Why U.S. Manufacturers Choose Mexico Shelter Services When Nearshoring

Nearshoring to Mexico has been a successful strategy for global manufacturers throughout the years. Though China has historically been the leader in trade with the U.S., there’s been increased competition with Mexico over the past decade. And, it was recently reported Mexico has now surpassed China (and Canada) as America’s top trading partner.

China held steady in the number one spot throughout the 2010s, up until the start of the pandemic. Yet, challenges over the past few years have resulted in a change of heart for many U.S. manufacturers, with more choosing nearshoring to Mexico instead.

In the first four months of 2023, trade between the U.S. and Mexico reached $263 billion without any signs of slowing. With trade activity between the two countries reaching economic highs, the majority of U.S. manufacturers are relying on Mexico shelter services to quickly get them set up for success.

The Unique Advantage of Mexico Shelter Services

Mexico’s shelter model allows U.S. and other foreign manufacturers to operate in a cost-effective, low-risk way. Plus, manufacturers maintain full control over their equipment, processes, and intellectual property. Whereas, those who outsource production to China are responsible for setting up a Chinese entity, which puts their intellectual property and production quality in jeopardy.

When U.S. operators are nearshoring in Mexico, they have the option of partnering with a shelter company or hiring individual employees/departments. Shelter services in Mexico provide a valuable way for U.S. manufacturers to get an operation up and running without any additional cost. These services include:

• Site selection and utility setup
• HR, payroll, and accounting services
• Permitting, licensing, and customs administration
• Legal, government, and tax compliance

Those new to nearshoring to Mexico typically don’t know where to start. Therefore, it’s beneficial to hire a shelter company who has the local expertise and experience. With a full administrative team already in place, it results in a quicker startup time of three to four months, compared to the six or seven months it may take launching production as a standalone entity.

Additionally, shelter costs are estimated to be 30-35% less than hiring their own personnel. There’s also production flexibility so manufacturers can scale up or down as needed. Plus, consulting and collaboration is provided throughout the entire process to help meet companies’ changing needs.

It’s important to note there are a few different ways to launch production when nearshoring to Mexico. Those interested in contract manufacturing are different from those who would benefit from shelter services.

With contract manufacturing, companies don’t retain full control or oversight over production quality and output. It may be an optimal choice for those with a higher product demand than production capacity, but most manufacturers value the benefits of Mexico shelter services to ensure all responsibilities and liabilities are handled.

We’re here to help U.S. and other foreign manufacturers reach their production goals. Talk to our team about our shelter services and if our model is a good fit for you. Contact IVEMSA today.

Source:
https://businessinsider.mx/us-mexico-china-trade-world-economy-changing-2023/?r=US&IR=T