Get Answers for Your Nearshore Manufacturing Frequently Asked Questions
Thank you for inquiring with NovaLink. Please refer to the answers below for all your Nearshore Manufacturing Frequently Asked Questions. Once you are to a point where you are manufacturing your own products and would like to discuss Manufacturing in Mexico, we should talk.
Manufacturing is the actual process of making or producing a product. Operations is the overall management of the manufacturing project, many aspects such as logistics, quality, production and warehousing. Operations can be included in full service manufacturing.
Contract manufacturing refers to the agreement between a company that is making a product and a company or firm (“contract manufacturer”) that contracts with a firm for components or products. In short, contract manufacturing is a form of outsourcing or full service manufacturing. At NovaLink, when a potential client approaches us with the intention of finding a contracting partner, and it is determined the client is a good fit for Contract Manufacturing in Mexico, the client is carefully put through a 9-step process to ensure the relationship and transition of business is conducted smoothly. This includes:
Classifications / Permitting
Relocation / Installation
Distribution / Warehousing
The IMMEX program is a manufacturing solution created in the 1960’s to utilize preferential tariff agreements between the U.S. and Mexico & to encourage foreign investment in that country. The IMMEX program is an acronym in Spanish for “Manufacturing, Maquila and Export Services Industries Program” (Industría Manufacturera Maquiladora y de Servicio de Exportación).
More commonly, the IMMEX program is known by their traditional name “Maquiladora”.
Typically set up under our model is quick; within a month. This is dependent on many variables. Lead time on equipment and raw materials to be used, etc. Since NovaLink is the incorporated business in Mexico and holds current maquiladora permits, the time constraint is not on the legal side of setting up. Then of course you have the set up of equipment time and the process of training the operators in the processes.
It is preferential that you understand manufacturing so that you can be a part of the success of the program. It is your product that we would be manufacturing so it is important that we make them to your satisfaction. It is also beneficial when the client has involvement in the manufacturing process set up and approval. However, if that is not available, NovaLink engineers can often times step in and engineer the process and necessary equipment. Mexico and Mexican labor? This is an area that is covered by NovaLink. So the general rule of thumb is that you do not need to know anything getting started, but, rest assured you will learn a lot through the process and the transparency with which NovaLink works.
For starters, assuming they know enough about Mexico to dive in and do it alone. Secondly, committing to an overhead structure that they must grow into rather than starting with a partner that allows them to grow into their needs.
With NovaLink, it is up to the client. We welcome expat involvement and work diligently to make them feel a part of the Mexican, NovaLink family. However, there is no need to commit long, term resources to the Mexican operation. Teach us and then we will run with it and manage the operation for our new partnership.
All companies should strive to have detailed spec packages along with costed Bills of Materials for their products. However, if you don’t, NovaLink’s experience across multiple industries and ERP systems means we can assist you in building not only these items but work aides, line balances and reporting systems for your company.
It never hurts, but, no. NovaLink has a bilingual staff at the management levels that will be dealing with your personnel. Aside from this, at the corporate level, the executive management and many of the upper management are fully bilingual.
Just as dealing with any foreign country, there are intricacies that can become challenges. This is why it is important to have NovaLink partner with you so that these issues never become yours. We have been doing this for 30 years and know how to wade through the details of Mexican regulations and laws
Both have succeeded extremely well and failed just the same. Size does not matter! It is how you do it. Who you partner with and what you know. It usually boils down to partner with the right company and people. Those that will learn your business and truly become your partner. You fail, they fail!
There are multiple reasons. Available labor pool that is trainable and ready to make a career out of manufacturing. Like the US of the 80’s and 90’s. Proximity to the market. You save time and money by using Nearshore Manufacturing Services. You are now planning to a shorter time period versus months out. This means you hold fewer items in finished form because you are ordering weeks out opposed to months. You also commit less to inventory. You are more flexible of what to convert your raw materials into. What do I need a week from now? That is what I will convert. You also are more able to customize your product to your customer requests. Build closer to the sales cycle and orders while nearshore versus offshore. Labor savings. Mexico is less costly than US labor and is in most cases comparable to other offshore countries as their costs continue to rise disproportionately to Mexico.
