“Time is money” is an old adage that has many applications including manufacturing! Many of the benefits of nearshoring production in Mexico, as opposed to overseas, stem from its physical proximity to the U.S. and Canada. Most companies agree that relocating manufacturing to Mexico is an idea worth consideration, but many may not fully understand the magnitude and breadth of the benefits and may be wondering – what exactly are the potential financial gains from transitioning production to Mexico? To help answer this question, below are key areas of opportunity for companies interested in saving money and time with Mexico manufacturing.
Faster to Market and Lower Transport Costs
It is no secret that it takes much less time and is less complicated to transport goods from Mexico to the U.S., Canada, and South America. The well-established supply chain between these countries is simpler and there are fewer risks of logistics issues during transport of goods. The delivery times of goods from Mexico are a matter of hours or days – compared to weeks when shipping from Asia. This delivery speed is a critical differentiator for Mexico manufacturing as it cuts the time to market dramatically – saving companies money and time! Additionally, shorter lead times allows companies to be nimbler and more responsive as customer’s needs arise. Improved speed to market also results in less inventory sitting on shelves since you are only planning and forecasting demand several weeks in advance instead of several months.
More Efficient Communications and Fewer Travel Expenses
Since Mexico is so close to the U.S. and Canada geographically, travel time for personnel to a manufacturing site is a matter of hours – versus at least a day for most Asian countries. This results in significantly lower travel costs and avoids wasting your personnel’s valuable time on travel to a more distant location. Additionally, Mexico is on a similar time zone with the rest of North America, allowing for communications to occur during normal business hours. When manufacturing in Mexico, companies eliminate the time zone hassles and delays that occur when working with China and other countries in Asia. This is especially important when dealing with critical manufacturing matters that need attention immediately!
Lower Labor Costs without Sacrificing Quality
Quality is non-negotiable, especially in high-tech sectors such as electronics or sensitive industries like aerospace and healthcare. Some countries are known for cheaper labor but their product quality is unpredictable. If you have to sacrifice quality in order to achieve lower labor costs, then you won’t save time and money in the end. The good news is that Mexico manufacturing offers much lower labor expenses while maintaining high quality assurance! The labor pool in Mexico are highly trained and skilled in manufacturing and take pride in producing excellent products. Companies that choose to manufacture in Mexico get all the benefits of lower labor expenses without sacrificing quality – saving the money, time, and headaches that come with quality issues!
Favorable IMMEX Program and VAT Certification
In order to attract and maintain foreign manufacturing, Mexico has established a program called IMMEX, formerly Maquiladora, to offer tax benefits to foreign companies with operations in Mexico. Under this program, foreign companies can import materials and machinery duty-free and tariff-free, utilize the materials and machinery to manufacture goods, and then export the final goods to another country. In addition to the IMMEX program, companies benefit from an excellent Value-Added Tax (VAT) exemption for imported goods once they receive VAT-certification. In order to make the transition into Mexico more efficient and cost-effective, foreign companies often work with a shelter company. A shelter company is familiar with Mexican laws and regulations for manufacturing and can guide companies through the various legal and logistics processes such as hiring, licensing, and even obtaining the VAT certification.
Desin: Your Mexico Manufacturing Partner
Desin International is a vertically integrated contract manufacturer of Medical devices, User Interfaces, Medical Sensors, Industrial devices, Wearables, Internet of Things (IoT), Robotics, and Green Energy solutions.
We are a well-established and long-standing company. We strive for constant growth through the consolidation of our original market, the expansion of our product offering and diversification of our industries. Our excellence in technological development combined with a superior team of employees allow us to deliver outstanding technological devices, components, and processes to our clients.
Conveniently located in Mexico, in the central time zone, we specialize and differentiate ourselves by solving complex engineering challenges that require deep engineering involvement on projects from inception to manufacturing, with the highest cost efficiencies.