There are many reasons why expanding your manufacturing company into Mexico can be financially beneficial to growing your business. Companies that have decided to work with El Grande Group have experienced savings from duty-free trade through the NAFTA agreement, savings on labor costs, lowered utility expenses, and have also received expert guidance and support from our knowledgeable maquiladora operations professionals.
When planning to establish your manufacturing industry in Mexico, it should be understood that there various options. The three most popular methods for setting up a foreign manufacturing company in Mexico include contract manufacturing, wholly-owned subsidiary corporations, and shelter operations.
Eliminate Risks by Hiring a Manufacturing Contractor
One of the best methods to establish a manufacturing company with minimized risks is through contract manufacturing. Under this arrangement, the foreign company provides the specifications and requirements for production of their items while the contract manufacturer assumes full responsibility for meeting these criteria.
Additionally, the maquiladora will assist you in administration, shipment processes, manufacturing certifications, handle materials and paperwork, oversee production, and customs clearance.
Through this option, your foreign company will experience minimal exposure to the drawbacks that come with production, as the contractor will be responsible for these duties.
Keep Control Through a Wholly-Owned Subsidiary
One of the ways by which a foreign company can keep more control over production is by establishing themselves in Mexico as a wholly-owned subsidiary. This approach does require more of a company’s input and resources to maintain all elements necessary to manufacturing.
Companies who would like to go this route would require a Mexican lawyer that can assist in developing agreements between the foreign company and the owners of the maquiladora where the actual manufacturing processes would take place. Wholly owned subsidiaries are also required to handle obtaining permits, supplying materials for assembly, as well as hiring experienced personnel and other workforce members to start up production.
Establishing your maquiladora as a wholly-owned subsidiary allows for greater control and oversight of production. However, there are more risks associated, more room for errors, and therefore, a slower flow of operations.
The Middle Ground is Through Shelter Operations
If you are seeking the structure and support of an established Mexican organization that can handle facilities, means of production, structural oversight, and support your company with business consultation, then shelter operations may be the best option for you.
In a shelter agreement, you will have to pay the service fee of operations. However, companies will maintain control of specifics, even having the power to select representatives of your choice while still obtaining the support of a knowledgeable and experienced maquiladora company.
El Grande Group is able to provide quality shelter manufacturing services in as little as 90 days. To find out how we can get take your manufacturing company off the ground, contact us today at 1.646.300.9401.
It is recommended to do further research and weigh your options before committing to a particular set up. By establishing your manufacturing company in Mexico, you will experience the benefits and savings that will help grow your company.
Avoiding Severance to Strengthen Maquiladora Start-Up
By Mexican Labor Law, employers must compensate workers after they have been laid off or terminated. Adjusting your workforce according to demand of production through temporary contracts is best to avoid severance fees.
Temporary Contracts to Adjust to Demands of Production
Temporary Contracts allow employers to hire temporary workers for up to six months with no demand for severance or renewal once the contract has finished.
There are plenty of workers looking for opportunities that are willing to apply to work under these temporary contracts. Severance increases the longer that an employee has been working, however, hiring smart can prevent the need to eliminate workforce.
Offer Flexibility to Maintain a Strong Workforce
As a start-up company, you will want to eliminate as many exterior fees as possible to keep your company up and running, this includes severance. Planning and cooperating with your workforce can help reduce severance fees and unnecessary overtime scheduling.
Working smart and developing solid business strategies will allow your company to flourish while building the support and trust of a valuable workforce.