If you are lucky and are able to quickly get through the red tape associated with starting operations in Communist China, the average amount of time is 33 days. In Mexico, with the aid of NovaLink’s services, you may be up and running in as little as 6 days. source
The average cost of shipping a container across the Pacific to the U.S. is $4300. The average cost of delivering a container from Mexico is $200.
The average time for delivery of products from China, shipping across the Pacific is 4 weeks. The average time for a shipment of products from Mexico, from just across the Texas border, is one.
In 2000, workers in Mexico’s manufacturing sector earned nearly 60% more than their Chinese counterparts, according to the Boston Consulting Group. Now they earn 11% less.
Facilities in China have become so expensive that in 2015 a Chinese Business Group opened an industrial park in Mexico rather than their own country.
The Maquiladora, a young and talented worker population with a mean age of 26 years, has demonstrated the capacity to construct sophisticated products. As stated by the Organization for Economic Cooperation and Development (OECD), Mexico’s 3.5 rate in the “technological sophistication level of exported goods” is above the average of OECD exports, higher than Brazil and similar to Asian countries. Every year, 115,000 Mexican engineers are graduated in science and technology careers.
This is one of the most common manufacturing in Mexico myths. While conceding that many U.S. high-wage manufacturing jobs were relocated to Mexico, China and other foreign locations as a result of NAFTA, Morris Cohen, Wharton professor of operations and information management, argues that NAFTA has, on balance, been a good thing for the U.S. economy and U.S. corporations. “The sucking sound that Ross Perot predicted did not occur; many jobs were created in Canada and Mexico, and [the resulting] economic activity created a somewhat seamless supply chain — a North American supply chain that allowed North American auto companies to be more profitable and more competitive.”
The North American Free Trade Agreement (NAFTA; Spanish: Tratado de Libre Comercio de América del Norte, TLCAN; French: Accord de libre-échange nord-américain, ALÉNA) is an agreement signed by Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994.
The benefits to a U.S.-based business relate primarily to the cost, quality and availability of labor, and the proximity to market. Other benefits of operating through a Maquiladora include:
- Unlimited duty-free imports
- Unlimited foreign capital investment
- Limitless options for type or amount of product that can be manufactured
- Reduced manufacturing costs
- High-quality product
- Reduced transport time and cost (specifically in comparison to manufacturing in eastern countries)
Mexico has remained consistent with costs and taxing, which allows companies to plan budgetary needs in advance and avoid any surprises that may set them back. It has also permitted U.S. companies to rely on Mexico as a manufacturing partner. As of 2015, 90% of Fortune 500 companies have investments in Mexico, making the maquiladora industry vital to the U.S. economy.
The Maquiladoras in Mexico are the labor pool for the NovaLink facilities and operations. Our relationship with them makes the service and quality we offer to our partners possible.
To better understand if your product or company is a good fit for manufacturing with NovaLink, we have provided a short list of items and practices that unfortunately we cannot accommodate. If you have further questions, please complete the form at the bottom of this page.
- Your manufacturing, whether your are doing your own production or outsourcing, has a steady, consistent volume.
- Your product requires at east 5 or more employees to produce.
- Your product requires complex labor or assembly.
Not a Good Fit
- We do not work with startups, or companies that are interested in doing “short runs”.
- Simple, machine based production.
- We prefer to work with companies that have their own equipment for manufacturing and are seeking to re-locate it to Mexico. We are able to source equipment for you if this is an issue, and the additional costs will be included in your quote.
- We do not produce Spec products. We encourage our clients to have spec products already produced before engaging with us.
- We do not produce the following:
- Chemical Products or any products that contain hazardous materials
- Food or Beverage products
- Weapons or Para-Military products
To learn more about products and service we do provide, please see the Industries We Serve page.
