Demystifying the Types of Shelter Companies in Mexico
July 6, 2021
There are many great reasons for moving one’s manufacturing operations to Mexico, but quickly and successfully establishing your presence there can be a complicated and confusing process if you aren’t familiar with Mexico’s laws and culture. To ensure they can fully reap the benefits of manufacturing in Mexico while remaining fully compliant, many companies decide to operate under a shelter company.
Shelter companies are service providers that enable foreign companies to offshore their manufacturing to Mexico without needing to set up as a foreign subsidiary, a standard process in other countries that often creates long start-up times. In contrast, when operating under Mexico’s shelter program, the foreign company can quickly ramp up its operations and stay focused on its core competencies while the shelter company handles administrative and legal tasks.
There are six main types of shelter companies, each offering a different range of services.
These shelter companies offer complete shelter services in addition to fulfilling any real estate needs. All the individual company is responsible for is getting their supply chain ready for production.
Fuller Shelter Services
These shelters are similar to manufacturing communities, with the main difference being that these companies do not provide real estate. They may, however, enlist the help of local real estate owners to support their client’s needs.
Real Estate Companies that Offer Shelter Services
While they may offer some administrative support, these companies focus primarily on real estate, so you may not find the same breadth of services you would find with other types of shelter companies.
Contract Manufacturing with Shelter Services
Foreign companies will occasionally use contract agreements with a Mexican manufacturer for specific projects. Additional shelter services may be utilized as well on an as-needed basis.
Shelter Companies for Start-Ups
A good option for businesses hoping to eventually become their own entity, these shelter companies will provide total administrative support for an agreed-upon length of time.
Shelter Companies that Allow Flexibility to Pick & Choose Services
Though they aren’t widespread, some companies offer a “menu” of services from which a manufacturer can select those that meet specific needs.
Functions of shelter programs
Although some companies will provide more services than others, a handful of key functions are common across virtually all shelter service providers. Including:
Advantages of Shelter Manufacturing
Because companies would not need to officially register as a Mexican entity, they would not take on any of the risk and liabilities associated with manufacturing in Mexico and would not be responsible for overseeing compliance. Instead, those responsibilities would fall on the shelter company.
When you decide to operate under a shelter, you avoid many of the obstacles that typically come with expanding or moving operations to a foreign country, such as the time-consuming process of obtaining permits. Many shelter providers can even get you up and running in 30 days.
Shelter companies bring in a significant amount of foreign investment, so the Mexican government views them as a highly beneficial entity and is willing to provide various income and tax incentives. They also create economies of scale that can reduce operating costs.
Partnering with a shelter company means you get instant access to the expertise of a company with extensive experience in Mexico’s manufacturing industry. In addition to legal knowledge, companies gain access to established business networks and cultural insights.
One of a shelter company’s main functions is recruitment. With its knowledge of available labor forces, a shelter provider can find you the best people to fill each role and drive productivity. Because the company will also manage new hires, you can stay focused on improving your production.
Operate under NAPS’ shelter services
As a leading shelter services provider with more than 16 locations in Mexico, NAPS is ready to help you successfully expand or relocate your manufacturing. We provide a full range of administrative services that will let you focus on your manufacturing processes, production quality, and business strategy while staying fully compliant with Mexican law. So whether you’re looking to form your own entity or to fully operate under a NAPS shelter corporation, we’re here to support your needs and ensure a smooth transition to Mexico. Contact NAPS today to learn more about how we can get you up and running.