Manufacturing Site Selection in Mexico: Finding Your Perfect Fit

Mexico’s manufacturing sector is booming, with its proximity to the US, skilled workforce, and competitive costs, it is attracting businesses of all sizes. However, within this vast landscape,  successfully navigating the manufacturing site selection process in Mexico by choosing the ideal location for your manufacturing facility requires careful consideration. This blog post will guide you through a site selection study focused on cost, infrastructure, connectivity, and workforce availability. We’ll also delve into the specific steps involved in selecting the perfect industrial building to house your operations.

Exploring Mexico’s Manufacturing Hubs:

Mexico boasts several regions with established manufacturing bases, each offering unique advantages. Here’s a glimpse into some key regions and cities:

The Northern Border Region: Cities like Tijuana, Ciudad Juarez, and Monterrey thrive on their proximity to the US. This translates to efficient just-in-time inventory management and faster delivery times for US customers. This region also boasts a well-established manufacturing ecosystem with experienced workers and readily available industrial facilities.

The northern border region of Mexico is a magnet for major automotive and manufacturing companies due to its proximity to the US market. Here are some of the well-known manufacturers that have established a presence in this region:

Automotive Giants: This region is a powerhouse for the auto industry. Leading car manufacturers like Ford, General Motors, Stellantis (formerly Fiat Chrysler Automobiles), and BMW that have production facilities in cities like Hermosillo, Ramos Arispe, Saltillo, and San Luis Potosi.

Beyond Cars: The reach of manufacturing extends beyond vehicles. Companies like Samsung, Honeywell, and Baxter International have set up shop in the north, leveraging the region’s skilled workforce and efficient logistics network.

Tech Titans: Even the tech industry has a stake in the north. Companies like Foxconn, a major assembler of Apple products, and  Honeywell Aerospace have ­

The Bajío Region: This central region, encompassing cities like Querétaro, Guanajuato, and Aguascalientes, is experiencing rapid growth in the automotive and aerospace industries. It offers a good balance between labor costs and skill levels, along with a strong focus on innovation and development.

The Bajío region of Mexico has become a hotspot for manufacturing, particularly in the automotive and aerospace sectors. Here’s a glimpse into some of the well-known manufacturers that call this region home:

Automotive Powerhouses:  The Bajío is a key player in the auto industry. Leading car manufacturers like General Motors, Honda, Toyota, and Volkswagen have major production facilities in cities like Querétaro, Guanajuato, and Aguascalientes. These giants are supported by a network of auto parts suppliers, further solidifying the region’s role in the automotive ecosystem.

Taking Flight in Aerospace:  The Bajío is not just about cars. It’s also gaining recognition as a major aerospace hub. Companies like Bombardier, Safran, and Pratt & Whitney have established a presence in the region, attracted by the skilled workforce and the growing focus on innovation in this sector.

Beyond Transportation: While automotive and aerospace are prominent, the Bajío caters to other industries as well.  Home appliance giants like Whirlpool and Mabe have manufacturing facilities here, leveraging the region’s strong infrastructure and central location.

The Central Region: Anchored by Mexico City, Toluca, and Puebla, this region caters to diverse industries and boasts a large pool of skilled labor. However, higher labor costs compared to the north might require careful consideration.

The Central region of Mexico, anchored by major cities like Mexico City, Toluca, and Puebla, boasts a large and diverse manufacturing base. Here are some of the well-known manufacturers that have established a presence in this region:

 

Automotive Players: While not as dominant as the northern border region, the Central region still plays a role in automotive manufacturing.  Chrysler has a major assembly plant in Toluca, and Volkswagen has a large manufacturing plant in Puebla.

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Food and Beverage Giants: The Central region caters heavily to the food and beverage industry.  Global brands like PepsiCo, Nestlé, and Kraft Heinz have established manufacturing plants here, taking advantage of the region’s access to a large consumer market and robust supply chains.

 

Chemical Powerhouses: The chemical industry also finds a home in the Central region. Companies like BASF and Dow Chemical have production facilities here, benefiting from the region’s well-developed infrastructure and proximity to major transportation hubs.

 

Pharmaceutical Power: The pharmaceutical industry is another significant player.  Global pharmaceutical giants like AstraZeneca and Merck have manufacturing facilities in the Central region, leveraging the availability of skilled labor and established research institutions.

