FAQ | U.S. Companies Manufacturing in Mexico

As of 2023, the average fully burdened labor rate for a direct employee in Mexico was approximately $5.30 per hour. While there may be some fluctuation in labor costs by market, this is still a typical hourly rate today. Contact NAPS to learn more about labor rates in Mexico.

A shelter company helps manufacturers expand to Mexico by offering administration and compliance management services so that the manufacturer can strictly focus on production and quality control. The term “shelter” comes from the most common organizational structure, which enables the manufacturer to operate in Mexico under the shelter company’s Mexican corporation. This, in turn, limits the manufacturer’s liability and exposure in Mexico. Contact NAPS to learn more about the various organizational structures and the benefits of manufacturing in Mexico.

For most companies exporting to the United States and Canada, the best location for manufacturing is along the U.S. / Mexico border—ideally in large cities with strong labor pools, such as in Tijuana and Ciudad Juárez. Some suppliers are required to be close to their customer’s facilities, which will dictate the specific location of their operation and which Mexican states might make sense. NAPS offers its services throughout Mexico, and we can help our clients to identify the best location for their operation through a comprehensive site selection process. Please contact NAPS for more information on Mexico manufacturing.

The timeline for a company to expand to Mexico typically depends on the size and sophistication of the existing operation. For smaller and less complex operations, such as general assembly or light manufacturing, NAPS has successfully helped companies begin production in as little as 12 weeks. Conversely, it could take up to 6 months or more for operations that require a large facility with complex machinery and a skilled labor force. NAPS can help companies better understand a realistic timeline through the development of a feasibility study. Please contact NAPS for more information.

The cost to open a manufacturing facility in Mexico depends on the size and complexity of the operation. Most of the start-up costs will relate to building improvements to prepare the production floor and offices (i.e. tenant improvements), as well as any building or acquiring the necessary machinery and equipment. NAPS can help companies better understand the cost to expand their operations to Mexico through the development of a comprehensive financial pro forma. Please contact NAPS for more information.

Mexico is often portrayed as unsafe by various media channels that focus on the violent drug trade. From a business and tourism perspective, most of Mexico is very safe to visit and work in. Like any place in the world, the bigger cities in Mexico tend to attract more petty theft and crime, but the rate of such crime is no higher in Mexico than in any other nation. The most effective way to remain safe in Mexico is to follow common sense security protocols, such as not traveling alone to areas that are unfamiliar. Contact NAPS to learn more about the current security situation in Mexico.

In 2018, the United States, Canada and Mexico worked together to develop a new, more progressive solution for NAFTA. Due to the significant changes made to the 25-year-old agreement, NAFTA will be referred to as the United States Mexico Canada Agreement (USMCA). Most of the changes will be isolated to the automotive industry. Contact NAPS to learn more about any questions you may have about NAFTA, USMCA and how they might apply to various manufacturing industries.

Section 321 of the U.S. Customs Code was created to help the flow of U.S. eCommerce sales from companies outside the United States. For most products, but not all, a company can import the goods into the United States as an “informal” entry, avoiding the need to formally declare them and thus avoiding any tariffs. The main limitation, however, is that no single box can be valued over US$800, and each box must be labeled and sent to a different address on any given day. Companies who can benefit from this type of entry are typically consumer product manufacturers, including electronics, sporting goods, apparel and other eCommerce sales.