Automotive & Aerospace Business Opportunities
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Automotive & Aerospace
Business Opportunities
in Mexico
By Xavier Hurtado
Manufacturing Expansion Facilitator
facilitator@ManufacturingInMexico.com
www.ManufacturingInMexico.com
What we’ll cover today: • 10 Reasons to start manufacturing or distribution operations in Mexico • 5 Steps to do Site Selection in Mexico • 5 ways to start up your manufacturing or distribution operations in Mexico • 1 step to request your FREE Pass for one of our Commercial Missions in Mexico
Leveraging Mexico’s advantages for your profitability 10 REASONS TO START MANUFACTURING OR DISTRIBUTION OPERATIONS IN MEXICO
10 Reasons to Start Manufacturing or Distribution Operations in Mexico 1. Immediate access to the US market, the largest market in the world. 2. Immediate re-manufacturing turnaround: 1 or 2 days. 3. Skilled, available and affordable labor: up to 80% in savings 4. Technical training support: Schools, R&D and training centers. 5. Quality culture: ISO900, SIX SIGMA, NADCAP, AS9100, etc 6. Solid Manufacturing Clusters & Supply Chains: more than 3,000 foreign companies doing business in Mexico. 7. Tariffs savings: free Trade Agreements with 45 countries 8. Legal certainty for Intellectual Property 9. Tax incentives: No VAT and NO Income Tax under the Shelter Programs. 10.Developed “Soft-landing” culture to help manufacturers and distributors to start up operations in Mexico in a fast-track, risk-free shelter programs.
Myth: Everything in Mexico will
be inexpensive
Facts:
• Labor will be very inexpensive –
up to 80% in savings compared to
certain locations in North
America.
• Utilities, logistics, real estate
leasing and utilities will be about
the same costs as in the US.
Myth: There is low quality in the
labor force in Mexico
Facts:
• The labor force in Mexico is
trained to meet international
quality standards at technical
training centers or at their
own academic institutions.
• Manufacturing plants have
gotten their certifications in
ISO 9000, NADCAP, AS9000 and
other certifications on their
first attempt.
Myth: Security in Mexico is a
threat to manufacturers
Facts:
• Manufacturers have not
been threatened since they
do not handle cash in their
day-to-day operations.
• Manufacturers already
established in Mexico have
not left the country, but
they have expanded or plan
to expand their operations
in Mexico.
Automotive Industry
Numbers & Trends
Mexico’s Light Vehicles Exports
Mexico is the #1 Autopart supplier for the US
Mexico took the 8th place among the top 40 Vehicle producers on a global level!
International Organization of Motor Vehicle Manufacturers (OICA)
Automotive, Autoparts & Heavy Duty Industry in Mexico
Automotive Clusters and Supply Chain Integration
Ford – Success story Diesel engines plant in Chihuahua with an investment of 800 million USD, this being the first time that the diesel engine is being manufactured in America with flexibility for vehicles which can use alternative fuel.
Mexico – Global Leader in Aerospace
Manufacturing Investment Attraction
Mexico reported 232
aerospace companies that
employed more than
30,000 workers in 2010,
and primarily serve the US,
Canadian, German and
French markets
Source: AerostrategyAerospace Industry in Mexico
Aerospace Clusters and Supply Chain Integration
Labinal – Safran Group
• Labinal operates two plants in the
state of Chihuahua that are
focused on electrical systems.
• The future plan is to bring other
service lines to Mexico, thanks to
the positive experience the
company has enjoyed operating in
Mexico over the last 20 years,
where the great advantage has
been based on Mexican engineering
talent.
• Labinal is the company that offers
the largest number of jobs in the
entire sector, with more than
2,000 employees including
engineers and technicians.Bombardier Success Story
• Bombardier opened its new plant
in Querétaro Aerospace Park, with
an investment of 255.9 million
USD. This project will generate
approximately 1,105 direct jobs.
• The Learjet 85 is a project
surrounded by technological
innovation, the use of new
compound materials for the
production of structures such as
the fuselage, wings, control The production of the first
surfaces, among other pieces, will Learjet 85 prototype is an
facilitate the creation of a achievement for the Mexican
completely different airplane from aerospace sector.
the current Learjet models.Other Industries that have
grown in Mexico:
From OEMs and assembly operators to Tiers 3
• Appliances
• Engineering Design
• Electronic
• Food
• Heavy industry
• Metal Mechanical
• Multimedia
• Petrochemical & plastics
• Pharmaceutical
• Software
• TextileMexico is the most cost effective
location for US companies as far as
labor and freight
2011 US Manufacturing-Outsourcing Cost IndexWhat are the business opportunities for manufacturing
suppliers in Chihuahua, Mexico?
