Starting Nearshore Manufacturing: Expectations vs. Reality

Mexico has long been one of the most convenient and popular destinations for businesses looking to begin manufacturing.  However, making the move to becoming a nearshore manufacturing partner is not without risk. At NovaLink, we believe that Manufacturing in Mexico is the smartest and most cost effective choice for outsourcing  manufacturing – if you are aware of what nearshore manufacturing in Mexico really means. In this article we will explain the differences between expectations and reality in many scenarios of full service manufacturing.  Here are few facts to consider compared to possible expectations that you might currently have:

Expectation: I don’t have a prototype product, but my company can make one for me.
Reality: It is common practice for a company considering manufacturing to have a prototype product made before engaging a manufacturing partner.  Mexico is not setup with the infrastructure to bring an idea and bring it to fruition; that is unless another company is making a similar product. Have your prototype made in the US; have a developed product and market.

At NovaLink we do not produce spec products; aside from the obvious legal and trade issue reasons, we believe having the functional product specifications as well as a product our engineers can reverse engineer helps to rapidly advance the time a product can begin production.
If you need a specification product completed, there are numerous resources available to you.

Expectation: I can run at a low volume or do a short run production.
Reality: The very nature of having a nearshore manufacturing partner requires a consistent production: you can do a short-run or limited product: as long as you have plans to keep making the same short-run in the future.  The cost to produce the product, in addition to sourcing the labor would be too expensive for the manufacturing partner to undertake as a project, and if even if they could accomplish this, the final cost for the produced product would be too expensive for the client.  In short, your manufacturing, whether you are doing your own production or outsourcing, should have a steady, consistent volume and require at least 15 or more employees to produce for it to be cost-effective.

If your product does not fit these guidelines, it makes more sense to have a contract manufacturer produce it for you.  

Expectation: I don’t need a lot of money to get started.
Reality: If you are a startup, your company needs to have full-funding from an investor for your project.  We cannot work with startups without funding; providing manufacturing space, equipment and labor will require funding for your product to get started.  Said Jason Wolfe, NovaLink CEO: “There will always be a need for capital when you are starting up manufacturing outsourcing in Mexico or relocating one. However with NovaLink, we have the infrastructure in place. We also provide the ability for a company to start small and grow into a larger footprint. This means you absorb exactly the overhead proportional to the space and employee level required. Further, NovaLink saves our clients upfront investment in that the client does not need to incorporate in Mexico, hire legal to negotiate union contracts or acquire permits. We already have this in place. NovaLink is also positioned to assist our clients with capital investment if so required.”

Expectation: I have an idea and I want my company help me get it to reality.
Reality: Any manufacturing company would love to be a part of the next big thing!  However, getting that product from concept to reality is going to have to consist of a lot of footwork on the part of the client beforehand.  As a standard, before approaching any nearshore manufacturing partner you should have a good outline of what the product is going to look like and work (with engineering specifications) a general cost for production, how many people it will take to manufacture it and what kind of equipment you will likely need.  After this, you should have a prototype of your product produced so engineers like the ones at NovaLink can examine it and understand it completely. This may seem daunting but it is necessary; the more forethought and work you invest in the concept stage will help to ensure your product manufacturing is done correctly and is a success.

Expectation: I have no equipment to begin manufacturing.
Reality: Nearshore manufacturing partners such as NovaLink will assist you in getting equipment for your production if you do not have any.  However, finding and sourcing the equipment is very time-consuming (as well as finding the labor to run the equipment) and will delay the beginning of your production.  You may want to consult with a company like NovaLink beforehand and gain a better understanding of the equipment you may need and the cost of such and then explore options in finding the equipment yourself.  This will help in shortening your timeline and getting your production off the ground more rapidly.

Expectation: I will need a large labor pool.
Reality: This depends on the product you wish to produce.  A simple product may only require 5 employees to produce; a larger, or more complex product that requires more machinery, or a product that needs to be assembled, will certainly require more.  Cut and sew products, especially ones that have multiple pieces that need to be created and assembled together, like a handbag or a complex garment, can be very labor-intensive. However, some products that have a simple assembly or can be produced in a single unit, may require less employees – the best way to determine if you product will need a large labor pool to produce is to have a specification/demo made and let engineers like we have at NovaLink examine it; experts in manufacturing will be able to determine if they product you wish to produce will need a large factory team to make it.  

Expectation: There will be a lot of government red tape.
Reality: Any large manufacturing project, whether in the United States or Mexico, will require you to navigate through the regulations associated that that country – that is a certain reality.  However, it does not have to be a bureaucratic nightmare that will stop your project in its tracks: there are experts in nearshore manufacturing companies like NovaLink that can help you pilot your way through the various regulations, forms and inspections that are required.  As mentioned previously, the more legwork that is committed on the front end of your project, the easier it will be for you to anticipate what is required from the bureaucracy of your country of origin, like Mexico, allow you to budget time and plan for these contingencies.

Expectation: It will take a long time.
Reality: Here is where you may be welcomed with a pleasant surprise: if you have done your due diligence and planning for your project thoroughly, your time to getting started may be much shorter than you anticipate: At NovaLink, typically set up under our model is quick; within a month. This is dependent on many variables, however, your planning will aid in being prepared for these variables in order to move things rapidly along.  The belief that a manufacturing project will take over a year to get started is simply false.

Knowing where to begin is the most important hurdle of any large business project; understanding the realities of starting a manufacturing business in Mexico and planning for complications will make your transition from concept to reality a smooth one.    

If you are interested in beginning a manufacturing project and would like to partner with NovaLink, please contact us today: 956-621-7362.

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