12 Questions to Ask a Shelter Company Before Offshoring to Mexico
February 01, 2021
Manufacturers who have settled on expanding into Mexico know there are many options available for offshoring locations. Once you settle on Mexico as your destination of choice, you’ll also find that there are many options when it comes to the shelter service providers who can help you maximize the benefits of offshoring in Mexico. Not all shelter service providers offer the same benefits or level of services, so it’s essential to select a partner you can trust to support your company.
Below we offer 12 questions to consider asking as you interview shelter providers before making your leap into manufacturing in Mexico.
1. What is the advantage of working with a shelter service compared to setting up an independent entity?
If you’re talking to a shelter service provider, you may already have a sense of some of the advantages this relationship provides. However, it’s still a question worth asking to make sure your expectations align with reality. The company representative with whom you’re speaking might highlight the big picture of how operating under the umbrella of an IMMEX company can help speed your market entry. Or, they may surprise you by explaining the wide range of services, from advisory to HR to real estate leasing, that they offer as a shelter provider.
2. How will you lower my costs?
This is one of the leading advantages of offshoring manufacturing to Mexico, so it’s best to work with a partner that takes a strategic approach to reduce your costs. Answers here may include some insight around hiring low-cost, skilled labor as well as ways to reduce your tax burden. However, some shelter service providers may also focus on more strategic areas, such as labor retention strategies to lower turnover costs or insight for boosting productivity with more strategic hiring. They may also have insight into typical incentives offered by state governments and how to negotiate to your advantage, among other strategies.
3. How will you lower my risk?
From hidden costs to poor intellectual property security to compliance issues, offshore manufacturing seems rife with risks. However, it’s important to understand that many of these risks are more typically seen in contract manufacturing operations rather than shelter manufacturing.
Contract manufacturing, or subcontracting, involves hiring an outside company to perform specific tasks. This model can be risky in that your company gives up considerable control in overseeing the quality of the work being performed. However, one of the reasons many U.S.-based manufacturers opt to operate in Mexico is the ease of visiting facilities to oversee quality control practices.
With a shelter service provider, manufacturers maintain control over all production processes. The shelter service provider may support your hiring but is largely focused on startup and administrative support. This service provider should have a proven strategy to ensure you are in compliance with all local labor, environmental, and customs regulations as needed.
4. How can you help me ensure product quality?
Again, when operating with a shelter service provider, your company will retain oversight of all production processes, including quality control. However, a shelter service provider can help you achieve this goal by hiring experienced supervisors or connecting your staff with training opportunities. In some cases, shelter service providers may have industrial lease space available within manufacturing communities that provide space for on-site training. This ensures workers get the skill sets they needed to perform even the most complex manufacturing tasks.
5. What can you do to simplify my processes?
Shelter service providers are there to help sort through much of the regulatory red tape that can slow down your launch within a new country. More importantly, they serve as a resource to manage the administrative processes that tend to require insight into local norms and expectations. Bottom line, a good shelter service provider should serve as a resource for your company, allowing you to focus on what you do best: manufacturing.
6. What will you do to protect my intellectual property?
One concern that keeps business decision-makers up at night is the safety of their intellectual property when offshoring. Fortunately, this concern should be lessening in Mexico, which continues to strengthen its intellectual property laws. If you’re working with an experienced shelter service provider that is managing your regulatory compliance, then they should undoubtedly have processes in place for ensuring the protection of your IP.
7. What will you do to protect my business?
Physical safety and security is another concern for many manufacturers considering offshoring in Mexico. Violence in Mexico has climbed in recent years, but this threat is not a nationwide problem. It is safe to manufacture in Mexico in most areas. A shelter service provider can provide site selection guidance to help you determine a suitable spot, with a low risk of crime or violence. Many industrial sites, including most manufacturing communities, will also include security features, including camera systems and locked gates.
8. How can you help me to better reach my customers?
With its national highway and rail networks, deep-water ports, and dozens of international airports, Mexico provides easy access to customers around the world—and unequaled access to its largest trading partner, the United States. However, getting products to these customers requires more than a freighter. It requires know-how to ease through the Customs process. Some shelter service providers offer import/export support to streamline paperwork and keep goods moving at the lowest possible cost.
9. How can you connect me with the local workforce?
Your workforce should give you your edge, so it’s important to have a plan in place for recruitment and retention. An HR advisor with experience in your target area should already have a strong sense of the types of recruitment strategies that might work best for your operation and skill needs, as well as how to avoid many of the common challenges to Mexico manufacturing recruitment.
10. What is covered by your fees?
Get a detailed look at the services included in the shelter service provider’s fees to ensure you know exactly what you’re paying for. Some providers’ fees include real estate services (such as janitorial and security costs), Customs fees, or logistics fees. Now’s the time to determine if the shelter company bills inclusively for its services or will charge over and above the quoted fee billed.
11. How can you help make my company more competitive?
There are as many answers to this question as there are manufacturers already successfully operating in Mexico, and the answer should be as unique as your business. Whether you’re looking to lower your costs, connect with strong supply chain networks, more easily reach nearby markets, or expand your global footprint, your shelter service provider should be able to help you create a custom solution that builds up your competitive edge.
12. How experienced is your company in helping manufacturers like me?
This is one question that shouldn’t be overlooked. There are many options for shelter service providers in Mexico, but not all have the same level of options or experience. You’ll be best served by working with a partner that has decades of experience in helping companies like yours launch an operation in Mexico. Make sure you walk away from your discussions with a clear sense of the provider's core competencies, scope of services, depth of expertise, and their strength ﬁnancially and operationally.
If you’re ready to get answers to these and other questions, we’re prepared to talk. Contact Tetakawi today.