Supplier Supplier Supplier
Company A Company B Company C
Company Company
A C
Stamping
Plastic Plastic
Stamping Stamping
Injection Injection
Machining
Plastic Machining
Injection Machining
Company
B
As members of the Manufacturing Association in Chihuahua, we are bringing together the
different purchasing areas from other members to create a pool of needed supplies that make
an attractive business deal for qualified suppliers.Some of the Companies already
participating in the pool:
Aerospace Automotive Metal Mechanic Electronic
Plastics Medical Energy Generation
v
Various
vWho is this opportunity for?
Key suppliers from these industries will be able to bid
27 M 4 M 19 M 109 M
3M Automotive
Aerospace
Electronic
Energy Generation
Medical
116M
Metal-Mechanic
Plastic
79 M
$357,070,791.18 USDWho is this opportunity for?
Suppliers who provide…
Specific Products
• Non Woven Rolls
• Clear Plastics
US $52M Processes
• Metal Structures • Stamping
• Coated Fabrics US$132M • Plastic Injection
• Solar Glasses • Die Casting
• Hardware • Machining
• Sheet Metal
• Forging
Products • Welding
• Electronic Components • Finishing
• Wire / Cable
• Metals
• Resins
• Packaging
•Screws
• Labels
• Plastic Injection Molds
US$174M
• Springs CURRENT POOL
• Chemicals
• Rubber
US $357 MWho is this opportunity for?
Do you provide these type of processes?
41 M USD Processes Pool
$132,750,723.26 USD
26 M USD
22 M USD
14 M USD
12 M USD
8 M USD 6 M USD
0.6 M USD 0.2 M USDWho is this opportunity for?
Do you provide these type of products?
56 M USD
$60,000,000
49 M USD
$50,000,000 Products Pool
$40,000,000
$174,260,128.39 USD
28 M USD
$30,000,000
18 M USD
$20,000,000
12 M USD
$10,000,000 1 M USD
3M USD
.3 M USD .2M USD .1 M USD
$-$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$-
Non woven rolls ( co-polyester)
Non woven rolls polipropileno
18 M USD
Metalic Structures
5.8 M USD
3 M USD
Air Hose and Cylindres
Coated Fabrics
Electric and Electronic Supplies
2 M USD
Who is this opportunity for?
Solar Glass
TFMChemicals
Forms of cardboard / plaster
Do you provide these type of specific products?
Encoders, Cards, USB, Sensors
1 M USD
$50,059,197.61
Personal Protective Equipment
Specific Products Pool
Bearings
Various
10.3MThese are business opportunities in the region of Chihuahua, Mexico.
This 2014, we will develop the same business framework: we will determine
the purchasing pool of the 22 most industrialized regions in the country and
host a B2B event in November in Mexico city.
To Pre-register for this business opportunity go to:
http://Opportunities.ManufacturingInMexico.com
If these opportunities, make
sense for your company to be
in Mexico, in the following
pages, you will learn how to
find the right location, how to
start your operation and how
to join us for our Commercial
Missions in key regions in
Mexico.Elements to consider to find the most cost-effective location 5 STEPS TO DO SITE SELECTION IN MEXICO
Site Selection Process
Understanding the Project
Project Scope Company Objective Corporate Criteria
Regional Site Selection
Cities Rough Cut Cost Analysis Evaluation Matrix Final City Selection
Specific Site Selcetion
Site Rough Cut Cost Analylsis Evaluation Matrix Final Site Selection
Due Dilligence
Selected SiteUnderstanding the Project
• Project Scope: What?
– Product, Facility Size, Volumes, Equipment, Headcount & Skills,
Utilities & Consumption, Raw Material(s), Supply Base,
Customer(s)...
• Company Objective: Why Mexico?
– Cost reduction, Proximity to Customer(s), Logistics, Suppliers....
• Corporate Criteria
– Time Frame
– Buy or Lease
– Existing or BTS Facility
– Project Confidentiality / Company Exposure
– City Profile
• Border, interior, big, small.
