Investors that are buying a manufacturer in Mexico should consider the possibility of partnering with a provider of what are known as “shelter services.”
With its prevailing condition of economic and political stability, as well as with its low cost of doing business and favored geographic position, Mexico has captured the attention of foreign investors seeking to bolster their position in the markets in which they compete. This will increasingly continue to be the case.
Given proclivities and corporate culture, some manufacturers opt to execute “greenfield” projects. They take the time and make the effort to create wholly-owned Mexican subsidiaries of their domestic company. They decide upon buying land and constructing, and are of the opinion that initiating and operating their Mexican production facility from the ground up is the best way for them to proceed. On the other hand, some firms chose to enlist of individuals and companies that have expertise related to manufacturing in Mexico that can be applied to their company’s move. These individuals and companies may take the form of consultants, and what are known in Mexico as “shelter service providers”.
Rather than extending their existing operations to Mexico, some firms choose the route of buying a manufacturer in Mexico that is already functional. They prefer to avoid starting an operation from the ground up under the greenfield scenario, or by working with a shelter company in order to extend their existing operations south of the US-Mexico border. Some businesses seek to find a ongoing and pre-existing concerns in the metal fabricating, plastic injection molding, electronics manufacturing services, or other industry or industries. The companies that have interest in buying a manufacturing a manufacturer in Mexico are not always aware that the shelter concept is one that can be readily applied to them, as well as can make their transition to and ongoing operation in Mexico a smoother and less risky endeavor. While executives that have purchased factories in Mexico can occupy their time and energy focusing on the aspects of the operation that drove the need and/or desire to purchase in Mexico in the first place, a shelter company can be brought in to take care of all non-manufacturing functions. These may include some, or all, of the following:
- Human resources
- Accounting services
- Payroll and benefits managment
- Facilities management
- Import-export processing
- Transportation and logistics
- Environmental compliance services
- Industrial cafetaria services
- MRO procurement
In addition to the aforementioned, companies that are considering the option of buying a manufacturer in Mexico can count on shelter company experts to perform other important functions such as:
- acquiring permits for construction, building improvements and environmental compliance issues;
- going through the process that will result in bringing or expanding electrical service to the plant;
- introducing new executives to existing and potential suppliers;
helping new owners to become acclimated to Mexican culture and work habits.
For some companies buying a manufacturer in Mexico is a more attractive and expedient option than starting a production facility from scratch, or extending existing operations through the use of a shelter company as a partner. Companies that choose the acquisition option are often well-served to take into consideration that a Mexican shelter service provider can be of strategic benefit to them in that all of their non-core funtions will be in the hands of experienced third-party personnel.