Production is closer to the U.S. border; faster time to the consumer market than shipping across the Pacific Ocean, which can take weeks. Lower transportation, trucks and trains as opposed to ships and the abundance of warehousing make Mexico a cost-effective solution. The Mexican government is very friendly to foreign business and investment, as demonstrated by their 44 trade agreements with countries around the globe. U.S.-made parts and products are used by Mexico Manufacturers up to four times more than China; this is a tremendous benefit to suppliers in the United States. The U.S. and Mexico share similar cultures, have a minimal language barrier, and comparable time zones. In addition, English-speaking middle management in the Mexican workforce is plentiful (as opposed to China where speaking English is actually discouraged) alleviating the need for language translators. Mexico enjoys lower medical costs for its workforce as compared to the U.S., allowing companies to hire additional employees with minimal expense for medical benefits.
30 years. NovaLink developed their manufacturing concept in 1988: a vision of providing vertical integration for manufacturers and facilitating the relocation of their operations into Mexico within a model of providing a full service approach focused on small to medium size companies.
We serve many varied and unique industries. Here are just a few of the industries that have been NovaLink clients:
Every new operation requires administrative support: NovaLink’s Mexico manufacturing consulting services provides accounting, information systems, recruiting, training and managing employees. NovaLink will staff an operation according to your needs. For projects with a design component or those that require greater technical expertise, we can recruit additional engineering talent to help oversee the operation.
NovaLink will integrate your information systems to provide timely information in a familiar and convenient format. Our goal is to learn to speak your language so that the transition and ongoing operations appear seamless to you.
NovaLink operates two 200,000 square foot Manufacturing Facilities in Mexico in the town of Matamoros, and another 60,000 square foot distribution facility in Brownsville, Texas.
To help manage inventory, NovaLink also provides warehousing and storage for its customers. We can drop-ship products directly to your customer and manage a quick turnaround time from the time the order is received at our facility to the time it arrives at your customers door. NovaLink also provides direct to retail distribution or bulk shipment back to your operations.
NovaLink has decades of experience managing Mexico supply chain services, getting the shipment of equipment, raw materials and finished goods across the U.S. / Mexican border. If mishandled, the shipment of raw materials and finished goods across the border can result in a costly outcome. Our objective is to make this process seamless and the border invisible.
NovaLink offers a variety of pricing models to accommodate unique client needs. These range from fully loaded hourly rates to a full package model where NovaLink provides the raw materials and equipment.
With our proximity to market, short lead times are met with turns from order placement as short as five days.
Depends on the project. 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.
Yes. NovaLink can initiate a manufacturing relationship with a floorplan as small as 5,000 square feet. Once the relationship has been established, and proven successful, customers can scale up to 100,000 square feet or more. It also permits larger customers to scale down if the customers’ business experiences a need to reduce overall capacity.
Refined by 30 years of serving clients NovaLink has a host of manufacturing services that makes production in Mexico an easy and seamless solution. NovaLink currently provides full service manufacturing for everything from aircraft seating, activewear, fire extinguishers, wire harnesses, patio furniture and water meters and other products.
We offer Full Service Manufacturing for the following industries:
NovaLink’s manufacturing process has setting up your business in Mexico down to a precise science. We use the following step-by-step process.
CLASSIFICATIONS / PERMITTING
RELOCATION / INSTALLATION
DISTRIBUTION / WAREHOUSING
See the Process page for more information.
NovaLink’s Full Service Manufacturing is a comprehensive, complete turn-key manufacturing solution for our customers all “under one roof.” Our services include:
Equipment and Raw Material Sourcing
Machining & Manufacturing
Supply Chain and Logistics
NovaLink keeps costs low while manufacturing high quality products: It doesn’t matter if you are a startup or a large multinational company, NovaLink’s infrastructure allows our customers to explore made in Mexico manufacturing and decide if it is a fit for their company without significant risk.
NovaLink is competitive in full service manufacturing a wide array of products. Whether it is a product that requires precision and high tolerance, or a product that has been commoditized, NovaLink operates at an advantage. NovaLink currently provides full service manufacturing for everything from aircraft seating, activewear, fire extinguishers, wire harnesses, patio furniture and water meters and other products.