News, Insights and Best Practices for Manufacturing in Mexico

Sheltering companies can help Mexican offshoring

15 May 2014

Category: Manufacturing in Mexico

The concept behind expanding to Mexico and constructing a factory at lower price than in the U.S., and then hiring capable laborers to work at a fraction of the U.S. cost might sound like a dream come true for many manufacturing firms, but the fact is that it can be daunting for some. A story in The HR Director recently spoke to this phenomenon. There are so many barriers to entry in the Mexican market. There are cultural issues, concerns (real or not) about quality, theft and perceptions of security. Even so, the offshoring benefits can be great indeed.

A way to solve this problem is through hiring an offshore sheltering company. Such a company has lasting experience with these matters. It can go through every issue with a company like a checklist, pointing out the best places to work, and confirming that Mexico is safe and that the local workforce does quality work. The shelter will also provide a cultural buffer-zone, with native Spanish-speakers working together with native English-speakers to get the job done.

According to The HR Director, planning is everything. It is the key to a successful offshoring program. Companies need to work hard to ensure they are keeping on track for growth. This is another reason why working with an offshore shelter can help. Offshore shelters can do the planning for a company - as much or as little as it needs.

Benefits of offshoring to Mexico
One of the benefits of building a maquiladora in Mexico is the country's many trade agreements. The Trans Pacific Partnership Agreement (TPPA) includes the following countries: Malaysia, Singapore, Philippines, Vietnam, Brunei Darussalam, Japan, Australia, New Zealand, America, Peru, and Chile. Mexico can trade with any of those countries very easily because of its connection to two major oceans: the Atlantic and the Pacific.

Market Oracle (MO) analyzed the TPPA in a recent assessment, comparing it to the North American Free Trade Agreement (NAFTA), which also includes Mexico and the U.S. While it is common knowledge that Mexico improved greatly through NAFTA (MO points to Mexico's Consumer Price Index), MO argues the U.S. benefited from the trade agreement as well, with Gross Domestic Product increasing about 30 percent since NAFTA's introduction.

The advantages of NAFTA include maquiladoras, or offshore manufacturing sites, which have helped Mexico greatly and improved the bottom lines of American companies. It is likely that similar trade agreements with other countries will promote trade and encourage further offshoring in Mexico.


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