News, Insights and Best Practices for Manufacturing in Mexico

Mexico Shelter Services Offer Simple Start-Up Options

10 May 2012

Category: Manufacturing in Mexico

Companies looking to start and maintain manufacturing facilities in Mexico have discovered seeking shelter is a smart way to plant roots.

As a project manager for The Offshore Group in Saltillo, Leonard Ottosen would be an ideal first stop for executives contemplating a Mexico shelter services operation. Ottosen works with prospective manufacturing companies considering shelter services, ensuring that they are confident that they will have the reinforcement – laborers, venue and vendors, for starters – to build operations in Mexico.

After a contract for shelter services in Mexico is signed, Ottosen continues as a liaison between the newly established manufacturer and the shelter company, providing vital support to help to guarantee the building of a thriving Mexican operation, including utilities setup, avoidance of unnecessary taxes and EPA compliance assistance.

The time it takes to set up a manufacturing operation in Mexico varies, Ottosen says.

“For example, if it’s a general-assembly operation, manufacturers may be looking at an average of two months to get things going,” he explains. “If it’s a company with machined parts, stamping, break presses, this kind of operation requires more installation processes and a start-up period in Mexico between four to six months.”

A lot of the time frame depends on the speed at which the company wants to establish its Mexico manufacturing project, Ottosen adds.

“For example, a metal-stamping operation might need to move quickly,” he notes. “We will put more people in place to make the process installation happen faster. When a company visits (industrial park operation) The Offshore Group’s Manufacturas Zapalinamé for the first time, they understand our capabilities. When they sign a contract, we hire specific contractors in Mexico that will help them make things happen.”

The Offshore Group’s Mexico Shelter Plan offers autonomy and flexibility to nearshore manufacturers seeking their niches in the aerospace, automotive, electronics, metal fabrication and other manufacturing industries. With The Offshore Group managing non-core functions of Mexico manufacturing, its clients can fully concentrate on their fields of manufacturing expertise while reducing total landed costs.

Mexico continues to draw attention as a viable and attractive manufacturing venue, due in part to low landed costs, inexpensive labor and proximity to the States. It ranks competitively in its pursuit of low- and no-tariff trade, and its 12 free-trade agreements that cover 44 countries – including the United States – place more than 90 percent of its commerce under free-trade agreements.

And, for companies pursuing leveraged-growth strategies, the Mexico shelter business model is particularly attractive because a manufacturer absorbs only a portion of additional overhead that such expansion requires.

Ottosen, who has helped nearly 20 companies establish their Mexico manufacturing presences, has advice for those just beginning their research:

“Mexico is a different country with a different culture and different ideas. This is not rocket science, but you have to be aware of how things need to be managed differently in Mexico,” he notes. “We will do everything that is in our hands to avoid problematic issues, and will help our clients to perform as well, or even better, than at their home office.

“In summary, a company needs to understand that Mexico is another country, but that it is a good place to manufacture profitably.”

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