How Have Cost Considerations Influenced Facility Location Decisions?

For any organization looking to set up a manufacturing facility in Mexico, your budget will have a significant bearing on the location of your facility. For example, site selection for manufacturing in or near a major metropolitan area will have different cost implications than setting up a factory on a vacant site outside of a city.

Therefore, your first task is to understand the criteria for selecting a manufacturing site and how costs will determine your final choice. Fortunately, it is far easier today than in years past for a foreign entity to establish a manufacturing plant in Mexico–especially when you partner with a local firm like Tetakawi that can give you first-hand insights into the process and requirements.

With Tetakawi on your side, the site selection process is easily explained and the risk of wasting valuable resources searching for a perfect site is eliminated. Tetakawi experts are fully aware of available sites where you can easily set up your factory and begin your operations within a month.

Factors to Consider When Choosing a Location

Here are some of the key cost considerations to keep in mind when choosing a site for your factory:

Tax and Legal Climate

Whether you’re contemplating expanding or relocating your manufacturing business to Mexico, it’s important to consider the existing tax and legal climate in the country and how it’ll affect your business operations and revenue. Currently, the Mexican tax climate is conducive to foreign investment. The Mexican government encourages foreign investors to set up shops in the country as a way of creating employment opportunities for the growing Mexican population, which is not always the case in other countries. 

If you decide to have a presence in Mexico, make sure you fully acquaint yourself with the tax laws in the country and local region before you begin operations. This will save you from a lot of problems in the future when you’re filing your tax returns, license applications, and other necessary documentation and forms.

Cost of Transportation

As a manufacturer, you’ll need to transport raw materials to your factory and the final products to your storage facilities and distributors. If you set up your factory in a location far from these places, your transportation costs will shoot up, affecting your overall operational costs.

That’s why a local partner like Tetakawi is necessary. We will guide you through the process of choosing the perfect location for your facility that will keep your operational and transportation costs as low as possible.

Commuting Convenience

Furthermore, you must consider how far your workers will have to commute every day between their homes and your facility. This means you’ll either need to choose a location near a qualified pool of workers or build living quarters inside your facility where they can reside during the work week.

Alternatively, you can offer workers a commuter allowance or invest in staff buses that can transport them to and from their homes. These options will directly affect your overall operational cost and influence the site selection process.

Workers’ Benefits

Full-time employees receive certain benefits, as mandated by the state and region. Make sure you understand what your obligations are at each location you are considering, in case these costs vary from one place to another. Health, retirement, and other employee benefits can be expensive and add considerably to the costs of a manufacturing operation.

Proximity to Essential Services and Infrastructure

Make sure your factory is set up in a location that is close to essential services such as electricity, water, roads, airports, railroads, storage, hospitals, shopping centers, schools, and other facilities that will make your operations more streamlined and cost-effective.

The farther away your factory is from these services, the more expensive it will be for you to run your business effectively. Fortunately, you can easily identify these utilities when you’re doing your site selection and feasibility study.

Choose the Right Local Partner

Lastly, make sure you seek assistance from an experienced and reputable local partner like Tetakawi that is fully aware of the many moving parts that play a part in locating and selecting the perfect site for a manufacturing facility like yours. We will help you to avoid potential challenges that could derail your project and make sure your facility implementation goes as smoothly as possible!