Manufacturing companies gain a multitude of benefits by outsourcing manufacturing to Mexico, such as proximity to the United States, skilled labor forces, cost advantages, favorable trade agreements, and a well-developed infrastructure. These advantages enable companies to optimize production processes, increase efficiency, and improve their bottom line. Manufacturing in Mexico doesn't have to be complex or time-consuming. NovaLink is the ideal partner if you're considering Mexico as a destination for manufacturing.

1. Getting Started With
Manufacturing in Mexico
2024

2. 2
Overview
Getting started with manufacturing in Mexico doesn't need to be complex or
time-consuming. If you're exploring Mexico as your manufacturing
destination, NovaLink is your ideal partner. Our efficient, streamlined process
for initiating manufacturing operations in Mexico, state-of-the-art facilities,
and three decades of experience ensure a rapid and hassle-free transition.
When comparing manufacturing in Mexico to China, the advantages of
reshoring production to North America become crystal clear.

3. 3
The Manufacturing Process Is
the Same for Large and Small
Companies
Mexico's traditional shelter companies provide
services that are not integral to their customers'
manufacturing processes. From A to Z, we can assist
your business with all tasks and functions required to
manufacture your products in Mexico. We provide
manufacturers with a comprehensive and all-inclusive
service that is truly unique in the market.
Whatever the size of your company or where you are
in the process of starting, NovaLink can help. We do it
at a low cost and with little risk.

4. 4
Understanding the Mexican
Manufacturing Landscape
Due to its proximity to the United States, cost-effective labor force, and trade
agreements such as the USMCA, Mexico has become a prime manufacturing
destination. It is important, however, to understand market dynamics.
Analyses of the industry
Decide which industry or sector you would like to enter first. Manufacturing sectors in
Mexico include automotive, electronics, aerospace, and medical devices.
Analyses of the market
Assess the size of the industry market first. Analyze Mexico's current and projected
demand for your products. Identify emerging trends, consumer preferences, and
changes in market dynamics that may impact your manufacturing strategy.
Analyses of competing products
What are your competitors like? How much of their market share do they hold?
Position your company effectively by analyzing their strengths and weaknesses.

5. 5
Selecting the Ideal
Manufacturing Location
It is crucial to choose the right location when establishing a
manufacturing presence in Mexico. Your business's success can
be significantly impacted by this. Mexico offers numerous
opportunities for manufacturing companies thanks to its
growing economy and strategic geographic position.

6. 6
Selecting the Ideal
Manufacturing Location
• The proximity of suppliers is a key consideration when choosing a manufacturing
location. Availability of raw materials, components, and parts is critical.
• Logistics play a pivotal role in manufacturing when it comes to transport infrastructure.
Transporting goods to and from the facility requires adequate road networks, ports, airports,
and railways.
• Manufacturing success depends on a skilled and reliable workforce. The availability of
labor in the chosen location is crucial. Consider the size, skills, and wage expectations of the
local labor pool.
• A manufacturing location's regulatory environment can significantly impact operations.
The tax structure, labor laws, environmental regulations, and safety standards may differ by
region.
• The overall cost implications of each potential manufacturing location must also be
considered. Indirect expenses include utilities, taxes, and insurance in addition to production
costs. Analyze all relevant aspects to determine which location is most cost-effective.

7. 7
Do You Have a Minimum Order
Quantity (MOQ)?
A minimum order quantity (MOQ) is the least number of units
that must be purchased at once in manufacturing. MOQs are
usually used for production runs, but manufacturers can set them
for different types of orders. NovaLink does not establish
relationships with its manufacturing partners based on MOQs. A
successful, financially-viable manufacturing project requires
consistent volume that engages full-time manufacturing teams
year-round.

8. 8
Supply Chain Questions You Should
Answer Before Manufacturing in
Mexico
You should always ask prospective manufacturing partners for specific supply
chain metrics to make sure they’re capable of producing your product. Here are
a few questions you should ask before reshoring manufacturing to Mexico:
• Turnover rate: Is your partner able to sustain a labor pool for his projects
and increase them when needed?
• Factory costs: Is there some unforeseen overhead you may not have
expected or need to plan for?
• Transportation costs: Again, with regards to location, what are the average
costs and expenses related to the transportation of your goods to market?
• Port of Entry time for crossing trailers: If you have decided on a shelter
manufacturing partner, what is the average time it takes for your goods to
be transported across the border into the U.S.?

