.html
https://www.usitc.gov/press_room/news_release/2019/er0418ll1087.htm