Manufacturing in Mexico
Manufacturing in Mexico
Manufacturing in Mexico
Manufacturing in Mexico
Manufacturing in Mexico
Manufacturing in Mexico












 
Executive Summary

What is a Maquiladora (in-bond operation)
What is a Shelter Program
Which companies are suitable for a shelter program
Why establishing an off-shore operation in Mexico
Top advantages of establishing an off-shore operation in Mexico
Which are the best locations in Mexico to establish an in-bond operation
How can Intermex help in this process
Why working with Intermex
Costs of my operation if manufacturing in Mexico
Who should I contact


1. What is a Maquiladora (in-bond operation)
Maquiladoras are Mexican corporations that assemble imported components for export to other countries (usually the U.S.). Maquilas have special privileges that make them attractive to an offshore manufacturer, some of them are: duty reduction incentives, temporary import of raw materials and equipment without duty and simplified customs procedures among others.

There are a variety of support services that are needed by the maquila operations (logistics, customs, environmental, human resources, relocation services and legal and accounting services) that can be more effective provided by Mexican companies who have knowledge of their community and culture.


2. What is a Shelter Program
The "Shelter" program is designed for foreign manufacturers that need a rapid access to the advantages of operating under a maquiladora, but:
without loosing control over the manufacturing processes,
without performing costly investments and,
without having legal presence in the country.

Shelter plans are still the most popular and effective method of establishing an assembly site in Mexico today.



3. Which companies are suitable for a Shelter Program
The Shelter plan is used in Mexico by important transnational companies such as Philips, Siemens, Sumitomo and ATT, as well as small and medium producers from the US, Asia and Europe.

The most likely prospects for a shelter program would be:
Companies that do not have the strong capital and human resource investment backup to start a manufacturing operation in Mexico by their own,
Companies that wish to learn about manufacturing in Mexico before switching to a stand-alone operation,
Companies that are required by their customers to bring their product next to their manufacturing plant,
Companies that have customers in Mexico but do not have off-shore experience,
Companies that wish to reduce their costs without having to send operations overseas,
Companies that want to take advantage of the NAFTA and other Free Trade Agreements Mexico subscribes,

There are a variety of support services that are needed by the maquila operations (logistics, customs, environmental, human resources, relocation services and legal and accounting services) that can be more effective provided by Mexican companies who have knowledge of their community and culture.



4. Why establishing an off-shore operation in Mexico
Many companies choose to transfer production to other countries to be close to related suppliers and customer sites. There are geographic and business advantages related to having a presence near key technological centers. Other benefits often include cost reduction advantages related to reduced labor and the overall cost of doing business.

As a common interest in reducing the production costs, many companies have to choose between manufacturing in Asia, Europe or Mexico.

When production/lean cells and production systems are configured correctly, the lead-time from time of schedule change to receipt of new product at EOM/distributor site can be one week, or less, with normal ground transportation. While this requires pre-planning for inventories and supply chain responsiveness, one week lead-times are very normal from Mexico.

While Asian and European suppliers are very motivated to receive new business, the ocean vessel container shipping lead-times, even when using a shipping broker, are normally planned at 4 weeks. This can be, on occasion, improved to 3 weeks, but for most outsource and OEM products, ocean freight still takes about 1 month. Airfreight is becoming a more cost-effective option for some compact, high value-added products especially as part of a contingency plan for 'emergency' product availability.

The quality of any outsourced product is most closely related to the quality of the process, equipment and tooling, documentation and training materials utilized by the original manufacturer and the level of skills in the direct labor.

The cost savings varies with the type of product, labor content, process control and capability, freight costs and other overhead requirements. But for Mexico, from many real life experiences the typical cost savings are from 25,000 to 35,000 USD per employee per year.

Working conditions are a function of regulations and the management staff (and investors) that run the site. Most maquiladoras have conditions equal or better than equivalent sites in the US. Many Mexican sites offer subsidized transportation, meals, on-site healthcare or daycare, paid medical, air-conditioning, training and incentives.


5. Top advantages of establishing an off-shore operation in Mexico
The obvious reasons include: inexpensive labor costs, no to low import duties, but other important advantanges are:

Labor advantages

Mexico's labor force is much less expensive than the U.S., Canada and other emerging countries
direct labor is readily available (and easily trained), indirect labor is readily available, employees work a 48-hour week,

Proximity to the U.S.
Saves time, money, and resources. Materials and finished goods have shorter transit times. Suppliers are closer. Communication issues are less complicated due to fewer time zone changes, and any cultural differences easier to transcend.

Preferential U.S./Mexico customs programs
Under Mexico's maquila program, manufacturers pay little to no duty on raw material and capital equipment entering Mexico; U.S. duty accrues only on value added to materials during the manufacturing process
Manufacturers gain access to the 95 million Mexican market; 75% of maquila product can now be sold in Mexico, by 2001, 100% may be sold to Mexican markets

Better service to your customers
You may need to be close to your customers - many OEMs are requiring their suppliers locate in Mexico

An edge for competing in North American markets
The North American Free Trade Agreement (NAFTA) typically gives duty preferences to companies who manufacture in North America and whose products qualify under NAFTA rulings.


6. Which are the best locations to establish an in-bond operation in Mexico
Border cities of Mexico were the origin of the Maquiladora Industry, currently maquiladoras are established in every state of the country.

Industries have developed areas of specialization, the Automotive industry is located in the northern states of the country like Baja California, Sonora, Chihuahua, Coahuila and Nuevo Leon; as well as the central region in states like Jalisco, Guanajuato, Morelos, Estado de Mexico, Puebla, Aguascalientes, Queretaro and San Luis Potosi. Autoparts, electronic components, electronic products, textiles, plastic products and metal products have also their influence areas.

The type of operation, its complexity, its closeness to suppliers and customers, and the infrastructure requirements, are the most important issues to consider before deciding which city is the most appropriate for your facility.


7. How can Intermex help in this process
Intermex works as a one-stop shop in which any foreign investor can find the appropriate service, from the design of a building to the shelter services required.

Intermex can help through all the process of establishing an In-Bond operation providing:

Design and construction of industrial facilities according to the customer needs,
Lease or sale of industrial buildings,
Shelter services for any off-shore operation,
Shared shelter services for small or pilot operations, and
Comprehensive Logistics services



8. Why working with Intermex

We have more that 30 years helping establishing off-shore operations in Mexico.
We work as a One-stop shop
Open book policy
A group of experts to your service along all the process
Account executive dedicated to your operation, among others.



9. Costs of my operation if manufacturing in Mexico
The level of cost savings varies with the type of product, labor content, process control and capability, freight costs and other overhead requirements. But for Mexico, from many real life experiences the typical cost savings are from 25,000 to 35,000 USD per employee per year.

Intermex has a cost model that provides real and accurate numbers for operating in Mexico. This model takes into consideration the number of workers, the type of operation, the number of indirect and managerial employees, the number of shipments, the lease cost of a building, etc.

To obtain a quotation of your operation, please send an e-mail to: maquila@intermex.com. You will be contacted within 24 hours, and we can provide you with the numbers for your operation in 48 hours.



10. Who should I contact
For further information of any of the issues in this web site, please send an e-mail to: maquila@intermex.com. or call us at the following numbers: FROM USA: 1-866-249-3326 or FROM MEXICO: 01-800-221-1541





TOLL-FREE NUMBERS
FROM USA: 1-866-249-3326
FROM MEXICO: 01-800-221-1541
EMAIL: maquila@intermex.com
info@intermex.com



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