9. 9
What Is the Cost of Starting a
Manufacturing Operation in Mexico?
Before you can determine how much does it cost to start a company in Mexico, you
will need to address several issues and misconceptions associated with starting a
manufacturing operation.
• What type of products do you want to manufacture? There will be different
issues depending on the type of goods you want to make and how you intend to
import them back into the United States. It will be less expensive to procure
materials and create a simple product, like a garment, while it will be more
difficult to make a complex product, like an electronic device. The location of your
manufacturing operations is crucial determining the cost to start a company in
Mexico.
• Do you wish to start on your own or do you want to use a shelter model?
Foreign manufacturers can open maquiladoras in Mexico through the shelter
manufacturing model without going through the paperwork required to establish
a Mexican company. Your manufacturing will run cheaper if you do everything
yourself in Mexico, but it will also take a lot longer and be more challenging.

10. 10
Mexico Regulatory Compliance
Navigating the complex landscape of regulatory compliance in Mexico can be a
daunting task. However, it is essential for businesses looking to operate
manufacturing successfully in this vibrant country.
Compliance is crucial for businesses to avoid legal issues, penalties, and
reputational damage. It ensures that your operations align with Mexico's legal
framework, fostering trust among stakeholders.
Mexico has various regulatory agencies overseeing different sectors.
Understanding how your business operates is key to compliance. Agencies like
the Federal Commission for the Protection of Sanitary Risks (COFEPRIS) and the
National Banking and Securities Commission (CNBV) play vital roles.

11. 11
Mexico Manufacturing
Advantage
With its strategic location, abundant labor force, and attractive trade
agreements, Mexico has become a popular manufacturing destination. Its
proximity to the United States, the world's largest consumer market, simplifies
transportation and reduces lead times. The Mexican workforce is young, highly
skilled, and competitively paid. As part of the United States-Mexico-Canada
Agreement (USMCA), Mexico has signed a number of trade agreements.
Mexico's advantages make it an ideal location for manufacturing operations in
industries like automotive, aerospace, and electronics.

12. 12
Why Mexico is a Better
Manufacturing Location than
China
Mexico offers several advantages over China for manufacturing companies,
including:
• Proximity to Market: Reduced transportation costs and lead times enable companies to respond quickly to
changing market demands.
• Lower Labor Costs: Mexico's labor costs are significantly lower than China's, making it an attractive option
for companies seeking to reduce production costs.
• Streamlined Supply Chains: Mexico's modern transportation infrastructure and maquiladora program
simplify supply chains.
• Maquiladoras: The IMMEX program, established in 1965, allows companies to import raw materials and
equipment duty-free provided they export finished goods.
• Favorable Trade Agreements: Mexico's extensive network of trade agreements makes outsourcing
manufacturing to the country attractive. Trade between the United States, Mexico, and Canada is
preferential under the USMCA.
• Infrastructure and Supply Chain Integration: Infrastructure investments have increased Mexico's supply
chain integration, creating an efficient logistics network.
• Intellectual Property Protection: IP protection is a concern for many companies considering outsourcing
manufacturing. IP laws and enforcement mechanisms have been strengthened in Mexico
• Government Support: Mexico's government offers various incentives and support programs for foreign
investors.

13. 13
Proximity to the Market and
Skilled Labor
Manufacturing companies have access to a vast consumer market in Mexico
because of its proximity to the United States and Canada. As a result, they can
respond quickly to changes in demand patterns.
With more than 130,000 engineers graduating annually, Mexico has a large,
skilled, and affordable workforce. The labor costs in Mexico are significantly
lower than those in the United States. Due to this, it is an attractive option for
companies seeking to reduce production costs without sacrificing quality.

