Shelter Services in Mexico: A Guide for Foreign Manufacturers

If you’re involved in manufacturing, it’s worth considering the benefits of shelter services in Mexico. With low labor costs, access to a skilled workforce, and open trade agreements, Mexico is a great place to invest in manufacturing endeavors.

Key Takeaways:

• Mexican shelter services enable foreign manufacturers to set up operations on a shortened timeline, typically within 6 to 8 weeks.
• Shelter services provide substantial benefits, including tax incentives, exemptions from legal liability, pre-established infrastructure, and access to a skilled workforce.
• Shelter companies can handle local recruitment and human resources, while ensuring full compliance with labor laws.
• Manufacturers maintain control over production and brand standards while shelter programs manage the administrative tasks.
• There are multiple types of shelter service providers that can offer different levels of support, allowing businesses to choose the best fit for their needs.

If you’re serious about establishing a manufacturing presence in Mexico, partnering with a shelter company can provide an alternative to the expense and logistics involved in investing in a standalone company. Our guide below will provide you with all the information you need to decide if working with a shelter company in Mexico is right for you.

What Are Shelter Services In Mexico?

Shelter companies are legal entities, registered with the Mexican government through the IMMEX Program, which allow foreign manufacturers a quick and easy way to establish manufacturing operations in Mexico. These companies take on all of the legal risk and liability, providing manufactures an established and knowledgeable support system from the start.

Most shelter services only require you to provide the raw materials and components which are imported into the country tax and duty-free. Everything else, such as handling Mexican law, human resources and other administrative tasks, is handled by the company that provides shelter services.

Related: What are Maquiladoras?

You can still operate under your own name, maintaining full control over operations and implementation of policies in keeping with brand standards. But it allows you to focus on the manufacturing side of your business, while others handle the administrative tasks. 

Some of the most common services that a shelter service can offer include:

• Cost analysis to help calculate the costs of moving your manufacturing to Mexico.
• Human resources, such as recruiting workers, managing employees, and administrative tasks like accounting, all while ensuring that your business is compliant with Mexican labor laws. 
• Industrial real estate services, like providing existing infrastructure, taking care of regulatory permits, negotiating lease terms, and finding vendors and suppliers as required.
• Legal assistance, such as complying with environmental regulations and facilitating agency inspections.

For U.S. manufacturers, having all of these functions handled by the shelter company makes Mexico a valuable nearshoring alternative to less attractive offshoring manufacturing.

Related: Benefits of Manufacturing in Mexico

Benefits Of Using Shelter Services In Mexico

Shelter services offer a unique blend of benefits that domestic or offshoring alternatives just can’t provide. These companies are designed to streamline your setup, reduce costs, and minimize risks. 

By leveraging the expertise and resources provided by these entities, you can quickly and efficiently establish your presence in Mexico, all while maintaining control over your production and safeguarding your brand identity. Let’s explore the key advantages of operating under a shelter service in Mexico.

Streamlined Setup and Rapid Launch

Shelter services offer a quick and efficient way to start your manufacturing operations, typically getting production up and running in just 6 to 8 weeks. These services are designed to counteract the traditional pain points of relocating operations, allowing businesses to start quickly with fewer logistical challenges and reduced transportation costs for raw materials and equipment.

Significant Tax Incentives

Foreign companies operating under a shelter enjoy a wide range of tax benefits, including exemption from Mexican income taxes and duties. Imports and exports are duty-free, resulting in substantial tax savings compared to offshoring to countries like China. Additionally, shelter companies handle all interactions with Mexican tax and regulatory bodies, freeing you from the complexities of local tax compliance.

Recruiting and Workforce Management

Great businesses are built by great people, and shelter companies excel in recruiting skilled workers in Mexico. They take the hard work and guesswork out of finding, training, and retaining the right employees, ensuring that you begin operations with a workforce that aligns with your brand’s needs. Moreover, shelter services ensure that employees are paid fair, market-competitive wages and receive benefits, leading to higher productivity and employee retention.

Minimized Risk and Liability

Since your company technically has no legal presence in Mexico, the shelter service assumes most of the responsibility, minimizing your risk and liability. This includes managing labor law compliance, which is often supported by the Mexican government, saving you significant legal costs.

