Manufacturers who are interested in diversifying and expanding their operations in new territories are often given the advice to partner up with shelter companies in Mexico. This can provide them with significant benefits that include experience and expertise in working in the local market.
The shelter manufacturing model presented by renowned companies like Tacna combine a range of services with legal framework hence removing the regulatory and financial burdens faced for foreign investors who are interested in manufacturing in Mexico.
What Are the Pros of Working with Mexican Shelter Companies?
Shelter service providers in Mexico help in uniquely navigating Mexican start up hurdles such as IMMEX registration and also ensure regulatory compliance. However, there are many other benefits of working with the Mexican shelter companies and some of these are listed down below.
- Established Certification Leading to a Faster Process
As briefly explained above, shelter companies have the tendency to eliminate common hurdles to ramp up the operations. For instance, if an investor wants to start manufacturing solo, he will have to get an IMMEX certification which might take up a lot of time. On the flip side, since the shelter service providers already have an IMMEX certification, manufacturing can start as fast as within 30 days.
- Fewer Amount of Exposure
The manufacturing entities will face less risk as the shelter service provider will act not only as the employer but also the manufacturer of record in Mexico. Depending upon the experience of the shelter service provider, he will be able to handle HR responsibilities along with accounting and other administrative tasks efficiently.
- Labour Law Guidance and Compliance
The labour laws in Mexico are significantly different from those in the U.S. Not being able to properly identify employees and not following the appropriate protocol can lead to increased expenses. A shelter company will be able to oversee labour compliance along with severance entitlement and will be able to guide the manufacturers through the hiring and firing stages. This will minimize the risk and liability by a significant percentage.
- High Employee Retention and Improved Productivity
A local shelter service company will have more insights regarding the labour market. Hence, this insight in the average wage, the types of benefits and expected bonuses can help in reducing the staff renewal rates. Moreover, when trust is built between the manufacturing entity and the shelter service providing company, it leads to improved productivity.
Why Do Companies Want to Set Foot in Mexico?
Mexico is considered to be an industrious country as it has a huge skilful workforce of 47 million people. Even the government of Mexico is quite proactive in giving young people the training to fulfil skilled roles in various sectors.
Even if we keep the benefits of setting up manufacturing operations in Mexico through sheltered programs, there are quite a lot of inherent benefits of manufacturing in Mexico. Setting up factories in Mexico allows the brands to reduce the overhead costs without compromising on the quality of the product.