Sourcing a Manufacturing Site in Mexico: Top Considerations to Know

June 11, 2021

More and more companies are outsourcing their manufacturing processes to Mexico, and for good reason. Mexico offers lower labor costs, a skilled workforce, and logistical advantages due to its proximity to the United States.

One key to successfully moving your operations to Mexico is a strategically sourced manufacturing facility. There are several factors you’ll need to consider in light of your financial needs, product type, and business objectives. Here are some of the most important.

Transport of goods

To reduce costs and keep your operations on track, it’s important to consider the proximity to your supply chain, market, and distribution centers when looking for a manufacturing plant. Even if a city is closer to your end market in terms of mileage, inefficient transport systems could end up outweighing the savings you gain from lower labor and real estate costs.

Labor force & employee availability

As the manufacturing industry continues to thrive, Mexico’s workforce only becomes more skilled. However, you’ll need to evaluate the labor market in prospective cities to ensure there is a workforce that possesses skills specific to your industry, in addition to immediate and long-term availability. A manufacturing specialist (like NAPS) can facilitate this process by analyzing a location’s employee availability and narrowing down choices according to your labor requirements.

Perhaps one of the biggest challenges when outsourcing, you’ll also need to ensure your future facility will comply with Mexican Labor Laws and the USMCA trade agreement. Whether you choose to lease an existing space or opt for greenfield construction, a manufacturing consultant can guide you in the selection process and guarantee full compliance.

Buy or build?

Utilizing an existing space or constructing your own are viable options for establishing your manufacturing site. However, both come with their own advantages and disadvantages which you will need to consider.

Lease – With an existing structure, you can significantly cut down on startup times, and project managers or shelter companies can help ensure your needs are met while maintaining full compliance with Mexican law. However, this option could end up costing you more in the long run if the structure and utilities are outdated and require frequent maintenance.

Contract – Mexico is one of the top countries for manufacturing, so a factory that produces goods similar to yours may already exist. Contracting your manufacturing site can be a way of getting your production up and running quickly, but your partner may have other clients, meaning they may not always be able to give your product their full attention.

Build — While startup times may be slower, constructing a new facility guarantees that all of your specifications are met. If you’re unsure whether the need for building a customized space may outweigh the benefits of modifying an existing one, an outsourcing or management service, such as NAPS, can assist you. They’ll help you weigh the costs of building a new structure and then oversee the process if you decide that is the direction you want to go.

Find the right location with NAPS

In addition to ensuring your facility will comply with Mexico’s labor laws, you’ll need to stay updated on other frequently changing regulations, from environmental regulations to the rules that govern Mexico’s IMMEX program. As expert site selection consultants, with years of experience in Mexico’s manufacturing industries, NAPS can help you get your business up and running with a facility that fits your needs, minimizes your expenses, and complies with all regulatory requirements. Contact NAPS to learn more.