With all the talk of operations around the world pulling up manufacturing stakes for the Far East, Mexico has been quietly luring businesses into its borders. The high value of our dollar has also compelled local firms to shop around to increase their global competitiveness, and our Spanish-speaking NAFTA partner is being heard.

But setting up operations south of the Rio Grande, however attractive the regional wage rates, can be fraught with logistical, linguistic, land and legal hurdles. Fortunately, Brushstrokes Fine Art Inc. (www.brushstrokesdirect.com) of Richmond Hill, ON, has gone through the process of adding manufacturing capacity there, and its CEO founded a new organization, North American Industries (www.naig.ca) to assist Canadian manufacturers in setting up operations in Mexico. To date, more than 80 global companies, including Cessna, Goodyear, Hallmark Cards and Lear Corp. have moved all or part of their businesses to Mexico through NAI parent American Industries International Group.

Offshore doesn’t have to be “off shore”
“There is definitely a fear factor,” said Mitchell Wine, founder and CEO, North American Industries, as well as President and CEO at Brushstrokes Fine Art. “It’s a foreign country with its own import and export regulations.
“And we bring our own biases – the perception is that Mexicans are not as productive as Canadians – while actually the opposite is true.”
In Mexico, factory work is not sniffed at the way it can be in Canada. “It’s a good job by Mexican standards, and they show it by the positive attitude they bring to the workplace.”
Another important consideration for manufacturing in Mexico is the issue of intellectual property. Wine has observed a better respect for IP in this part of the world, even avoiding some business in China for this very reason.

A number of prominent players in the automotive and manufacturing industry operate design and engineering centres in major industrial centres of the country such as Ciudad Juarez (Delphi/automotive) and Queretero (GE/aeronautical), with Labinal (aeronautical) developing a design centre in the state of Chihuahua. The centres have the expertise and capabilities to see a product through its entire life cycle, from concept design, refining and enhancing through to final delivery and ongoing maintenance.
Brushstrokes Fine Art was American Industries International Group’s fi rst Canadian customer, setting up manufacturing facilities in the Juarez region of Mexico in January 2005 to produce 40,000 art pieces per month. Within three months, Brushstrokes had saved 40 to 50% in operational costs, according to Wine.

North American Industries notes that companies manufacturing in Mexico can expect to reduce their total operating costs by more than 30% due to:
• Lower labor cost – The average fullyloaded cost for an assembly operator in Mexico is approximately $2.90 per hour, much less than half of what it would cost in Canada.
• Reduced travel time and ease of distribution – Mexico is close to Canada and easier to get to than Eastern Europe or the Far East (the distance from Vancouver to Tijuana is less than 2000 km).
• Gateway to international markets
– Opens up new markets and expands distribution opportunities into Latin America, as well as overseas.

It takes approximately 45 working days for North American Industries to get a client up and running in Mexico. The Canadian company maintains control over its core business operations and has fi nal say in all hiring, Wine explains. Key professionals from Canada can be relocated to the company in Mexico, but the country has an already highly skilled workforce, he adds.

North American Industries also assists with customs, human resources, financial issues, legal services, environmental permits and other related services. American Industries also offers multi-tenant shelters designed for small and medium sized projects that do not have the critical mass to justify a standalone operation.