Getting Started: What to Consider During the Site Selection Process

Though China has been the leading trading partner of the U.S. for decades, manufacturing in Mexico has steadily become the more favored strategy. And, in 2023, Mexico replaced China, taking over the top spot.

With a convenient proximity to the U.S., in addition to a skilled labor pool, among other benefits, it’s no surprise to see the shift in leadership. There are several manufacturing hubs already set up throughout Mexico, ready for the influx of new U.S. companies, though each area has different advantages.

Site selection is the priority when considering Mexico manufacturing solutions, but where to begin? Here are key factors to consider when choosing a location and facility that best suits your company’s needs and how the support of a shelter company can help.

Logistics

The close proximity between the U.S. and Mexico is one of the driving forces of the increase in manufacturing in Mexico. It’s a strategic advantage to get products to market quicker and with fewer transportation costs. The border region, in particular, remains a hotbed of activity, with Tijuana, Mexicali, Juarez, Saltillo, and Monterrey among the most competitive areas in the country.

However, currently, the region with the quickest growth is Monterrey, which delivers the promise of worker availability, while still maintaining less expensive transportation costs compared to outsourcing production to China. Specific logistics to consider during the site selection process include:

● Transportation networks
● End-market proximity
● Infrastructure developments
● Supply chain availability

Throughout Mexico, there are already industry-specific clusters with buildings set up for different sectors. For instance, Chihuahua, Saltillo, and Nuevo Leon have a strong automotive presence, while Baja California, Sonora, and Queretaro are key areas for aerospace manufacturing. Choosing a facility in an already established area helps to quickly identify supply chains and transportation routes.

Labor

Historically, Mexico has been recognized for its cost-effective labor rates and high-quality technical talent. This combination has become a welcome solution to American manufacturing leaders who have recently been faced with a shortage of industrial workers capable of fulfilling their production roles.

Fortunately, manufacturing is the leading industry in Mexico, with continued investment in advanced education and specialized training in various sectors. The availability of workers varies from location to location, and due to the growing worker demand in Mexico, U.S. and other foreign manufacturers may face higher than average turnover rates if they don’t prepare the right strategy for recruiting, benefits offered, amenities, building location, and employee transportation. This is why it’s extremely important to choose the right HR strategy partner in order to minimize your turnover.

Though the cost of labor is lower than in the U.S., manufacturing companies must be prepared to offer competitive compensation packages, including premium benefits and satisfactory working conditions. A shelter company can help with recruiting, hiring, onboarding, and retention of employees to secure qualified talent in the chosen location.

Operating Costs

In addition to logistics and labor considerations, evaluating and comparing differences in operating costs among different regions in Mexico also affects the final site selection decision. These include but aren’t limited to:

● Lease rates
● Utilities including electricity, water, and waste management
● Specialized infrastructure needs
● Customs compliance

Operating costs are further determined by company size, product volume, and the proximity to the U.S. market. A shelter company like IVEMSA has the local data, insight, and expertise to help guide decisions based on what each company requires both in the short-term and as they expand.

Site Selection Services Through a Shelter Company

Site selection is a key part of a comprehensive shelter services solution. IVEMSA will create a site selection matrix to compare costs, benefits, and any potential challenges for the areas being considered. This provides company leaders an overview of which region will be most beneficial; thus, saving time, money, and resources on research.

Additionally, once a site is confirmed, additional shelter services will help manufacturers get their production up and running in a matter of months. This includes all the necessary administrative responsibilities required to launch production, such as recruiting and hiring labor, establishing permitting and trade compliance, and implementing tax and accounting expertise.

Even if you’re in the beginning stages of considering manufacturing in Mexico, let IVEMSA help you decide the best place to set up. Learn how our site selection analysis and shelter company can benefit you.

Contact our team today.