Operational Efficiency

Shelter companies provide expert response to maintenance and utility issues, mitigating their impact on your operations and profits. With most administrative tasks handled by the shelter service, you maintain control of production and full intellectual property rights, ensuring your business runs smoothly and efficiently.

Comprehensive Compliance and Reporting

Compliance is a critical concern in the manufacturing sector, and shelter companies provide full customs compliance and assurance in importing raw materials and exporting finished products. They also handle Mexican government reporting, ensuring that your operations meet local legal requirements. This allows you to focus on your core business activities without worrying about the intricacies of local regulations.

Support Without Compromising Your Brand

US companies can leverage the benefits of operating in Mexico through a shelter service without sacrificing their branding, operational prerequisites, or identity. These entities provide the necessary support for your manufacturing to thrive while maintaining your business’s core values and standards.
Related: Benefits of Maquiladoras

Choosing A Shelter Service Provider

Shelter services are offered by a number of different types of companies and it’s important to examine each one and the services they provide. This will help ensure that your shelter service provider is the right fit for your needs and can help you establish an effective production facility in Mexico.

As with any business partnership, you should do your homework before committing to a working relationship with a shelter company. First, let’s look at the different types of shelter providers and how they might align with your needs. 

• Manufacturing Communities: These organizations provide a comprehensive suite of services, providing legal assistance, labor law compliance, accounting and tax compliance and more. These are typically located in dedicated industrial parks, ensuring you’ll have all the resources you need once you establish your supply chain. 
• Full-Service Shelter Companies: These companies do not own real estate but offer the full complement of services you need from a shelter company. Many of them also partner with local landowners to help you find the right property in which to get started.
• Startup Shelter Companies: These services prioritize getting manufacturers up and running, and working towards independence. They’ll provide support and guidance for foreign manufacturers just getting started, but once the initial setup process is complete, the manufacturer gains full control over the operations.
• Contract Manufacturers Offering Shelter Services: These are autonomous contract manufacturing companies that lend their facilities to foreign companies’ projects while providing other value-added services as needed.
• Real Estate Companies Offering Shelter Services: These act primarily as real estate companies that can rent or sell you land to set up your manufacturing, though they have typically made some investments to provide some shelter services as well.
• Pick and Choose Shelter Companies: These companies take a more ala carte approach to shelter services, offering a variety of value-add services to foreign manufacturers depending on their needs. These offer flexibility to manufacturers needing a more limited or unique scope of services.

Because there are so many different versions of the shelter concept, it’s important to ask the right questions. This is why there is a large variation in costs represented by different outfits. 

Knowing exactly what you’re getting prior to starting a relationship with one of these partners can help ensure that you get all of the rewards while bearing none of the risks. Here are some of the basic questions to ask a prospective shelter company.

1. Do they operate under the Mexico shelter service provider’s business license? Or do they obtain a separate license for each new client? The answer to this question will have certain ramifications for important tax, labor, customs and environmental law.
2. What do they include within their lease costs? Do they assume responsibility for real estate taxes, building insurance, maintenance and other costs, or must these be absorbed by your company?
3. What are the services detailed within their fee? For example, does it include logistics and customs fees? What custodial and security costs? Make sure you know exactly what you’re getting for your money.
4. Do they offer inclusive billing for their services, or will there be administrative charges which could add significantly to your overheads?

Many of these questions will have a huge impact on the costs associated with the services you get, so it’s important to do your research and compare several different service providers in order to get a full picture of what you’ll be paying for.

Related: How to Find Manufacturers in Mexico

Cross Border Shipping with R+L Global Logistics

Regardless of which shelter company you decide to work with, you’ll need a reliable logistics and transportation partner you can trust. While these providers offer many advantages, if your transportation and logistics services are inefficient, those benefits can be lost. 

As experts in cross border shipping R+L Global Logistics is the perfect logistics partner to any manufacturer that operates in Mexico. With professional logistics staff that go above and beyond to provide safe, timely and value-added services, we offer outstanding solutions to help you optimize every step of your supply chain.

In addition to managing the direct transportation of goods and Mexico cross border freight shipping, our additional 3PL services provide full coverage for your supply chain. These services include:

• Customs Brokerage
• Warehousing
• Fulfillment services
• Warehouse management systems
• High Value/High Risk freight service

Allow us to help you make the most of your shelter services in Mexico. Give us a call at (866) 335-0495 to see how we can make shipping your products to and from your manufacturing facility in Mexico affordable and secure.