How to Manufacture in Mexico?
What options works best for you?
There are many ways to start operations in Mexico, the question comes to, which is best for you? Whether your bring your operation from China or looking to expand your current footprint, Javid LLC will help you meet your goals needs. Mexico has what you are looking for, pick the right partner to take you to your next level. More and more businesses are coming to Mexico, let us take you through the steps to open up your operation.
How to Manufacture in Mexico?
4 Most Common ways to Manufacture in Mexico
Contract Manufacturing Model
Contract manufacturing in Mexico may be a good option for companies that are looking for predictable, consistent runs of a particular product or products. They may be in the earlier stages of business growth, and demand for their product is greater than their current production capacity.
When looking at Contract Manufacturing you need to think if your looking for someone to sub-contract the entire Manufacturing process or simply to produce sub-assemblies. You loose control of costs and pricing when you operating under this model, because the price and cost is based on the contractor you use. At times and based on the conditions of the market, the contractor can raise prices per their needs. The other thing you may run into is your priority is not always the sub-contractors priorities, they may have many clients and will need to prioritize them in their schedule.
Depending on the contractor you work with, you may not need to assume any legal risk or worry about trade compliance. You'll also benefit from tax and trade incentives when importing the finished goods to the U.S.
However, when outsourcing manufacturing to a contractor, you give up standards over production and quality assurance. This option is beneficial when there is good relationship with the Contract Manufacture and your operation or product needing to be built is not of the size, that you would see having your own operation.
The Shelter model started in the early 1980's and was a way to help foreign companies open up manufacturing operations in Mexico. This model offered/and still offers a way to place a footprint in Mexico with a heavily reduced risk. Javid LLC's Mexican Shelter Program provides all the administrative and compliance functions needed for a Company to carry out operations in Mexico. This model is the fastest way to start up your operation in Mexico and you do not need to deal with all the red tape.
A Mexican Shelter Company allows you to start up operations in Mexico in less than 90 days. By operating in Mexico through a Mexican Shelter Company, the foreign company owns and controls its production assets, engineering, production processes, quality control, and supply chain, while the Mexican Shelter Company is the Mexican legal entity of record – the entity that the Mexican government looks to for compliance and the legal entity.
Javid LLC focuses on the clients needs vs our own needs. Being under Javid LLC Mexican Shelter Program you will find that your operational cost per hour will be lower than that if you would operate alone. The Shelter covers the Administrative side of your company and that is part of the service offered to you. You will not have to worry or hassle to find a Administrative Manager (HR, Accounting, Customs, EH&S) or the team that supports those departments, because the Shelter provides that for you. Through our Partnership, Javid will bring you the best employees to produce your product to your needs and specifications. Being under Javid LLC Mexican Shelter Program you will not only save 40-60% on Labor costs, but save a lot more on administrative and legal costs associated to simply running an operation.
As you look at Javid's Logo you should notice it is an umbrella. We like to think of our Mexican Shelter Program as a umbrella that will Shelter you from all the red-tape and hassle that comes form operating in another country. Just like an umbrella Shelters you from the rain. This is the reason the program is called "Shelter"
There is less than 20 Mexican Maquila Shelter Companies and we are all located primarily along the border states, however, you can find these same companies providing services throughout the nation of Mexico. While all Mexican Shelter Companies all provide a commonality in their ultimate value proposition, each operates with distinct features.
Javid LLC Mexican Shelter Company is also able to offer services as an Service Based program. Click here to find out more.
Merger or Acquisition Model
A merger or acquisition with an already established Mexican Operation is not the most common when we looking at having a Mexican Manufacturing operation. However, it is one approach that can be taken to by-passes the Start-up process and headaches that could come. This model can be either in a Standalone or Shelter model and can still have a large learning curve if not a larger one.
You may be saving costs in opening up an operation and all the expenses associated to it, but you may find you are left with a staff that does not meet your requirements and have to invest in making needed changes to personnel or process.
This option is the more expensive and takes more time to initiate. Unlike the Shelter Model (which is an already established Mexican entity), the Standalone Model requires an establishments of a legal entity, then once that part is completed, the company will need to apply for a IMMEX Permit, and once the IMMEX is obtained, the Company will need to apply for a IVA Certification. Most of the time, this is done using an advisory firm and a large group of lawyers. This process is also something Javid LLC can offer and provide.
In this model, you own every aspect of the business and are required to hire the Administrative staff and legal firms needed to ensure you compliance in Mexico. Besides the higher costs that need to be spent when running your own operation in Mexico, you loose the piece of mind that no matter what situation you may be in-fronted with, you have a partner by your side that will fight for your operation.
The significant up-front investment required to build an entirely new manufacturing operation creates risk for companies lacking a high level of certainty that their Mexico operation will meet its intended objectives. However, standalone operations have total control. Therefore, the standalone model is typically chosen by companies with a high degree of confidence in their ability to do it all, at least eventually.
You still have options when it comes to Standalone operations, for example;
You can start with a Mexican Shelter and have them transfer everything to a standalone operation after a set of time
You can have a Mexican Shelter run the administrative areas of your standalone operation. Learn more
You can hire Javid LLC as your advisor to start your operation.