14. 14
Supply Chain and Maquiladoras
* Federal Reserve Bank of Dallas: https://www.dallasfed.org/research/swe/2022/swe2203/swe2203b

15. 15
Favorable Trade Agreements
Manufacturing outsourcing to Mexico is also attractive due to its extensive
network of trade agreements. Trade between the United States, Mexico, and
Canada is treated preferentially under the United States-Mexico-Canada
Agreement (USMCA). Over 480 million consumers benefit from this trade
agreement, which eliminates or reduces tariffs, streamlines customs
procedures, and provides market access. Companies can expand their market
reach and gain a competitive edge by leveraging these trade agreements.

16. 16
Favorable Trade Agreements
“The new Market Access chapter (of the USMCA) will more effectively
support trade in manufactured goods between the United States, Mexico,
and Canada by removing provisions that are no longer relevant, updating key
references, and affirming commitments that have phased in from the
original agreement.” - Office of the United States Trade Representative

17. 17
Infrastructure and Supply Chain
Integration
The Mexican government has made significant investments in infrastructure,
resulting in a logistics system that is efficient and enhances supply chain
integration. Transportation systems in the country, including ports, railways,
and highways, facilitate international and domestic trade. In addition,
Mexico's manufacturing clusters, such as the Bajio region and the Mexico
City metropolitan area, offer specialized industrial parks and infrastructure
tailored to specific industries. Streamlining operations, reducing
transportation costs, and improving supply chain visibility are all possible as a
result of these factors.

18. 18
Intellectual Property Protection
Many companies considering outsourcing manufacturing are
concerned about protecting their intellectual property (IP). In recent
years, Mexico has strengthened its IP laws and enforcement
mechanisms. Several international agreements have been signed by
the country, including the World Trade Organization's Agreement on
Trade-Related Aspects of Intellectual Property Rights (TRIPS). By
establishing a legal framework in Mexico, companies can protect their
valuable intellectual property.

19. 19
Incentives for Manufacturing
Investment
The Mexican government offers various incentives to attract foreign investment in
the manufacturing sector, including:
• Tax benefits: Companies can benefit from reduced tax rates, exemptions, and
deductions.
• Investment promotion programs: Initiatives like the Investment Promotion
Program (PPI) and the Strategic Investment Project (PSI) offer financial support
and guidance.
• Training and development programs: The government provides training and
upskilling programs for workers, ensuring a skilled and adaptable workforce.

20. 20
Partnering With a Nearshore
Manufacturing Partner
Working with a nearshore manufacturing partner like NovaLink can help
international companies navigate Mexico's manufacturing complexities. A partner
with local expertise can provide:
• Market knowledge: In-depth understanding of the Mexican market,
regulations, and business environment.
• Supply chain management: Streamlined supply chain operations, reduced
lead times and costs.
• Labor management: Access to skilled and affordable labor, with expertise in
labor laws and regulations.
• Regulatory compliance: Guidance on navigating Mexico's regulatory
environment, ensuring compliance with all relevant laws and regulations.

21. 21
What Does NovaLink
Manufacture?
Currently NovaLink manufactures everything from aircraft seating,
activewear, fire extinguishers, wire harnesses, patio furniture and water
meters, among others. The company has facilities in the border cities of
Brownsville, Texas and Matamoros, Tamaulipas, Mexico. NovaLink’s near-
shore contract manufacturing services and highly-skilled workforce are the
ideal solution for all companies looking to reduce costs associated with
manufacturing from large, blue-chip corporations with brand name labels to
the small and medium-sized companies that have limited financial and
human resources to effect a near-shore or offshore manufacturing platform.

22. 22
Conclusion
Manufacturing companies gain a multitude of benefits by outsourcing
manufacturing to Mexico, such as proximity to the United States, skilled labor
forces, cost advantages, favorable trade agreements, and a well-developed
infrastructure. These advantages enable companies to optimize production
processes, increase efficiency, and improve their bottom line. Manufacturing
in Mexico doesn't have to be complex or time-consuming. NovaLink is the
ideal partner if you're considering Mexico as a destination for manufacturing.

23. 23
NovaLink Nearshore Manufacturing
6665 Padre Island Highway Suite B
Brownsville, TX 78521
(956) 621-7362 contact@novalinkmx.com https://www.linkedin.com/company/novalink
www.novalinkmx.com