Where should you locate your manufacturing plant?
The industrialized area in Mexico is huge – it extends from the U.S. border to south of Mexico City. There are large and small urban regions, multiple industry clusters, and varying distances from suppliers and markets. With all of these factors to consider, manufacturing site selection can be challenging, and the best decision can only be made with reliable data and fact-based analysis. Our site selection services can help you choose the right industrial center for your company and new plant.
Regions in Mexico for Manufacturing Sites
Mexico has multiple regions that are ready to host manufacturing sites. Our team can help you explore which area works best for your company’s specific manufacturing needs and requirements so the site selection process is less daunting–but here’s a quick overview of some of the top choices to consider when choosing a site for your facility:
The border zone stretches about a hundred kilometers of the U.S.-Mexico border. This site includes the cities of Tijuana, Mexicali, Nogales, Juarez, Nuevo Laredo, and Reynosa. These locations have been industrialized for a while, so services and manufacturing skillsets are more high-quality and accessible to your company. Plus, being so close to the U.S. makes it the ideal space for companies with customers, services, and suppliers in the country.
That said, competition and incentives are is steep in this region, plus services and real estate are more costly. Security at your manufacturing facility can also be an issue since border cities have high levels of crime that could impact your plant.
Central Mexico, also known as the Bajio region, stands immediately north of Mexico City and comprises the states of Aguascalientes, Guanajuato, San Luis Potosi, and Queretaro, plus a wide range of cities within.
This area is home to manufacturing clusters in several industries, including automotive, electronics, apparel, and food production. This site offers a good market for skilled labor and services with a low turnover rate and reasonable costs. Perhaps its best draw is the excellent distribution pathways to the Mexican market and its accessibility to major local ports. That said, if your goods are being shipped to the north (the U.S. or Canada), this location may be too far away for your company requirements.
The Bajio region is still growing, so there’s not a lot of manufacturing infrastructure to work with here yet, or at least there is not enough to support the existing population, which can cause congestion at this site.
The states of Coahuila, Nuevo Leon, and Chihuahua, and the areas around Monterrey and Saltillo, are industrialized regions, so they’re ripe with available manpower and services. Plus, this site is just a relatively quick drive away from the U.S., making it a great site for your manufacturing plant.
Skilled labor is also generally cheaper and has less turnover, which is why it’s often chosen as a home for manufacturing companies in different sectors. By choosing Northeast Mexico as your base, however, you’ll have to settle with higher manufacturing costs (though still less than the border zone) and a disconnect with the Mexican market which is closer to Mexico City.
Northwest Mexico comprises the state of Sonoro, plus the cities of Hermosillo, Empalme, and Guaymas. This site is strategically located close to the Arizona border and the U.S. West Coast; it also offers great port access to the Pacific Ocean. That said, being further from Mexico City, there are fewer opportunities at this site to connect to the local market.
The region hasn’t been industrialized for long, which translates to lower manufacturing and labor costs, especially compared to manufacturing plant locations in the north and by the border. That, plus a smaller population, makes for fewer available skills and services at this site. Still, team turnover is lower, so this does not pose much of a problem for your manufacturing site and product development.
What do you need to know to make an informed choice?
Labor: Labor markets are very localized in Mexico. Pay rates are important but there is so much more to consider during the site selection process. You need to know what benefits to offer, what the local union environment will be and the turnover you can expect for each market you are considering. You also need to know if the skills you require are available now and to support growth for your manufacturing company in the future.
Real Estate: Everyone knows that location matters when it comes to real estate. Leasing, purchasing, and availability vary from region to region and within urban areas in Mexico. But there are many other questions when developing your manufacturing strategy and managing the location selection process. Is the type of plant you need available now or will it the plant need to be built? Should you lease a plant or purchase one? The answers will depend on the site you select and your development requirements.
Logistics: You want your site to optimize inbound and outbound logistics, but you also want to choose a site that gives you the best opportunity to add new customers. You probably want goods and personnel to travel easily between your manufacturing facilities. You may also need local services and resources nearby. The best location needs to balance all of these factors.
Security: Will my operation and personnel be safe in Mexico? The answer is yes, but safety and security vary widely in Mexico as they do in most countries. Some locations offer a safer environment than most American cities while others are less secure for certain factors. You want to be sure your assets and employees will be safe no matter where you decide to locate your plant. You need to know the specific risks for each manufacturing location, and the steps you will need to take to maintain a safe operating environment in that region.
Customers: Where are your customers, current and future, located? Think about how this relates to your development process and operations, particularly how it will affect the way you reach your market.
Services: Companies require services from other businesses to function efficiently. Choose a site that gives you easy access to what your production team needs, whether local or foreign.
Appeal: An often overlooked factor in picking a location is the appeal. Remember that your manufacturing business company will be visited by executives and employees from home base, especially in the first years of business. Is the location conducive for business and travel?
How do you get reliable answers to your location questions?
Tetakawi advisors are experts at helping foreign companies select the right location in Mexico. Our industrial site selection team can provide you with the data you need to make an informed decision on location. We create a customized comparison of operating costs, risks and benefits for each location you are considering using the factors that are important for your business. If you do not have manufacturing locations in mind, we can recommend a short list for comparison. Our analysis is based on:
- Daily statistics from companies employing more than 24,000 people
- Real-time data on wages, benefits, salaries, utilities, logistics, expenses and more
- Surveys, published data, and field studies for each location
Working with a trusted advisor can make the site selection process easier. Does your organization need to:
- Choose a location with the lowest operating cost?
- Optimize logistics?
- Find a sustainable supply of skilled employees?
- Minimize turnover?
- Optimize lifestyle for expatriate employees?
- Maximize local market growth?
- Access special processes near your factory?
How can Tetakawi help you find the right manufacturing venue in Mexico?
The Tetakawi Site Selection Service begins with a company needs and requirements analysis. We work together to develop a short list of potential locations based on the critical selection criteria for your manufacturing plant. Using our research and data mining resources we identify, collect and analyze the criteria for each location. Based on the information we extract, we calculate an estimated operating cost for each location and generate an in-depth report for your company. Our report includes a comparison for each critical factor, the estimated operating cost for your business in each location and our recommendations. We can simply provide you with the report or, if you prefer, we can include a presentation and discussion at your facility. Either way, our team can help you take the next step in your manufacturing process, and you will be able to maximize your chance of success by choosing the best location in Mexico for your business.
Ready to get the data you need to make an informed choice about where to locate in Mexico?
Contact us to talk with a Tetakawi Advisor.