Ten Questions for Choosing a Mexico Manufacturing Site

When a foreign manufacturer decides to launch production in Mexico, the first thing they must do is secure a facility and sign a lease. Though there are numerous industrial hubs set up throughout Mexico, the challenge is establishing the best fit.

To factor in all the important considerations, from logistics and labor to competitiveness and costs, here are the top 10 questions manufacturers often ask to help them reach a decision.

1. Should I set up along the border or inland?

It depends on the market and where your target audience is. For instance, the labor market will be more cost-competitive inland but will be more skilled and specialized at the Mexico/U.S. border. However, there may be higher costs for shipping inland to consider.

Also, if exporting to a U.S. audience, a manufacturing site near the border makes the most sense. However, if you’re using a port or shipping to South America, an inland site is going to be more convenient and less costly transportation-wise.

2. Is manufacturing in Mexico set up by sector?

There are multiple sectors, including automotive, aerospace, and medical device manufacturing, present in the main industrial areas in Mexico. It’s best to go where your sector is already established because there will be the infrastructure, supply chain, and workforce to support your specific production demands.

3. Where is the best area to recruit labor?

In general, Mexico is known for its highly skilled labor pool and each region has worker availability for a range of positions. Many manufacturers choose to set up production near technical schools. Often, these schools offer training programs in collaboration with U.S. and other foreign manufacturing companies to recruit workers as they graduate.

4. Do all manufacturing sites cost roughly the same?

No. Every manufacturing company has specific production demands and budgets to work with. Some prioritize keeping costs at their lowest and certain areas will have facilities that are a better fit for that.

Whereas, other manufacturers are willing to pay more money for premium space. Knowing up front how much you’re willing to spend will help narrow down the options for your site.

5. What should be the main driver?

There are several factors manufacturers consider when choosing a site. Cost, proximity to the target market, and workforce availability are some of the most common.

It’s important to prioritize the order and compare sites to consider where you may want to compromise. For example, if you decide your main driver is to be closer to the U.S. audience, you may be willing to pay a higher cost to secure a manufacturing site near the border.

6. What is the infrastructure of the area?

As manufacturing in Mexico continues to grow, so does the availability of new areas. Certain areas like Tijuana have a strong, established presence which also makes securing a manufacturing site highly competitive.

Whereas, other areas of growth like Monterrey may have more opportunity to scale long-term. Higher demand often leads to limited space at higher costs which makes it beneficial to look beyond the border.

7. What is the quality of life?

To recruit and retain talented workers, it’s necessary to choose a manufacturing site near popular areas. This includes factoring in the cost of living, ease of commuting to work, and level of extracurricular activities available.

Younger workers especially are going to go where the compensation and quality of living is most lucrative which factors into the final site selection decision.

8. What is the cost of buildings?

The cost of Class A buildings ranges from $0.65-$.0.75 per square foot per month, depending on location. Manufacturing facilities located closer to the border are often costlier while those in central regions may be less expensive. The amount of space and amenities needed will determine the final price.

9. Should I work with a shelter partner?

Partnering with a local expert is beneficial to save time, costs, and stress in securing a manufacturing site. A shelter company helps U.S. and other foreign companies narrow down their site options and secure a lease based on their unique production criteria.

10. What does a site selection matrix entail?

A site selection matrix simplifies the process by comparing viable industrial areas and buildings based on a manufacturing company’s profile. It provides information in side-by-side comparison regarding transportation routes, lease costs, workforce availability, and other factors that will help manufacturers decide which will suit them best.

Final Step: Site Visits to Secure a Space

After all the standard questions are answered and a site selection matrix has been reviewed, manufacturers can narrow down their top contenders. A shelter company will then set up site visits to see in person whether or not it’s the right fit.

At IVEMSA, we don’t decide for manufacturers regarding where they set up their production site. Our goal is to provide transparency and the most up-to-date information so clients feel confident in their decisions.

Learn more about how we can help you choose the best site and get your production up and running as quickly as possible. Contact IVEMSA today.

Source:

https://usafacts.org/articles/who-are-the-uss-top-trade-partners/