Mexico site selection initiative do’s and dont’s
Covering all the right bases is the key to successful Mexico site selection.
During the first week of the month of August 2014, a group of professionals, expert in the process of selecting and establishing manufacturing facilities in Mexico, met at the Mexico Industrial Location & Logistics Summit, sponsored by the maquiladora industry’s leading publication, MexicoNow. The event took place at the Expo Bancomer facility in Mexico City.
Among the array of knowledgeable speakers to address Summit attendees, was Rafael McCadden. Mr. McCadden has a long history of participating in Mexico site selection projects. He has been the director of industrial & logistics at Colliers International in Mexico City for the past ten years. Prior to that, for many years, he assisted manufacturers in their Mexico site selection efforts as the executive director of the Mexican Association of Industrial Parks, or, as the organization is known by its acronym, AMPIP.
During his presentation at the Mexico Industrial Location & Logistics Summit, McCadden advised manufacturing executives as regards what to do and what not to do in the process of making a Mexico site selection decision when determining where to locate a production facility in the country.
According to McCadden, among the things that executives should make sure to do when involved in a Mexico site selection project are:
Plan – A better strategy than firing before aiming is to do the homework necessary to be in a position to be able to aim first, then fire. Understanding and acting upon the drivers of the Mexico site selection process under consideration, as well as defining the scope and schedule of activities innate to the process, is critical to the long term well-being of the business so engaged. According to McCadden, executives involved in determining where to locate a new production plant must:
- Be familiar and act concurrently with overall company strategy, as well as with customer needs in terms of proximity, delivery times and cost
- Take into account the magnitude of the investment being made, and be aware of the possible adverse repercussions associated with making a bad choice
Make Mexico site selection a team activity – In order to situate a production facility in the optimal location, a multi-disciplinary group of company employees that includes finance, logistics and supply chain, customs, manufacturing operations and strategic planning personnel and experts should be assembled for the purpose of looking at the initiative from all relevant angles.
Be concise – A preliminary list of candidates for a Mexico site selection project should consist of no more than ten “possibles.” Variables and other drivers of the initiative should then be viewed comparatively in order to turn the “long list” into a short list of no more than three candidates.
Negotiate incentives – Be prepared for the process of incentive negotiation to take up to eighteen months.
In his recitation of the Mexico site selection “do’s,” Rafael McCadden also points out that it is important to consider not only broad trends, but also specific variables that address the unique needs expressed in each company’s situation. Some of these are:
- Labor costs
- Availability of appropriately skilled workers
- Availability and cost of industrial lease space
- Construction and occupancy costs
- Proximity to major transportation routes and airports
More information on specific Mexico site selection variables, as well as counsel on the “dont’s” that can result in a project’s failure can be accessing the entire document.
LINK BELOW TO PRESENTATION: