Prepare and launch a new manufacturing factory in Mexico
Our client, a Chinese manufacturer of power sports equipment wanted to launch a new manufacturing site outside of China. After successful distribution of their products in Mexico, the decision was made to invest in a facility to better attend the market. Their U.S. headquarters in Minnesota also underwent an expansion, consolidating full sales, marketing, vehicle development, design, parts and accessories, tech support and domestic shipping and receiving departments.
They faced a significant challenge in obtaining the "Made in Mexico" certificate or origin with their current process and supply chain. They wanted their products to qualify for treatment under the USMCA (United States-Mexico-Canada Agreement). Their initial plan was not going to achieve the goal. And that's where PRODENSA stepped in.
This project involved launching their manufacturing facility in Mexico, starting from the selection and negotiation of real estate to establishing work formats and reaching key administrative and foreign trade milestones.
To address this complex set of tasks, the company sought expert guidance to navigate Mexico’s regulatory landscape and to ensure compliance across various areas, including customs processes and labor management. Our team provided end-to-end project management support, helping them differentiate between a cost center and a profit center, while acting as their overhead during the crucial early phases of development. Additionally, we played a key role in helping them establish essential policies for human resources, accounting, and foreign trade.
Their initial plan called for 86-107,000 ft2 for an assembly operation. After multiple changes of the scope, the client ended up renting two buildings within an industrial park in northern Mexico, totaling 400,000 ft2 that housed their multiple production processes. As part of the negotiation, an adjacent plot of land within the same park was set aside for future development.
In early 2023 the company expanded their operation into a nearby 278,000 ft2 building that currently houses warehousing and plastic injection processes.
A large part of PRODENSA's real estate strategy was to provide flexibility and agility, and the company still has an option plot set aside.
The primary challenge in the real estate strategy was the evolution of the project alongside the consulting that PRODENSA provided. As the project developed, it had to drastically change in order to meet initial goals. The client's initial idea was not feasible, but the alignment of PRODENSA's trade compliance consulting with the real estate and project strategy was essential to meeting the timeline.
Scope of the project:
The project started with a PRODENSA Feasibility Analysis to determine the viability of the project and the budget. The analysis took the client business strategy and compared multiple models for operating in Mexico. The goal was to:
Part of PRODENSA's Feasibility Analysis included an analysis of the trade strategy. The client sought to source enough local material to comply with USMCA rules of origin, with their products destined for the US market. The goal was:
The client leveraged PRODENSA's start-up support to successfully launch their operations in Mexico. Aligned with their business and trade strategy, as well as the real estate and construction plans, PRODENSA’s project management team efficiently streamlined the operation’s launch and ramp-up. Working closely with the client, PRODENSA co-developed policies and frameworks tailored for their Mexican operations. The hands-on consulting provided essential data and expert recommendations, enabling the client to make informed decisions while exploring various options. PRODENSA's comprehensive start-up service achieved key operational milestones, transitioning the project smoothly to the client's newly hired and trained workforce.