– Expat Quality of life
– Outside or Inside Industrial Park
– Curb Appeal“Information IS NOT
Knowledge”
- Albert EinsteinKey Factors to consider for Regional & Specific Site Selection: Business Environment Labor Demographics Academic Infrastructure Quality of Life Political Environment Geography & Climate Accessibility Supply Base Infrastructure
Key Factors to consider for Regional &
Specific Site Selection:
• Turnover Rate
Business Environment • Absenteeism
• Labor • Labor Environment
• Demographics • Unemployment Rate*
• Labor Availability
• Academic • Labor Culture / Vocation
Infrastructure • Union Presence
• Quality of Life • Established Companies &
Competitors
• Political Environment
• Geography & Climate
• Accessibility
• Supply Base
• InfrastructureKey Factors to consider for Regional &
Specific Site Selection:
• Business Environment • Availability
Labor • Skills
• Fully Loaded Cost
• Demographics
• Academic
Infrastructure
• Quality of Life
• Political Environment
• Geography & Climate
• Accessibility
• Supply Base
• InfrastructureKey Factors to consider for Regional &
Specific Site Selection:
• Business Environment • Population
• Total
• Labor
• Economically Active
Demographics • Average Age
• Academic • People Entering the Workforce
Infrastructure
• Quality of Life
• Political Environment
• Geography & Climate
• Accessibility
• Supply Base
• InfrastructureKey Factors to consider for Regional &
Specific Site Selection:
• Business Environment • Universities
• Community Colleges
• Labor • Technical Schools
• Demographics • Training Centers
• Research Centers
Academic
Infrastructure
• Quality of Life
• Political Environment
• Geography & Climate
• Accessibility
• Supply Base
• InfrastructureKey Factors to consider for Regional &
Specific Site Selection:
• Business Environment • Residential Areas
• Country Clubs
• Labor • Lodging
• Demographics • Restaurants
• Academic • Hospitals
Infrastructure • Shopping Malls
• Convention Centers
Quality of Life • Cultural / Sport Activities
• Political Environment • Financial Services
• Geography & Climate • Bilingual Schools & Universities
• Expat Community
• Accessibility
• Supply Base
• InfrastructureKey Factors to consider for Regional &
Specific Site Selection:
• Business Environment • Attitude towards business
• Incentives
• Labor • Political party in power
• Demographics
• Academic
Infrastructure
• Quality of Life
Political Environment
• Geography & Climate
• Accessibility
• Supply Base
• InfrastructureKey Factors to consider for Regional &
Specific Site Selection:
• Business Environment • Topography
• Temperature
• Labor • Humidity
• Demographics • Prevailing Winds
• Rainfall
• Academic • Elevation
Infrastructure
• Quality of Life
• Political Environment
Geography & Climate
• Accessibility
• Supply Base
• InfrastructureKey Factors to consider for Regional &
Specific Site Selection:
• Business Environment • Airports
• Commercial / Cargo
• Labor • Domestic / international
flight’s frequency
• Demographics • Main roads connections
• Academic • Railroad connections
Infrastructure • Distance to other cities
• Quality of Life • Distance to the port of entry
• Parcel services
• Political Environment • Freight services
• Geography & Climate • Freight costs
• Air
Accessibility • Land
• Supply Base • Rail
• Sea
• InfrastructureKey Factors to consider for Regional &
Specific Site Selection:
• Business Environment • Services
• Labor • Maintenance
• Special processes
• Demographics • Heat treatment
• Academic •
•
CNC Machining
Chemical
Infrastructure • Tool & Die Casting
• Injection Molding
• Quality of Life • NDT
• Political Environment • Other
• Metrology
• Geography & Climate • Laboratory
• Accessibility • Raw Materials.
Supply Base
• InfrastructureKey Factors to consider for Regional &
Specific Site Selection:
• Business Environment • Industrial Parks
• Location
• Labor • Available Buildings
• Demographics • Available Land
• Building Lease Rate
• Academic • Land Prices
Infrastructure • Rail Spur
• Quality of Life • Utilities
• Water
• Political Environment • Potable
• Treated
• Geography & Climate • Sewage
• Accessibility • Electricity
• Tension (Low, High, Mid)
• Supply Base • Natural Gas
• Telecommunications
Infrastructure • Copper, Fiber, WirelessCost Analysis For both the Regional & Specific Site Analysis, operating cost scenarios must be determined by considering the following: + Labor + Process Utilities + Freight, Customs & Logistics + Building (Lease Rate, Triple Net, Utilities, CAM Fees) + Administrative = Monthly Operating Cost & Fully Burdened Cost/hr
Evaluation Matrix
City / Site / Building
Option A Option B Option C
Key Factors
Company defines priorities & weights of the
factors to be consideredDue Diligence
After selecting a site, a due diligence process is
required:
Zoning Easements
Ownership Site Studies
Utilities Feasibility Soil Mechanics
Water Topographic
Sewage Environmental Studies
Electricity Phase One
Natural Gas Phase Two
Permits & Registrations
Note: you can by-pass this long and costly process by leasing your
industrial facility in Mexico with a credited real estate companyLocal Knowledge is Key to :
Obtain up-to-date & detailed information
Clearly differentiate pros and cons of the available
options
Avoid unnecessary problems & costly mistakes before
and after the operation.Different ways to leverage Mexico’s advantages for your operations 5 Business models to start manufacturing or distribution operations in Mexico
