News, Insights and Best Practices for Manufacturing in Mexico

Shelter companies allow manufacturers to safely expand into Mexico

01 Aug 2013

Category: Manufacturing in Mexico

In recent years, many U.S. companies have started expanding to Mexico to reduce manufacturing costs and stay competitive in the fabrication sector. With Mexico's close ties to the U.S., it is the top choice to offshore manufacturing for many U.S. businesses. According to The New York Times, many manufacturers are taking advantage of Mexico's benefits by using shelter companies to ensure their employees, production process and transportation services stay safe. While some drug cartels continue to have a presence in certain parts of the country, shelter companies strategically pick safe manufacturing locations for their clients to keep their workforce and operations away from violence. 

Manufacturers look to stay in Mexico
The New York Times reported that many U.S. manufacturers understand that their workers and operations based in Mexico will remain safe from violence. While some companies in other industries would have pulled out after hearing reports of drug cartel activity, The New York Times reported U.S. manufacturers do not ask their workforce to come home, but to stay in the country. 

When accounts of violence in Mexico reached the U.S. in 2011, many companies cited by The New York Times said the developments did not deter their organization from expanding to the country. In fact, Mexico's improving economy, increasing manufacturing sector and close proximity to the U.S. drove the companies to stay in Mexico. 

Bob Cook, president of the El Paso Regional Economic Development Commission, told The New York Times that while cartel-related crime does happen, it is a rare occurrence for a company to be impacted, especially if they take the appropriate measures and utilize a shelter company.

"Central location, great infrastructure, suppliers and labor pool," Cook said. "Those things haven't been tampered with by organized crime."

The New York Times reported that the Mexican economy may pick up even more speed if the country saw drops in drug cartel influence and violence. With the recent capture of drug cartel leader Miguel Angel Trevino Morales and additional law enforcement in many parts of the country, Mexico continues to be a smart investment for U.S. manufacturers. 

Mexico remains the first choice for offshoring manufacturing 
The AlixPartners' "Manufacturing Re-shoring and Near-shoring Outlook Survey" found businesses have increasingly chosen to offshore their production process to Mexico. Of the 116 executives that were surveyed for the 2012 report, 43 percent cited the security of their workforce and factories in Mexico are important to them. This number improved from 2011, when 45 percent reported safety to be important, as violence has dropped throughout the country.

Safety continues to be an essential factor for businesses when they are expanding to Mexico. However, using shelter companies to offshore the production process allows businesses to ensure the security of their workforce and manufacturing process. Shelter companies locate production at specific industry areas, such as Guaymas and Empalme in Sonora and the city of Saltillo in Coahuila, because they understand where factories can be safely located.

The Offshore Group: You Manufacture ... We Do The Rest

Related posts