Understanding The 6 Types of Mexico Shelter Companies
August 01, 2019
Companies looking to manufacture in Mexico have two options on how to proceed. They can either invest in standalone operations or partner with a shelter company.
Creating a Mexico-based subsidiary puts on a company all responsibility for registration with the IMMEX program (more commonly known as maquiladora), finding or building a suitable facility, navigating staffing and training hurdles, and working to comply with customs requirements — all before production actually begins. While some large companies may feel undaunted by this task, others may recognize that cultural nuances can present challenges that slow down the time to production.
On the other hand, shelter companies can remove some of the hurdles to ramping up operations. For starters, a shelter company already has an IMMEX license so foreign companies can enter the country as a division of the shelter company. But that’s only the beginning. Organizations that opt to work with a shelter company also have a choice to make. Tetakawi's survey of the service providers market has identified six distinct types of services available from shelter companies in Mexico.
Depending on the level of direct oversight your organization wants to hold into specific functions, there is likely a shelter company able to help you get started. Consider the six options below.
- Manufacturing Communities
These organizations provide all the Mexico Shelter Plan services typically offered by companies in the market. This includes legal assistance on IMMEX registration and compliance with local labor laws and permit requirements; HR experts to manage recruitment and hiring; accounting insight into tax compliance; and more. In addition, full-service shelter companies own and rent Mexican industrial real estate to their clientele. All your company has to do is get your supply chain ready for production.
- Full shelter services only
Unlike the option noted above, full shelter service companies do not own real estate. They otherwise offer the typical array of essential administrative services commonly provided by Mexico shelter companies. In addition, many of these companies partner with local landlords of industrial buildings to support their clients’ needs.
- Mexico shelter company for start-ups
These shelter companies are focused on getting foreign manufacturing entities up and running. At a set agreed-upon time, the start-up company steps aside and the manufacturer assumes the costs, risks and responsibilities associated with performing essential administrative functions.
- Contract manufacturing plus some shelter services
These subcontract manufacturing entities can dedicate workers to a particular company’s projects and work. They provide other value-added services to their manufacturing firm customers on an as-needed basis.
- Real estate companies that also offer shelter services
While the general idea for these companies may be the same as the full-service Mexico shelter companies discussed above, their priorities are different. Companies primarily interested in the rental and sale of Mexican industrial real estate may not invest at the same level in the infrastructure for providing administrative services to manufacturers in Mexico. As a result, their services may not be as developed as that of those companies that emphasize the service end of the business. In some cases, firms that prioritize the sale and lease of industrial real estate in Mexico may have a third party involved in providing Mexico shelter services in their buildings.
- Pick and choose shelter services
There are a very small number of companies that allow manufacturers to pick and choose, “cafeteria style,” from a list of shelter service offerings. Companies that have very specific ideas on the areas where they need help can benefit from this type of arrangement.
Questions to ask to select a shelter company
Knowing that there are different versions of the shelter concept, companies looking to manufacture in Mexico must make sure that they are making “apples to apples” comparisons among providers. Asking the right questions upfront can ensure you’re getting the cost, service and level of risk that’s comfortable for your organization.
Some important questions to ask include:
- Does the manufacturer enter the maquiladora industry under the Mexico shelter service provider's business license? Or does the shelter company obtain a separate license for each client? The answer to this question has important tax, labor, customs and environmental law ramifications that buyers should fully investigate.
- What is included in the facility’s lease costs? Will the tenant be responsible for real estate taxes, building insurance, maintenance and other costs? Or does the Mexico shelter service provider assume all costs associated with the facility?
- What are the detailed services included in the shelter service provider’s fee? Does it include janitorial and security costs? What about logistics and customs fees? Request a full list of all services that will be provided.
- Does the Mexico shelter company bill inclusively for its services, or are there administrative or other charges billed to the client that are over and above the quoted shelter fee?
Find the right partner
As every business professional knows, you get what you pay for. Looking for reduced fees can mean selling yourself short on required services. It’s important to keep this in mind when selecting a shelter company in Mexico. When a shelter service company presents a low estimate for fees, it’s important to be clear on what those fees actually cover.
Knowing that some companies offer a less than comprehensive solution to support manufacturers in Mexico, you’re better armed to ensure you partner with a provider that will offer you the protection, guidance and expertise necessary to get your operations running successfully.