 FREQUENTLY ASKED QUESTIONS (FAQs)  1. Is it really cheaper to run an operation in Mexico? I have heard that it costs about $5.00/day for each operator - is that true?
You can save about 30% of your total operational costs and 50% or more of your total labour costs by running an operation in Mexico. The average fully loaded costs for an operator are $2.50/hour. In Canada, the equivalent costs can be $20/hour or more depending on location.
2. Isn’t it cheaper to set up a manufacturing facility in India or China? Why should I consider Mexico when there’s cheaper labour in Asia?
India and China are indeed excellent places to set up off-shore facilities. However, the quality of the skilled and unskilled labour force in Mexico is generally superior to those markets and workers are familiar with the American market and American quality standards. In addition, India and China are harder to travel making management of facilities in those locations more difficult and resulting in much greater distribution costs into the U.S. market.
Another factor to consider is the generally weak record China and other Asian markets have in respecting intellectual property rights; an issue that does not exist in Mexico.
3. What are the advantages of having an operation in Mexico? Why would I want to have my own location in Mexico?
Large customers are becoming more demanding and require personal attention from their suppliers and, often, just-in-time delivery. Having an operation close to your customers is efficient and easier to manage.
Other advantages include:
Mexico is as close to the U.S. as Canada and just as easy to get to. The benefit is having fast, low cost distribution costs into the U.S. while paying little if any tariffs (NAFTA).
The country provides a high quality manufacturing environment with a highly skilled, productive labour force.
The labour environment is excellent with good working conditions.
Because of Mexico’s existing trade agreements with over 32 countries around the world, there is potential to expand your existing distribution channels abroad. Additionally, imports and exports have been flowing smoothly across the border for over 30 years.
4. Are the start-up costs prohibitive to open up a facility in Mexico?
The costs you will incur to open a manufacturing facility in Mexico will vary depending on the industry you operate in and your particular needs. Expenses such as utilities on the building and equipment are essentially the same as in your home location.
However, the real savings are in the cost of the labour force.
Taking all of these expenses into account, the total operational costs will be approximately 30% cheaper in Mexico vs. your home location and labour savings can run up to 80%.
5. Where are the best areas to work in Mexico? If we wanted to establish a particular type of operation, where is the best location for these specific skills?
Certain areas of the country specialize in specific industries and have the unique skills that are required for a particular operation. However, most industries and the skills required can be found in most of the large centers; you are not restricted to these locations.
- Soldering - San Luis Potosi
- Electronics - Guadalajara
- Textiles - Torreon
- Steel, glass, plastics - Monterrey
- Automotive - Reynosa & Juarez
- Television - Tijuana & Mexicali
- Harnesses, electronic/mechanical assembly - Chihuahua
6. Who is North American Industries and what is their relationship with American Industries International Group?
North American Industries was recently set up to assist Canadian companies in starting up manufacturing in Mexico. Our company is part of American Industries, a group that has helped facilitate the establishment of more than 80 multinational companies in Mexico since 1976. Our clients include small, mid-sized and large companies in both Canada and the U.S.
American Industries (AI) is a Mexican company with vast experience helping companies of all sizes get established in Mexico. AI assists foreign companies to start up operations in Mexico as quickly as possible. AI also takes care of the administrative details and allows a company to concentrate on its manufacturing requirements.
AI provides a team of experienced professionals who specialize in all the support services:
- Customs
- Human Resources
- Financial Control
- Operational & Legal services
- Executive Customer Services.
We provide personnel to ensure you have prime facilities in prime locations.
Based on your needs we can assist you with site selection, we can build a facility to suit your requirements or assist with a multi-tenant facility for a smaller operation
7. What about the available facilities? Can we find buildings that will meet our requirements?
Many people who visit plants in Mexico are amazed at how modern, clean and safe the facilities are. For example, American Industries has a Real Estate Division that builds and manages first class industrial buildings across Mexico - prime facilities in prime locations. We combine your specific needs with our knowledge of Mexico and its varied markets and infrastructure to provide the best solutions for you.
8. We’ve thought of Mexico but it seems too difficult. I would not like to deal with customs. I’ve tried to get things done in Mexico before and it’s always been a hassle.
Yes, many things are very different in Mexico. From setting up a legal entity to working with employees to shipping goods back and forth across the border, you must learn a great deal about the rules and regulations as well as the customs and practices of the country. For this reason, the American Industries Shelter program is extremely effective in Mexico.
With this program, you concentrate on looking after your manufacturing activities (your core competencies), just as you would at your plant in Canada, while a Mexican company takes care of the administrative details (customs, human resources, financial control, and legal services including environmental permits). The Shelter provider assists you in starting up your operations quickly, at a much lower cost and with protection against costly mistakes.
9. We are a small company and would only want to start a small operation in Mexico to see how things go before investing a lot of money. It would be too costly to set up a large facility.
Many companies are in a similar situation and cannot justify a stand-alone operation. This is the principal reason that we introduced an option called a Shared Shelter Program which can justify setting up a small operation. Under the Shared Shelter, clients share common space (cafeteria, reception area, etc.), infrastructure (heating & air conditioning, furniture in common areas) and services (building utilities, etc.) with other clients under the management of the Shared Shelter Provider.
Requirements for this Program:
Less than 50 people
Fairly small space requirements (150 sq. ft/person)
10. Who are some of your customers?
Our client companies range in size from small, medium and large size manufacturers such as:
- Arrow International
- Brooks Automation
- Brushstrokes® Fine Art Inc.
- Cessna
- Delphi Automotive Systems
- Electrolux
- Emerson
- Flexfab
- Friedrich
- GE
- Good Year
- Hallmark
- Honeywell
- ITT Industries
- John Deere
- Lockheed Martin
- Philips
And many more…
11. Is it possible to see the manufacturing operations of some of American Industries’ clients in Mexico to get a better idea?
We’d be pleased to visit your office or arrange a visit and a personal seminar at our head office in Chihuahua, Mexico. If you would like to visit us, we can schedule some tours at plants that have set-up in Mexico with our assistance. You will be able to talk with the Managers directly and ask them questions about their experiences.
12. I noticed that you offer seminars about Manufacturing in Mexico. Why should I take this seminar? What will I get out of this course?
If your company is interested in expansion, this is an excellent opportunity to gain insight into the alternatives and options available in Mexico. With this course, you will understand the requirements and difficulties of establishing a manufacturing operation in another country. By committing just one day of your time, you will gain the understanding of how things work in Mexico, be able to make an informed decision regarding your strategic goals and ensure success.
You will learn about the differences in the legal system and the available options for setting up a legal entity in this county; the payroll structure, which is very different from Canada or the U.S., environmental requirements, and other issues that are unique to Mexico.
13. Will I have legal or financial or tax issues in dealing in Mexico?
Most companies start with American Industries’ Shelter Program which means they do not establish a legal entity in Mexico. This means you will not incur any tax or other liabilities in the country. You can continue to invoice your customers as well as receive payments at your Canadian head office.
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