In the competitive arena of global business expansion, have you considered how Mexico's shelter services could be the pivotal factor in transforming your industry's success?
Understanding Shelter Services in Mexico
Shelter service providers in Mexico offer a unique solution, empowering foreign companies to quickly and effectively establish operations as a compliance and project management partner. By managing complex regulatory landscapes, labor laws and infrastructure challenges, these service providers in Mexico allow manufacturers to focus on what they do best - running their core operations.
Shelter services in Mexico provide varying startup methodologies and scopes, depending on the provider. These services can encompass real estate and construction, permits and trade programs, project management and consulting, as well as all of the back-office activities related to running a business: finance, taxes, recruitment, health & safety, import/export, etc.
Automotive Industry
The automotive industry is the cornerstone to North American collaboration. It accounts for 22% of the trade under the USMCA (United States-Mexico-Canada Agreement). The region produced 16.1 million vehicles in 2023 with Mexico contributing nearly a quarter of the total. Estimates vary but about 38% of the value of a vehicle made in Mexico and exported to the U.S. come from American-made parts. The industry is of great importance to the region.
The Growth Story
Mexico's automotive sector has been thriving, becoming a pivotal hub for global manufacturers. From BMW to General Motors, the influx of automotive giants is no coincidence but a result of strategic advantages offered by the region. Today, the industry is in transformation to EVs and a number of investments are being implemented. Directorio Automotriz reports 8 EV OEMs in Mexico as of July 2024.
The Role of Shelter Services
By streamlining compliance with labor and safety regulations, shelter services ensure that manufacturers can set up operations swiftly. For instance, aligned with the USMCA, the rapid response mechanism, was created to protect workers' rights in North American facilities. The RRM allows the US government to impose penalties on facilities that deny workers' rights, such as the right to collective bargaining and freedom of association. The importance of a local partner that can implement strategies designed to comply with both the Federal Labor Law in Mexico as well as the USMCA can be crucial to mitigate the risk of closure or fines.
Aerospace Industry
In fact, for the first time Mexico overtook China as the top importer of advanced technologies (with include aerospace, advanced materials, electronics, etc). Mexico's aerospace industry exports have grown 14% annually over the past years. About 80% of Mexico's aerospace exports enter the U.S. market.
Rising Aerospace Hubs
States like Baja California, Sonora, Querétaro, Chihuahua and Nuevo León are burgeoning aerospace hubs, backed by a skilled workforce and favorable conditions. The national industry employs over 60,000 workers throughout about 380 facilities.
Navigating Complexity
The aerospace sector requires navigating complex regulatory environments and securing certifications. Shelter services provide a roadmap through the maze of regulations, helping companies meet stringent industry standards. Bombardier, for example, has thrived in Mexico partly due to these invaluable services.
With new a new duty regime in 2023, imports of steel, aluminum, chemicals, electrical equipment and more, saw an increase of 25% on rates. For aerospace companies manufacturing in Mexico, the changes mean increased costs on imported materials and components unless they qualify for special programs like IMMEX or PROSEC, which can help mitigate some of the tariff impacts. Shelter service providers in Mexico can provide the consulting expertise to navigate the options and prepare for subsequent changes.
Electronics and Electrical Manufacturing
The electronics industry is North America highly integrated with Mexico exporting over $100 billion dollars annually - 86% of that destined for the United States. Mexico is the leading producer of flat screen TVs, and is second only to China on overall import to the U.S.
In fact, the electronics sector has been highlighted for efforts central to the Circular Economy, which aims to drive sustainable production by emphasizing product longevity, reuse, and recycling. This is a trilateral initiative and is only possible due to the high degree of collaboration and cooperation in the region and industry.
Proximity Advantages
Estimates show about 400,000 workers in the electronics sector in Mexico, with high integration into automotive and appliance industries. The electronics manufacturing industry needs to achieve continuous technological advancement. This industry is characterized by rapid technological change, and manufacturers must constantly innovate to stay competitive. One such advantage of Mexico's electronic industry is the proximity to R&D operations both in the US as well as throughout Mexico.
With reduced tariffs under trade agreements and proximity to the U.S., electronics manufacturing in Mexico is expanding. Nearshoring is expected to continue growing, but the extent of that growth is highly dependent on the 2026 USMCA review.
Bridging Regulatory Gaps
Innovation in the electronics sector brings with it the need to maintain agile supply chains. For small and medium electronics manufacturers, shelter services in Mexico has provided the support needed to ramp up production fast and meet new opportunities.
