Manufacturing in Mexico: Where do I start?

Updated: Aug 25

Manufacturing in Mexico is a synonym for competitive business advantages. Benefits such as lower costs, free trade agreements, and an experienced workforce are just a few reasons why multinational companies decide to manufacture in Mexico. Some of these advantages are:

  • Lower costs: Foreign companies usually reduce costs when moving manufacturing operations to Mexico, especially due to lower costs when employing Mexican talent and when acquiring installations and utilities. The Mexican IMMEX program allows foreign companies to temporarily import, free of import tax and VAT, which also means tax savings for businesses.

  • Free Trade Agreements: More than 50 countries have agreements with Mexico, enabling global transactions with reduced barriers to trade. This encourages the worldwide transition of goods and services. Four of Mexico’s most important trade agreements are the USMCA, TPP, The Mexico-EU Free Trade Agreement, and the Pacific Alliance.

  • Experienced workforce: The rich talent pool in the region is a great economic potential for multinational companies, especially because workers tend to be highly educated and less costly than in North American countries. The experienced Mexican workforce of developers and IT experts makes the country also a great place for Nearshore potential.


But where to start?

There are several options a business may choose from when beginning to manufacture:

Standalone

Contract

Joint Venture

Acquisition

It involves creating an independent entity in Mexico which enables businesses to control every decision in their operations.

One benefit for foreign companies in Mexico is the IMMEX program, which allows holders to temporarily import, free of import tax and VAT.

Outsourcing production from a third-party contract manufacturing company is a great option for smaller operations.

Most Mexican manufacturers hold an IMMEX certification and are owners of the production assets required for creating goods.


Partnering with a Mexican manufacturer implies a mutual benefit for both businesses that combine strengths to accomplish a common goal.

Since the manufacturing company understands the Mexican tax system, operation and production tend to be faster than other business models.


It requires a foreign company to acquire an established Mexican manufacturer.

However, most recognized manufacturers in Mexico are already owned by foreign businesses, making this option not as common when starting manufacturing in the country.



 

Read more: Relocating Business Functions to Mexico

 


Nepanoa’s experience can assist in every step of your business journey towards a successful manufacturing experience in Mexico. We are here to help.