Thinking about nearshoring to Mexico? Here’s a look at the advantages and challenges every manufacturer must understand before they plan the big move.

Which industries & businesses are moving operations to Mexico?

Manufacturers across all industries benefit from the advantages of doing business in Mexico. However, Mexico is home to a handful of industries in particular that have found significant success.

The aerospace, automotive, medical device, electronics, and home appliance industries continue to attract foreign manufacturers from across the globe thanks to their strong vertical supply chains, which help manufacturers cut down on costs and risks. Today, some of the biggest manufacturers within each industry have operations set up in Mexico, including Toyota, Johnson & Johnson, and Honeywell.

Why are they moving to Mexico?

Mexico is well known for its strategic location and affordable labor. But there are many other reasons why big global enterprises like GM and Whirlpool have chosen to manufacture in Mexico, including:

• Free trade agreements: Mexico has more free trade agreements than any other country in the world, giving manufacturers significant opportunities to expand into global markets and cut down on the costs of imports and exports while producing high-quality products.
• The IMMEX Program: To further reduce costs and boost efficiency, many manufacturers choose to operate under the IMMEX program, which allows them to temporarily import raw materials and goods duty-free as long as they are exported from the country within a designated time frame.

• A growing economy: Mexico’s manufacturing industry is growing rapidly, but the nation is still considered a developing economy. This means businesses have opportunities to corner their place in the market and build a solid foundation for growth as the economy develops.

How can you address the challenges of manufacturing in Mexico?

Setting up business in any foreign country will come with its own challenges. Mexico, however, has unique resources that can help you address whatever challenges you may face.

Challenge #1

After deciding to make the move, one of the first challenges manufacturers experience is forming an effective strategy for entering the market. Mexico offers many different modes of entry, and in order to ensure long-term success, you need to choose the one that’s right for your business.

Solution: Most manufacturers opt for working with a shelter company to get up and running quickly and successfully. By engaging a shelter service provider like NAPS, businesses don’t need to establish their own Mexican entity and can hand off administrative duties and any liability. Plus, they maintain complete control over their production processes.

Challenge #2

Mexico’s workforce is diverse, highly skilled, and affordable, but foreign companies often don’t have sufficient local knowledge to target the right labor pool and find the best employees to fit their business needs. Other administrative duties also become more difficult without an understanding of the local language and culture.

Solution: Local knowledge is the key to overcoming any challenge you may face while moving your manufacturing processes to Mexico. With our expertise in Mexico manufacturing, we take over everything from recruitment and training to talent management and payroll, and you’re able to stay focused on production, quality control, and company direction.

Challenge #3

Moving your operations to Mexico means handling an entirely new legal system. Not only are the tax and labor laws notoriously complicated and hard to navigate, but without full compliance, you also can’t take advantage of the IMMEX program and Mexico’s FTAs.

Solution: Whether you’re looking to expand or are just getting started, NAPS’ administration and compliance management program ensures you stay compliant with all regulations and are able to make the most of everything Mexico has to offer.

What’s next?

We’ve helped more than 150 companies find long-term success, and we’re confident we can do the same for yours. With our service-oriented operating model, we help you through all phases of ramping up and managing your manufacturing operations so you can focus on guiding and growing your business. Contact NAPS and find out why it is the best choice when it comes to moving your manufacturing to Mexico.