|Last month I met a marketing manager of a company specializing in equipment for water management. She commented that many US companies are “reshoring” because they have found that some Chinese companies consider US copyright and patent laws to be of “no consequence” and that costs of manufacturing in China are increasing. Here is some information about “reshoring” manufacturing to Mexico that might be of interest to your company.
Mexico manufacturing less expensive than China: “Mexico's hourly wages are about a fifth lower than China's, a huge turnaround from just 10 years ago when they were nearly three times higher," according to new research by Bank of America. The fastest ocean transit time from China to the West Coast is approximately two weeks or three weeks to the East Coast and generally longer with slow steaming to save on fuel. The transit time from Mexico City to New York is approximately five days and four days to Los Angeles. Many manufacturing facilities are just across the border and able to deliver to most of the US in three days. So, shipments that currently move LCL from China are decidedly less expensive when imported from Mexico. So what would it take to begin manufacturing in Mexico? The first step is to find a vendor.
Finding a vendor: Just like manufacturing in China, the basics require a company in Mexico that has the ability to produce the products you have designed and manufactured in the US. We found two companies that offer to assist you with all phases of manufacturing in Mexico –one is called “TACNA” (http://tacna.net/) and another is called “Made in Mexico” (http://www.madeinmexicoinc.com/).
Other resources: Other resources you might check into are the US freight forwarders or the Mexican consulate. Most large forwarders such as DHL Global, CH Robinson, Panalpina, or CEVA have services to and from Mexico similar to those they offer for China. Mexican consulate offices have information to promote sales of Mexican products and importing into Mexico. How can a Maquiladora program help with manufacturing in Mexico?
Maquiladora Program-Duty Free Manufacturing : What does maquilladora mean? The operational meaning is a factory or assembly plant established and operated in Mexico to encourage the development of industry in Mexico. The Mexican government allows materials to be used in “maquilas” to enter duty-free, provided the finished product is exported from Mexico. The US assigns these maquila products a zero duty rate if the finished product meets the provisions of the US Harmonized tariff schedule. What documentation is needed?
Basic Documentation: The basic guideline for exporting to Mexico is to prepare a commercial invoice and packing list along with a Spanish translation. Here are some guidelines for an export invoice provided by the Mexican government:
a) Commercial invoice: The invoice must contain the following information:
• Place and date of issuance
• Complete name and address of buyer or importer in Mexico
• Complete name and address of exporter
• Detailed description of the merchandise
• Brand name, model, marks, serial numbers, manufacturers, weight; etc;
• Unit value and total value of each item listed on the invoice and harmonized tariff number
• Signature of seller, name and position
• Shipper's invoice number and customer's order number
b) Packing List: Required when more than one item is shipped, and should include:
• Number of packages
• A detailed list of the merchandise contained in each package
• Net, gross and legal weight/volume in metric equivalents of each package and of the total shipment
Summary: Manufacturing in Mexico is now less expensive than China and transportation costs are decidedly less expensive, particularly for the shipper of smaller quantities which currently move via LCL shipping from China. Finding a vendor/manufacturer or establishing your own plant is the first step. Two companies that can assist in setting up a Maquiladora or contract manufacturers are listed. Freight forwarders and the Mexican consulate can also be of assistance in exporting to Mexico. Export documentation to Mexico is similar to that for any other country plus a Spanish translation. Next time we will take a closer look at finding a vendor and NAFTA compliance in “Exporting to Mexico part 2.”