Manufacturing in Mexico: Five Things to Consider Before Setting Up Shop

If you’re thinking about moving any part of your business to Mexico, you’re not alone. More than 18,000 companies with U.S. investment currently operate in the United States’ southern neighbor. To enjoy ongoing success in Mexico, it’s important to get a good start. Here are five key points to consider before setting up shop south of the border.

1. Choosing a Location

Mexico’s a big country, and the location options for your business are almost endless. That said, most companies set up operations in the northern or central areas of the country. Manufacturing is a big industry along the border, especially in the cities of Tijuana, Ciudad Juarez, Matamoros, and Mexicali. By choosing a location in one of these cities, your goods will only have to travel a handful of miles to reach the United States.

While the border definitely has appeal, there are a number of unique advantages to choosing a location in other areas. Mexico City, which is in the heart of the country, offers a large workforce and access to major distribution routes. Puebla, Querétaro, and Guadalajara also cater to the manufacturing industry. In the northwest, Monterrey is one of the country’s main industrial centers.

If at all possible, visit the area you’re considering before making a final decision, and talk to other companies with operations in the region. Ask specifically about local regulations, average labor costs, and legal procedures for getting started.

2. Getting Legal Help

Mexican business laws are complex to say the least. Before you set up operations, you’ll want to consult a local expert about rules and regulations. Consider hiring an attorney and an accountant. Together they can help you figure out the best corporate structure for your business as well as help you work through accounting and tax issues.

Depending on the size of the operation you plan to establish, you may also want help from a consulting firm. Various companies offer this assistance. Their sole purpose is to help U.S. businesses set up operations in Mexico. If you feel overwhelmed with concerns, consider hiring one of these companies.

3. Hiring Employees

Finding workers is easy; establishing a dependable workforce may be harder. Start by hiring a local manager who can provide you with useful insight. While you’ll find that wages are generally lower in Mexico than in the United States, you may have to provide workers with different benefits. Transportation and meals are sometimes included in employee packages.

4. Understanding Cultural Differences

Mexico is right next to the United States but businesses tend to operate differently there. A high emphasis is placed on relationships, and you may find that initial meetings don’t yield many tangible results. With some time and effort, however, you can establish lasting business relationships. Important decisions are often made during social settings, such as during a long lunch.

The word confianza (trustworthiness) is an important one in Mexico and essential for success. Finding local people you can trust, as well as reliable employees, will make a huge difference. In a society laden with corruption, you’ll want to work hard to show your business operates with integrity and honesty.

5. Having Realistic Expectations

The vast majority of businesses do not become successful overnight, and the same holds true in Mexico. Setting up operations at an international level usually takes time as well as trial and error to find out what works best for your company. Before setting goals, speak with other companies that have done well south of the border. Evaluate progress periodically and don’t be afraid to make changes as needed.

Legal procedures, business meetings, and daily affairs tend to take longer in Mexico. It’s not uncommon for an activity to take twice as long as anticipated to be carried out. Pace yourself and be patient and it will be easier to deal with these ups and downs.

These are just a few things to consider before heading to Mexico. Research the country thoroughly before setting up shop there and you’ll enjoy ongoing success. A can-do attitude will help you work through the bumps and pave the way to higher profits.