The West Coast: This region, centered around Guadalajara, is a hub for technology, electronics, and medical device manufacturing. It offers a strong talent pool with expertise in these specialized fields.

The West Coast region, also known as “Mexico’s Silicon Valley,” is a hub for technology, electronics, and medical device manufacturing. Here are some of the well-known manufacturers that have set up shop in this innovative area:

Tech Titans: Global technology giants like IBM, Oracle, HP, Intel, and Cisco have established a presence in Guadalajara. This influx of tech companies has fostered a strong ecosystem for innovation and development, attracting other tech-oriented manufacturers.

Electronics Powerhouses:  Major electronics manufacturers like Bosch, Foxconn, Sanmina, and NXP Semiconductors have production facilities in the Guadalajara region. This concentration of electronics expertise creates a strong supply chain network, benefiting all manufacturers in the sector.

Medical Device Innovation: The medical device industry is also flourishing in Guadalajara. Companies like  AstraZeneca have facilities here, capitalizing on the region’s growing pool of skilled workers in the medical technology field.

Homegrown Success Stories:  Beyond global giants, Guadalajara also fosters a vibrant ecosystem for homegrown manufacturers. Companies like  Mavatec, a leading manufacturer of injection molding machinery, and  Jabil, a provider of electronics manufacturing services, demonstrate the region’s ability to nurture local manufacturing talent.

 

 

Cost as a Key Determinant:

While proximity to your target market plays a vital role in manufacturing site selection in Mexico, the cost of doing business should be a top priority. Here are some factors to evaluate:

Land and Building Costs: Northern border cities may command a premium due to their strategic location. Explore options further south for potentially lower land and building costs.

Labor Costs: Wages can vary significantly across regions. Compare average wages for the required skill sets in your target locations.

Taxes and Incentives: Many states offer tax breaks and incentives to attract manufacturers. Research these benefits and factor them into your cost analysis.

Utilities and Infrastructure: Assess the availability and cost of utilities like water, electricity, and waste disposal. Look for areas with reliable infrastructure to minimize disruptions.

Connectivity: Streamlining Logistics:

Efficient movement of goods is crucial. Consider these factors when engaging in the exercise of manufacturing site selection in Mexico :

Proximity to Transportation Hubs: Locate your facility near major highways, airports, or seaports. This minimizes transportation costs and ensures timely deliveries.

Border Crossings: If your target market is in the US, prioritize locations near major border crossings with efficient customs clearance processes.

Workforce: Building Your Manufacturing Team:

Finding the right talent is essential for smooth operations. Here’s what to consider:

Skills and Experience: Assess the availability of skilled workers for your specific manufacturing needs. Look for cities with established training programs that can provide a steady stream of qualified candidates.

Labor Relations: Research labor union activity in the region. A unionized workforce can provide stability but also lead to potential negotiation complexities.

 

Selecting the Ideal Industrial Building:

Once you’ve identified a promising region, the next step in manufacturing site selection in  Mexico is to find the perfect building. For those companies thinking of moving to Mexico, it is important to act quickly. In recent times, there has been a limited supply of existing buildings which has prompted the need for developers to build new industrial space for companies seeking to set up operations in Mexico. When engaging in manufacturing site selection in Mexico, seek a building that has the following characteristics:

Proximity to Markets: Consider the distance to your primary markets and the impact on transportation costs and delivery times.

Size and Layout: Ensure the building has ample space for your current and future production needs. Consider the layout and flow of operations for optimal efficiency.

Infrastructure: Verify the capacity of electrical power, water supply, and waste disposal systems. Ensure they meet your production requirements.

Zoning and Permits: Confirm the zoning regulations are compatible with your intended manufacturing activities. Research permit requirements and potential delays.

Safety and Security: Evaluate the building’s safety features and security protocols to ensure a secure work environment.

Making the Final Decision:

Once you’ve completed manufacturing site selection in Mexico and have explored various locations and buildings, compare all the data. Weight the significance of cost factors, infrastructure advantages, workforce availability, and the suitability of the industrial building. Consider conducting site visits to verify information and get a firsthand impression. Finally, choose the location that best balances your specific needs with long-term business goals.

By following these steps and conducting a thorough site selection study, you can find the ideal location in Mexico to establish your manufacturing base. Remember, the perfect fit optimizes costs, fosters efficiency, secures the right talent, and positions your business for sustainable growth.  With careful planning and this guide as your compass, you’ll be well on your way to manufacturing success in Mexico.