Manufacturing In Mexico: Outsourcing The Administration
Manufacturing in Mexico is an endeavor with plenty of internal hurdles for companies new to the country. Moving raw materials and finished goods into and out of Mexico means dealing with complex customs protocols and diligent record keeping. Mexico, similar to the United States, has strict environmental standards that demand compliance. How can a company seeking to move to another country like Mexico handle these tasks efficiently? Outsource them to a professional, experienced company. In Mexico, it is common for manufacturers to use outsourcing companies called “shelters” for all their administrative activities in the plant, including Human Resources, Mexican Payroll Services, Accounting, Customs and Environmental Health & Safety. The term “shelter” comes from the business practice of operating under the outsourcing firm’s Mexican corporation, which limits (or shelters) the manufacturer from liability in Mexico.
“Regardless of the corporate structure, a good shelter company can make the difference between succeeding and failing when manufacturing in Mexico,” said Scott Stanley, Sr. VP of Sales and Marketing with North American Production Sharing, Inc. (NAPS), one of Mexico’s largest and most successful shelter companies. “Outsourcing the administration of a manufacturing plant in Mexico allows companies to focus on production and quality control without the headache of adhering to strict compliance requirements.”
Mexico is a relatively underdeveloped country when compared to the United States and Canada. The country, however, is home to thriving manufacturing industries, such as Electronics, Automobiles, Medical Device, Solar and Aerospace. Mexico can support a number of advanced sectors due to an educated and motivated workforce. Shelter companies in Mexico can help their clients take advantage of this opportunity. With lower labor costs and less social unrest than China, Mexico presents an attractive option for manufacturers. Another benefit of using a shelter company is gaining a quick understanding of the cultural differences between Mexico and other countries.
“I believe many companies underestimate the cultural differences in Mexico, mostly because it is so close to the United States. If handled improperly, these differences can have a significant effect on the productivity and success of the plant,” said Scott Stanley. “After twenty-one years of operating in Mexico, NAPS understands how to integrate cultures from around the word with the culture in Mexico.”
While a shelter company in Mexico is not exactly the same concept as a joint venture in China, the shelter certainly becomes an integrated part of the operation. Manufacturers who are considering moving their production away from China to Mexico should consider using the shelter model to help organize the process and reduce the mistakes with such an endeavor. Outsourcing the administrative functions of a manufacturing plant in Mexico to a shelter company is a prudent strategy. Whether trying to limit a companies exposure and liability in Mexico or simply wanting to focus on production and quality control without the challenges of administrative compliance, the answer is using a shelter company, such as North American Production Sharing.
Senior VP - Sales and Marketing
Toll free: 800-551-8581
With over 20 years of experience doing business in Mexico, NAPS can provide expert commentary on trends and changes in the industry. NAPS offers administrative support services for companies manufacturing in Mexico. Administrative services include: Site Selection, HR, Recruitment, Accounting, Payroll, Customs, Environmental and Corporate Compliance. For more information contact NAPS at 858.794-7947 or visit our website.