When launching any kind of new business venture, choosing the right location is critical. This is particularly true when it comes to manufacturing, as local tax laws, talent pools, and standards of living can all have an outsized impact on financial performance.
In recent years, offshoring has become increasingly frowned upon within the industrial world, with more and more manufacturers moving their plants back to North America. Mexico can be an especially advantageous place for launching a manufacturing business, whether that’s a business focused on food and beverage, cosmetic products, or beyond.
Consider just a few of the top reasons to launch a manufacturing company in Mexico.
Why Choose Mexico for Your Manufacturing Business?
1) The Ease of Trade
First and foremost, it’s worth noting that Mexico currently has 13 free trade agreements (FTAs) in place, the most of any country in the world. This connects Mexico with more than 50 different countries, providing manufacturers with ample room for expansion and growth.
Of particular note is the United States Mexico Canada Agreement, one of the strongest and most favorable trade agreements in the world. However, Mexican-based manufacturers also benefit from the Trans-Pacific Partnership, the Pacific Alliance, and more.
2) Reasonable Standards for Regulatory Compliance
One consideration for every business owner is the local regulatory threshold. While Mexico does have some basic standards in place, meeting those standards is fairly easy. For food and beverage companies, as well as cosmetic manufacturers, working with professional legal regulation and compliance services makes due diligence a breeze.
Relatedly, Mexico is a favorable environment for IP law. That’s largely due to Mexico’s involvement in so many international pacts and treaties, which provide businesses with a number of important IP safeguards. Again, professional legal regulation and compliance services can provide greater insight.
Manufacturing companies depend on strong and accessible infrastructure. This is another area in which Mexico really shines. Because Mexico has such a long history of robust manufacturing, the nation has excellent infrastructure already in place.
This infrastructure includes expansive railways and highways, which not only cover the entire country but also reach deep into the United States. And as more and more international manufacturers bring their operations to Mexico, the investment in infrastructure has become increasingly significant.
4) The IMMEX Program
The IMMEX Program is one of the big motivators for foreign manufacturers bringing their operations to Mexico. Essentially, this program allows industrial companies to import whatever materials or components they need, tax- and duty-free. The only requirement is that they export their products from Mexico within a reasonable time span.
These cost-saving benefits are substantial, but the IMMEX Program benefits manufacturers in other ways, as well. For example, the program allows businesses a chance to operate under a shelter manufacturer, basically a quick and easy way to get up and running as an official, legal Mexican entity. The upshot of this is that foreign manufacturers can start and scale their Mexican operations quite expediently.
5) Additional Reasons to Choose Mexico for Your Manufacturing Business.
There are plenty of additional reasons for manufacturers to choose Mexico as their home base. Consider:
- For American companies, Mexico offers a favorable exchange rate.
- Mexico offers a skilled workforce and low labor costs.
- Geographically, Mexico occupies a centralized, strategic location.
- There is a reliable electric grid in Mexico (see previous point about stalwart infrastructure).
- Mexico is already home to plenty of vigorous manufacturing entities, making it a great environment to set up shop.
The bottom line: Location is critical for manufacturers, and Mexico is one of the all-around best options for establishing a new operation. One way to position your company for long-term success is by recruiting professional legal regulation and compliance services, which can help you navigate the legalities of Mexican manufacturing. Find out more about how these services can establish your cosmetic or food and beverage company for growth and vitality, by contacting Aldo Heladio Verver y Vargas Duarte, Antonio Grimaldo Monroy or Álvaro Israel Pérez Vega, at VCGA Consultores (VECEGEA S.C.) in Mexico City.