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How to start up manufacturing operations in Mexico with Juan Arvilla.

How to start up manufacturing operations in Mexico with Juan Arvilla.

Juan Arvilla, program director for the Tecma Group of Companies goes over the basics of the process of the start up of manufacturing operations in Mexico.

Juan Arvilla, program director for the Tecma Group of Companies goes over the basics of the process of the start up of manufacturing operations in Mexico.

Tecma Group of Companies:

Hello and welcome to another installation in a continuing series of Tecma Talk podcasts on the subject of manufacturing in Mexico and other topics that are related to doing so. Today joining us is Juan Arvilla. Juan is one of the Tecma group’s internal experts. He is the director of program management. Juan can you tell us a little bit about yourself and your position?

Juan Arvilla:

Sure. Hi, Steve. My name is Juan Arvilla, director of program management, which is the department that helps companies to move and start up manufacturing operations in Mexico.

Tecma Group of Companies:

So basically you’re right at the front lines when companies make transitions from the States or wherever they come from to Mexico, would that be correct?

Juan Arvilla:

That is correct. I’ve worked in the industry for 21 years. In the manufacturing, the planning, materials, and other areas. Basically the experience within the manufacturing operations industry concerned mainly with how to start up manufacturing operations in Mexico.

Tecma Group of Companies:

Okay, so you’ll be in the position to be able to hopefully provide some instructive information about Mexican manufacturing start ups. You’ve mentioned that its been twenty-one years during which you’ve been involved helping manufacturing companies to transition to Mexico. I would assume that you’ve helped quite a few companies do so. Do you have any idea what that number might be or a ballpark number at least?

Juan Arvilla:

It’s been around twelve companies that I’ve helped—actually, move and start up manufacturing operations in Mexico. It has been eight companies from telecommunications companies to dental companies. So any sort of products we have been able to help and move and start up manufacturing operations in Mexico.

Tecma Group of Companies:

I think we’ll take this question first, when a company does make a decision to transition some of its production, perhaps even all of it, from one location to a location in Mexico, which staff members of the company that is transitioning to Mexico should be involved as a part of the process to make that move?

Juan Arvilla:

Mostly the staff or members of the manufacturing process. In this case we’re going to be supporting with our Mexican shelter company departments, and they’re going to be basically focusing on manufacturing. It will be basically operations people. People that will be laying out the processes, making sure that the inputs of raw materials are going to be in certain areas, where the machines are going to be placed, where are the shipping areas, the quality of the product is guaranteed through a profit. Mostly it’s the manufacturing people involved in the start up of manufacturing operations in Mexico.

Tecma Group of Companies:

Of course that is under the shelter company scenario, because as you mentioned a shelter company does all those things that are not manufacturing which is, say, the moving of goods in and out of Mexico, payroll, human resources, for example. With a shelter company, as you just mentioned, the operation folks are most involved in the process.

What are some common mistakes that you’ve seen in your experience in this process or people involved in this process that you can perhaps provide people that are listening to this podcast information on so that they can avoid?

Juan Arvilla:

Yes, I can tell that they made mistakes and one common mistake, which is assumption.

People come to Mexico thinking that things, some things, may be different, or similar to what is done in the United States. They sometimes assume that they can be done in a certain way without first consulting with the experts on this side of the border. For example, customs. Everything that crosses the border into Mexico needs to be properly documented, and to be declared to Mexican Customs authorities. In some cases, people think that very small spare parts, some tools for example, there’s no need to declare them, and they bring them across in their own vehicles. That’s a huge mistake. Everything needs to be declared, and sometimes people assume that they can be done and that they won’t be caught or there’s not going to be a problem later on. It could be because our authorities will be doing some audits after the start up of manufacturing operations in Mexico. If there are any discrepancies there can be some fines. Basically, not knowing, for example, the labor laws, trying to make some decisions with employees at the beginning, thinking that they could be managed the same way as in the United States can be a mistake. Mexican labor laws are a little different. Assuming that things can be done a certain way without consulting can be the most common mistake. Every time that a decision is to be made, we need to consult with the experts, especial during the start up of manufacturing operations in Mexico.

Tecma Group of Companies:

Yes, and that obviously it will avoid problems just to make sure that they are doing things in accordance with the law that you mentioned, and to remember tht things like moving a part in the car is not like driving it from Texas into New Mexico, I guess would be a good example. It’s an international border and there are rules. So you’ve seen different scenarios with different kinds of industries that make different products.

What is the time line—is there any specific time line that you’ve seen is more common from the time that people make a decision to start up manufacturing operations in Mexico, until they’re actually producing parts and shipping them? What is the time line that it takes to get to the point where the outcome is shipped after coming off the assembly line?

Juan Arvilla:

It will vary depending on the specifics of the operation. For instance, if by moving the operation we need a new facility things could take a certain amount of time. Looking for the facility and preparing the facility, putting in all the infrastructure that is neede like air conditioning, heaters, and electricity, compressors can sometimes that can take up to six months. Or, if your operation requires pit construction to install equipment that could take a few months. In the case of moving just simple equipment like workbenches and all is needed is some electrical drops network drops, compressors and air drops, that can be done probably within a month. But it all depends on the type of operation, the type of equipment, the type of facility that the operation or the company will require to start up manufacturing operations in Mexico. It will be difficult to say an average time but if there is a simple operation probably within a month.

Tecma Group of Companies:

So again, to recap, if I understand you correctly, what you’re saying is the factors are the complexity of the manufacturing process as well as the extent of the capital improvements that may need to be made to the building that’s being occupied, or whether it’s a simple or complex operation, would that be correct?

Juan Arvilla:

That is right.  That is correct.

Tecma Group of Companies:

What services does a shelter company in Mexico provide to make Mexican start up of manufacturing efficient and a process that comes out correctly in the end?

Juan Arvilla:

We provide services that range from or go from payroll, accounts receivable, accounts payable, on the facilities or operations side of it, the environmental, the safety, and security the part of the building and facilities, customs, customs broker, human resources for recruiting and hiring employees and the payment and the headcount through the term of the operation.

Basically what we do is allow the companies to focus and run their operations, and focus basically on doing what they do best, which is manufacturing. They do the engineering part, the quality part, and the production part. At the end, our clients make sure that they are producing quality products and shipping out the door to get product to their customers on time, while we do the rest. Everything related to permits, licenses, the border crossing southbound, northbound, running the payroll, paying the employees, those are the services that we as a shelter provide. This is done from the time that the company begins to start up manufacturing operations in Mexico, throughout the relationship that we have with them.

Tecma Group of Companies:

In that sense it’s kind of a turn-key arrangement. You plug in your manufacturing, and that’s what you control, you control your quality, you control your shipments and also obviously you have to have direct supervisory control over the employees that the shelter company helped you to recruit and to hire.

One last bit of advice, obviously you gave a big general one, which is don’t assume anything which is good advice in general for just about anything, but is there any other issue that comes to mind that somebody who is listening to should keep in their thoughts as they’re going through this process that we’re speaking about today?

Juan Arvilla:

Yes, just recapping a little bit, about how to make sure that a decision, or startup with a shelter, a buyer, goes smoothly, I think that communication is a key part. It is important to communicate clearly what the company requirements are, what is it that is needed, what is the equipment that is being moved and installed, what are the electricity requirements, what is the requirement in headcount, and,obviously, from our side we put together a strategic plan where we list all of their requirements, and all of the items that are needed to start up manufacturing operations in Mexico. Communicating constantly and working together to make a smooth transition is key. Obviously on our side, as head of the program management department, we will always try to make sure that information is flowing between companies. We will be asking for information to make sure that everything will be in place, and we will achieve our goal to start up the operation on the day that the manufacturer specifies. From that point, we will make sure that everything happens as scheduled. Communicating and communication with our partner is key to success in this area.

Tecma Group of Companies:

Thank you for that perspective. Often when folks are listening to these podcasts, I know that questions sometimes come to mind. Would you be willing to take questions from listenerrs, is there a way that they can get in contact with you maybe by email or by phone?

Juan Arvilla:

Definitely, I’d be more than happy to do and to answer if that helps to make decisions on whether or not to start up manufacturing operations in Mexico, and to give them a better idea or perspective of what we do.
Tecma Group of Companies:

Okay. If you would just provide your email address for the listeners, maybe they can start out by going that route.

Juan Arvilla:

My email address is juan.arvilla@tecma.com.

Tecma Group of Companies:

Juan, thanks a lot for providing your insight into the important topic and hopefully those that have listened to what you have to say will take the advice that you have given to be communicative and not to assume anything. Thank you for joining us on Tecma talk podcasts and I look forward to communication with you in the future.

Juan Arvilla:

My pleasure, Steve. Thank you very much.

Remember, relevant and useful Mexico manufacturing content is available at one’s finger tips by downloading the Tecma Group mobile app from the Google Play Store, interested parties can also receive Mexico manufacturing information on a weekly basis by SMS Texting the word Tecma to 96000.

Photo credit: kris krüg

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