News, Insights and Best Practices for Manufacturing in Mexico

Increase employee retention with shelter company assistance

19 Aug 2013

Category: Labor & Economics, Manufacturing in Mexico

U.S. businesses can run into many challenges when they decide to expand into Mexico without the aid of an offshore shelter company. From finding a location for the factory building to developing the logistics process, manufacturers can see issues arise when they offshore independently. One of the biggest problems that can occur is high employee turnover. With many organizations choosing to offshore their production process to Mexico to benefit from its skilled labor force, worker retention is crucial to maintaining low cost manufacturing.

The challenge of acquiring and retaining experienced labor
Expanding to Mexico can be tricky without the proper assistance, and one of the issues most likely to erupt is high employee turnover. Finding top workers takes time and financing, which may be different in Mexico than in the U.S. When businesses aren't familiar with Mexican labor policies, practices and management preferences, Mexican staff may not feel loyal to the company and choose employment elsewhere. 

In the research paper "Understanding Employee Turnover Patterns in Mexican Maquiladoras" by Eric Romero, owner of Intrepid Consulting, and Kevin Cruthirds, assistant professor of management at Nicholls State University, the authors examined the labor practices of a large U.S. manufacturer's plant in Mexico. According to the paper, on-site research found Mexican workers often leave their employment after only a short amount of time, from a few months to a couple of years. In fact, many manufacturers were found to have yearly turnover patterns, some of which changed over around 80 percent of their workforce. This can be the result of employees not receiving the training they require to adequately perform their jobs and ineffective recruitment and management practices by U.S. business owners. 

Shelter companies not only understand the country's labor laws, but how to effectively recruit and retain Mexican staff. While the Mexican workforce is highly experienced in manufacturing, many U.S. businesses may believe they don't need to train staff as much as they would in the U.S. However, shelter companies understand the need for continued education.

U.S. managing and hiring practices often don't translate to Mexican workers because of cultural differences, as well. According to the paper, some manufacturing environments don't allow workers to interact due to poorly designed factory layouts. When manufacturers don't use an experienced shelter company, they may use U.S. plant designs, which may not be optimized for the production process in Mexico, causing personnel issues. 

Experienced shelter companies are able to provide all new hires with an orientation, to counsel workers, to resolve any disputes and to monitor the workforce's performance. When U.S. businesses are able to receive insight into how their workers are performing and if any issues are arising before turnover happens, they are able to avoid having to find more employees. Higher worker retention is crucial to keeping manufacturing costs low in Mexico, and shelter companies offer businesses the experience they need to retain top talent. 

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