Read the Case Study of how an Asian electronics manufacturer established their operations in record time - even despite COVID-19 travel restrictions.
Medical Device Manufacturing
Mexico accounts for 3-4% of all medical device manufacturing worldwide, and is the primary exporter of medical products to the United States. The medical device industry in Mexico has evolved into a dynamic and indispensable player in the global healthcare landscape. With diverse production capabilities, strategic clusters, a skilled workforce and a commitment to innovation, Mexico continues to attract major multinational corporations seeking a competitive edge in the production of medical devices.
A Leading Destination
Mexico's reputation as a leading destination for medical device manufacturing is well-earned, thanks in part to its strategic location and cost-effective operations. Most of the top medical device manufacturers operate in Mexico, including Medline, Philips Healthcare, GE Medical, Becton Dickinson, Johnson & Jonson and more.
Mexico is the world leader for the production of pacemakers, syringes, sutures, and surgical needles. Mexico is also home to the innovative, intravenous catheter known as the “butterfly”, which is used globally (ANAPS).
Ensuring Compliance
Adhering to strict industry regulations and quality standards is non-negotiable. In Mexico, about 70% of the medical device factories operate in controlled environments. In fact, Mexico is the global leader in FDA, CE and ISO 13485 certified manufacturing facilities.
Shelter services in Mexico provide strategic support, ensuring compliance with programs like IMMEX, which many medical device companies leverage successfully.
Consumer Goods in Mexico
The consumer goods sector in Mexico encompasses a diverse range of products, from food and household items to appliances, furniture, and apparel. Companies of all sizes, both domestic and international, manufacture goods in Mexico to serve a growing domestic market and for export to major markets across Latin and North America.
Expanding Production Capabilities
Mexico’s production of consumer goods is not only robust but rapidly expanding. The complexity of these supply chains is driven by the variety of products and materials involved, many of which are sourced globally. As a result, proximity to both suppliers and final markets is crucial for manufacturers aiming to respond quickly to evolving consumer demands. Additionally, companies in this sector must balance rapid production cycles with stringent quality and safety standards, making operational efficiency a top priority.
Managing Supply Chain Complexity
To manage these complexities, companies often rely on shelter services, which streamline labor-intensive operations and logistics. Leading corporations, have leveraged these services to strengthen their presence in the region. For manufacturers, keeping the supplier base close to production sites is vital to maintaining competitiveness, and shelter services help smaller suppliers remain agile and capable in this demanding industry.
This clear integration of production, proximity, and strategic management allows Mexico’s consumer goods sector to thrive, meeting both local and international demands with agility and precision.
Key Challenges in Industry Expansion
Site Selection
Identifying the right location is crucial, and shelter services offer deep insights into potential sites, factoring in logistics, workforce availability, and proximity to markets. Mexico is vast and the landscape varies greatly.
Download the free e-book The Ultimate Site Selection Guide in Mexico for additional context and tips.
Feasibility & Incentives
Analyzing feasibility and securing governmental incentives can be daunting. There are a number of operational models that vary in factors like tax impact, agility, and sales. However, with expert guidance, businesses can make informed decisions that align with long-term strategic goals.
Governmental Relations
Navigating governmental relations requires expertise, and shelter providers act as vital intermediaries, ensuring smooth interactions and compliance. The lure of newly defined economic zones and development incentives should be weighed against the practical approach to growing a business footprint in the country. Identifying barriers to the growth strategy is an important step to overcoming them.
Conclusion
Shelter services in Mexico provide a strategic advantage across various industries, from automotive to consumer goods. For international business executives eyeing expansion, these services offer not just a pathway but a strategic partnership in navigating the complexities of entering or expanding in Mexico’s flourishing industrial landscape.
Key Takeaways:
- For automotive manufacturers, shelter services in Mexico can provide constant support in crucial USMCA compliance, especially in the areas of labor management.
- Shelter services support aerospace companies navigate complex regulatory environments, ensuring compliance with certification requirements to reduce import costs.
- With constant innovation, electrical manufacturing companies must be agile and shelter services in Mexico provide the support to ramp-up production quickly to meet new opportunities.
- Shelter services provide crucial regulatory support, helping medical device companies comply with global certifications as well as position themselves in markets with the best talent available.
- In the consumer goods industry, shelter services optimize diverse supply chains and production networks, enabling them to meet demand efficiently why ensuring proximity to suppliers and end markets.
Are you ready to leverage Mexico's shelter services to transform your business? Join the ranks of global leaders who have already taken the plunge. Engage with us today and explore how we can help you capitalize on these opportunities.
