The Top Questions to Ask About Manufacturing in Mexico
July 03, 2019
If you’re thinking about establishing your manufacturing operation in Mexico, the first step is ensuring you’ve done your due diligence – making sure to ask the right questions so that you can build a sound strategy.
Understanding the Manufacturing Environment: Where to Start
Whether you’ve just started thinking about establishing operations in Mexico or are exploring expansion opportunities, the first step is developing a sound strategy and understanding the manufacturing environment in which your business will be operating. Knowing the right questions to ask will help you to make an informed decision about where, when, and how to execute your entry strategy successfully.
There are several areas to consider, including the legal framework and regulatory considerations; the Mexican labor market; selection of a manufacturing site; your supply chain and distribution needs; and several other considerations that are necessary for your entry and manufacturing to run smoothly.
Gaining a good understanding of the dynamics operating in each of these areas is critical, but it can be challenging to know what questions to ask, especially for new ventures. In this post, we’ll outline some of these questions and provide resources for how to go about answering them. You can also access a comprehensive list of items you should be asking about in the detailed ebook, Questions to Ask When Establishing Your Own Manufacturing Operation in Mexico.
Questions About the Legal Framework and Regulatory Compliance
Because Mexico offers several entry modes and legal frameworks that balance everything from planning to regulatory considerations, understanding their various pros and cons is one of the first decisions you must make. Some of the essential questions to ask include:
- What are the different operating models under which you can manufacture goods in Mexico, and how do you decide between forming and maintaining your own legal entity versus operating through a shelter provider or joint venture?
- What is the process and cost of establishing a legal entity correctly, and what capital, registrations, and permits are required to complete the process?
- How will regulatory compliance be met for the various Mexican operating laws, including labor, customs, taxes, and others?
Questions About the Mexican Labor Market
The success of your manufacturing operation is highly dependent on ensuring that you have the right workforce in place, from skilled labor to a capable management team. Consider asking these major questions when gaining an understanding of the Mexican labor market:
- What staffing requirements will be needed for the various phases of planning, launch, and operations, and what skill levels will be required?
- What is the availability and cost of labor and labor management in the various regions of Mexico, and how does this compare with your requirements?
- Are there labor unions, and if there are, how do they operate and who interfaces with them concerning wages and benefits?
Questions About Site Selection and Infrastructure Development
Given the vastness of the Mexican industrialized area, understanding the distribution of urban regions, the location of specific industry clusters, and the varying distances between suppliers and markets is critical to selecting a manufacturing site. To make an informed choice, make sure to ask these vital questions:
- Which regions in Mexico are most relevant to your manufacturing industry. and how do the dynamics between those regions differ?
- What are the top site selection criteria (e.g., real estate cost or access to ports) most important to your business?
- What are your facilities requirements for square footage given your production size, office space needs, and planned growth objectives?
Questions About Establishing Your Supply Chain
Once you understand the legal frameworks for entry, the labor market from which you’ll be selecting, and the optimal location for your site, you’ll need to ensure that your goods will be able to cross the border quickly, smoothly, in compliance, and with the lowest possible cost. Some of the most important questions to ask to keep your goods moving include:
- How will your supply chain costs, shipment terms, providers, lead times, and quality be affected by having a manufacturing operation in Mexico?
- What impact will Mexican duties and tariffs have on your financial outcomes?
- How will freight move to and from your facility, and across and within Mexico?
Getting Your Questions Answered: Where to Go for Support
Here at Tetakawi, our expertise is in getting your tough questions answered and helping you make informed decisions so that your manufacturing entry and ongoing operations are successful. Once you have all of the information you need, we can also help you make sense of the data, digest it, and turn it into an actionable strategy.
For an overview of the top 50 questions you should be asking about manufacturing in Mexico, download the full ebook, Questions to Ask When Establishing Your Own Manufacturing Operation in Mexico. The ebook covers topics you should be exploring when doing your research, including:
- Choosing the legal framework you will operate under and developing your knowledge of the Mexican regulatory environment
- Managing and sourcing labor and understanding the Mexican labor market
- Selecting a manufacturing location and site and developing appropriate infrastructure
- Understanding your supply chain in Mexico as well as considerations for freight, cross-docking, warehousing, and distribution
- Additional considerations companies may overlook when beginning their operations
Tetakawi also offers tailored consulting services to provide you the tools and support you need to answer questions in these areas. With our extensive operations in Mexico, we have real-time access to relevant data and experts to help you digest it and create a comprehensive plan.