On account of China’s COVID-19 restrictions, semiconductor chip shortages and the worldwide provide chain disaster, Santamarina + Steta has obtained a number of requests from US and Canadian corporations to supply recommendation and authorized help on arrange new manufacturing amenities in Mexico and even transfer manufacturing actions from China and Southeast Asia to Mexico.
Regardless of the a number of benefits of shifting to Mexico, similar to USMCA commerce charges, labor prices, and plain proximity to the US and Canada, shifting from one aspect of the world to the opposite is a difficult activity.
Strictly from an actual property perspective, and with any evaluation concerning areas similar to security, labor and taxation, our consultants have recognized the primary points to bear in mind when contemplating relocating manufacturing actions to Mexico:
Geography of North America. All three nations border the Atlantic and Pacific oceans, and the US-Mexico border stretches from coast to coast. Nevertheless, the choice on the place to find a producing facility in Mexico will rely in the marketplace or area that shall be served from that facility.
For instance, whereas shifting a producing facility to Ciudad Juarez, Chihuahua could also be a good suggestion to provide items in Texas, there could also be higher choices for exporting to different nations. In the identical vein, whereas a transfer to Tijuana or Mexicali could be the most suitable choice to serve the California/Arizona market, there could also be higher options for supplying items to the Northeast from the US/Canada or Europe. Likewise, the Yucatan Peninsula has turn out to be one of many high relocation locations on account of its proximity to Florida.
Availability of actual property. For the reason that nearshoring phenomenon started, it has turn out to be obvious that whereas Mexico has top-class industrial parks alongside the US-Mexico border and in different industrial cities, Mexico has not been able to accommodate the wave of recent entrants occupied with organising operations nearer to the US and Canada.
Fortuitously, land in northern Mexico just isn’t extraordinarily restricted, and builders have the capability to serve new shoppers. Nevertheless, this could often imply that new entrants would both have to attend till builders construct new industrial amenities or must make investments extra funds to construct their very own amenities in Mexico.
With the intention to expedite this course of, lots of our shoppers have opted out of customized constructing contracts with Mexican builders.
Infrastructure and site visitors. Though there are vital land expansions to be developed in Mexico to arrange new manufacturing amenities, it’s of utmost significance that the chosen location is effectively linked by street, rail or close by ports to simplify logistics and cut back transportation. prices and dangers.
Availability of water and providers. An extra query our shoppers thought-about was whether or not the specified location had the capability to supply them with the mandatory utilities and assets for his or her processes.
For instance, since industrial actions can have a excessive demand for water, it’s essential to find new amenities in areas with enough capability to deal with water exploitation by new gamers with out being overexploited. The aforementioned, as overexploited aquifers, are often topic to bans on issuing new water concessions. Due to this fact, the availability of the mandatory water can turn out to be dearer. On this sense, whereas the northern a part of Mexico has issues with excessive drought, different areas have sufficient water to serve the brand new gamers.
One other concern to contemplate is the capability of the electrical energy system within the space and the existence of LNG/LPG pipelines.
Incentives and permits. When deciding on the placement of a brand new facility, you will need to take into account whether or not the federal and state governments provide incentives for the funding to be made, in addition to the permits, licenses, and authorizations wanted to get the manufacturing amenities up and working and in good working order.
Relocating to Mexico has confirmed to be a viable and worthwhile choice for a lot of corporations. Nevertheless, an intensive evaluation of how, the place and when to maneuver is vital.