5 Business models • Finding a Joint Venture Partner • Acquiring an existing operation • Starting up with a Stand Alone operation • Contract Manufacturing • Starting up with a Shelter Program
5 Business models
Finding a Joint Venture – They might be experts to do business in Mexico
Partner – They might speed up the start up process due
to local networking
• Acquiring an existing – They might be well connected to help you
import & export
operation
– You do not have full control of your operation
• Starting up with a – You have the risk of losing your intellectual
Stand Alone operation property
– You will face liabilities in Mexico in case of any
• Contract mistakes or problems with the operations
Manufacturing
• Starting up with a
Shelter Program5 Business models
• Finding a Joint Venture – Employees will already have the
needed training for your process
Partner – Legal and operational permits
might already be compliant
Acquiring an existing
– High entrance cost
operation – You will be responsible for all
• Starting up with a the previous and ongoing legal and
operational liabilities
Stand Alone operation
• Contract
Manufacturing
• Starting up with a
Shelter Program5 Business models
• Finding a Joint Venture – You will have full control of your
operation
Partner
– High entrance cost
• Acquiring an existing – High and costly learning curve
operation – Lack of local networking
– High risk and liabilities for all
Starting up with a legal, labor, fiscal and customs
Stand Alone operation start-up and operational permits
(functions that are not your core
• Contract business)
Manufacturing
• Starting up with a
Shelter Program5 Business models
• Finding a Joint Venture – You will never have control
of your production
Partner
– You risk your intellectual
• Acquiring an existing property
operation
• Starting up with a
Stand Alone operation
Contract
Manufacturing
• Starting up with a
Shelter Program5 Business models
• Finding a Joint Venture – You will have immediate access
to the local networking and know-
Partner how to do business in Mexico
• Acquiring an existing – You have full control of your
operation
operation – You can start up in less than 9
• Starting up with a weeks
– You can choose to not have a
Stand Alone operation legal entity in Mexico
• Contract – No liabilities in Mexico: labor,
fiscal, legal and other operational
Manufacturing permits
Starting up with a
Shelter Program10 things to look for in a Start
up Partner or Shelter Program
Make sure you get the following benefits:
1. Free Cost Model Simulation comparing different regions
2. Flexible commitment: on any size project (headcount or Sq. Ft.)
3. No entrance or exit fee at the termination of your contract (with
coordinated exit strategies)
4. Fast and worry free start-up operations (9 weeks)
5. Flexibility on how to operate in Mexico: incorporated or not Incorporated
6. Tax Savings: No VAT and no INCOME TAX
7. Billing transparency & no mark ups on purchasing in Mexico
8. Full Compliance Assistance: fiscal, customs, labor and environmental (no
red tape and no administrative risk or liabilities)
9. Customs Certified Program: quick processing on cross-border transactions
10. Ask for full administrative support: it will allow you to concentrate 100%
on your manufacturing operation, not on human resources recruitment,
looking for suppliers and so on.How to start up manufacturing or distribution operations in Mexico You can start up in a shelter program protecting your company from risks and liabilities, including: • Start up, operational and environmental permits • Human resources: recruiting & managing skilled labor • Customs: Setting your importation & exportation proper documentation to save on taxes and duties • Fiscal & Accounting: preparing your company to save on taxes like VAT, and Income Tax • Freight forwarding services
10 things to look for in a Start up
Partner or Shelter Program
Make sure you get the following benefits:
1. Free Cost Model Simulation
2. Flexible commitment: on any size project (headcount or Sq. Ft.)
3. No entrance or exit fee at the termination of your contract (with coordinated exit strategies)
4. Fast and worry free start-up operations (9 weeks)
5. Flexibility on how to operate in Mexico: incorporated or not Incorporated
6. Tax Savings: No VAT and no INCOME TAX
7. Billing transparency & no mark ups on purchasing in Mexico
8. Full Compliance Assistance: fiscal, customs, labor and environmental (no red tape and no
administrative risk or liabilities)
9. Customs Certified Program: quick processing on cross-border transactions
10. Ask for full administrative support: it will allow you to concentrate 100% on your
manufacturing operation, not on human resources recruitment, looking for suppliers and so
on.Join us for one of our next Commercial Missions
Request your seat for one of our next commercial
missions in key automotive and aerospace clusters.
You will visit:
• 2 automotive / aerospace companies
• The State Government Secretary of Economy High
Technology Training Centers and Technical
universities
• Industrial Parks: available buildings and Land
reserves for Build-to-suit projects
• Start Up & Shelter Operation concept
• Logistics in Mexico
To learn about specific dates go to:
http://CommercialMission.ManufacturingInMexico.comThank you!
Request your seat for our next commercial mission in Key
Automotive and Aerospace `regions
http://CommercialMission.ManufacturingInMexico.com.
By Xavier Hurtado
Manufacturing Expansion Facilitator
facilitator@ManufacturingInMexico.com
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