Where to Start with Nearshoring to Mexico

Nearshoring to Mexico has been a key strategy for decades as U.S. and other foreign operators search for ways to reduce manufacturing costs. However, for those considering expansion for the first time, getting started may feel overwhelming. That’s why it’s beneficial to employ the help of a shelter company in Mexico.

They can help break down the process step by step and tackle the administrative responsibilities necessary for launch so you can solely focus on production. To get started, it requires finding a facility and setting up various administrative departments, among other responsibilities. Here’s an overview of where the nearshoring process begins and how a shelter company can help.

1. Site Selection Analysis

As the first step in the nearshoring setup, there are several factors to consider when choosing the right manufacturing site. These include pinpointing the optimal geographical location, as well as the appropriate building selection. Working with a shelter saves time and research when narrowing down optimal sites. During site selection, IVEMSA helps with:

• Negotiating and preparing the lease agreement
• Quoting and selecting the proper building insurance
• Quoting layout design services, civil construction services, and contractor(s) for building improvements and IT
• Utilities services permits and hookup

IVEMSA also appoints a dedicated purchasing agent, project manager, and executive relocation support for the first six months to help launch production. Additionally, shelter services include a cost analysis regarding project overhead and payroll, potential import/export duties, and other cost factors to give manufacturers an idea of expected expenses.

2. Administrative Setup

Once a site has been secured, the administrative setup can begin. To operate as a foreign entity in Mexico, manufacturers must register their company with various government offices, including the IMMEX program. IMMEX program certification is essential for exemption of the 16% VAT on all  temporarily imported goods, materials, and machinery needed for the manufacturing process.

A shelter already has the proper permits and certifications, as well as built-in accounting, HR, trade compliance, and legal departments. They also have a network of suppliers for various services, including trash collection, security, and office equipment, among others. And as the startup timeline continues, a shelter helps manufacturers execute equipment importation, training and onboarding workers, and finalizing improvements quoted for the building in order to enter the operation phase.

3. Production Launch and Ongoing Management

Many of the setup requirements when nearshoring to Mexico occur simultaneously to streamline efforts and achieve a speedier production launch. For a standalone entity, this can take six to seven months. Whereas, with a shelter, the time is reduced in half to three to four months. IVEMSA handles all administrative responsibilities as well as assists with the ramp of the first export of finished goods. Other benefits of Mexico shelter services include:

• Minimized risk and liability as a foreign entity operating in Mexico
• Reduced labor, infrastructure, and permitting costs
• Flexibility to tailor services when scaling production

Though nearshoring to Mexico isn’t as simple as 1-2-3, the transition is made easier with the knowledge and experience of local manufacturing experts. To learn how our shelter services can help you meet your production goals, contact IVEMSA today.