28Ene

Querétaro starts 2021 with an active aerospace investment portfolio

enero 28, 2021 Jesus Aguirre

Even with the prevalence of the COVID-19 pandemic and the impact it has generated on the local, national and global economy, the state of Querétaro maintains an active list of private investment intentions.

With the beginning of the year, the entity has a portfolio of 27 investment projects that are expected to settle in the state, but whose decision has not yet been defined, according to records from the Ministry for Sustainable Development (Sedesu).

The projects represent an accumulated amount of US$1,536,094 and if they are completed they would mean the incorporation of 13,766 formal jobs, informed the head of Sedesu, Marco Antonio Del Prete Tercero.

Among the projects, 22 correspond to new investments and five to extensions of companies that already reside in the territory; they focus on the manufacturing sector and correspond to both national and international investments.

“The project portfolio is mainly manufacturing, followed by information technology; Mexico, the United States, Japan and Canada are the main commercial partners that are investing in the state,” declared the state minister.

Even though the aerospace industry is one of the sectors most affected by the pandemic, he added, investment projects related to this activity have been completed in the state.

In 2020, 27 investment projects for US$595,784 were completed in the entity, they meant the creation of 5,269 direct job and had to do mainly with the automotive industry (7), information technology (4), aeronautics (2), food and beverages (1), electronics (1), among other sectors (12).

The origin of the investments made the previous year was national capital, Japanese, Canadian, German, American, and so on. And they settled to a greater extent in the metropolitan municipalities of El Marqués (9) and Querétaro (8), in addition to Colón (5), Pedro Escobedo (1), Corregidora (1) and San Juan del Río (1); two more projects have not yet defined their location.

Around the expectations for this 2021, the promotion of investments will be one of the lines of work that the state government draws, together with the continuity of strategies such as linking supply and demand and strengthening the capacities of companies.

Source: Mexico Now

(https://mexico-now.com/queretaro-starts-2021-with-an-active-aerospace-investment-portfolio/)

27Ene

Teleworking – New Mexico Law

enero 27, 2021 Jesus Aguirre

FOREIGN TRADE NEWSLETTER

Background: On December 9, it was approved by the Congress of the union the opinion with the draft decree by which article 311 is reformed and chapter XII BIS of the Federal Labor Law on Teleworking is added.

On January 11, 2021, the new guidelines were published in the Official Gazette of the Federation (DOF) that establish the rights and obligations of employers and workers who apply the modality of remote work and the rules applicable to it.

DEFINITION OF TELEWORKING:

Form of subordinate labor organization that consists of the performance of paid activities, in places other than the establishment of the pattern,, without requiring the physical presence of the worker in the workplace.

It will be considered as telework when more than 40% of the activities are carried out at the employee’s home or the place of his or her choice.

In order to carry out the teleworking modality, the use of information technologies is necessary, for effective communication, and for the supervision of the employer.

Employers’ obligations

Article 330-E establishes that employers must:

Provide, install and take care of the maintenance of the necessary equipment for teleworking such as computer equipment, ergonomic chairs, printers, among others;
Pay wages in the form and on the stipulated date.
Assume the costs derived from working under the teleworking modality, including, where appropriate, the payment of telecommunication services and the proportional part of electricity;
Keep a record of the supplies delivered to workers under this modality;
Implement mechanisms that preserve the security of information and data used by teleworkers;
Respect the right to disconnection at the end of the working day;
Register workers in the teleworking modality to the mandatory social security regime, and
Establish the necessary training and advisory mechanisms to guarantee the adaptation, learning and adequate use of information technologies by teleworkers.

Worker’s obligations

Save and conserve the equipment and materials that they receive from the employer.
Report on the agreed costs for the use of telecommunications services and electricity consumption, derived from teleworking;
Obey the occupational health and safety provisions established by the employer;
Attend and use the mechanisms and operating systems to supervise their activities,
Attend the data protection policies and mechanisms used in the performance of their activities.

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Likewise, the new law establishes that the teleworking modality must be recorded in writing by means of a contract. And that this modality will form part of the collective bargaining agreement, which may exist between unions and companies and a copy must be delivered to each worker under this modality.

In the event that employers do not have a collective bargaining agreement, they must include telework in their internal work regulations, and establish the mechanisms that guarantee the link and contact between people who perform work under the telework modality.

For its part, the Ministry of Labor and Social Welfare must issue the Official Standard (NOM), in the next 18 months, in order to regulate the implementation of safety and health in the workplace.

Once the aforementioned regulation is issued, labor inspectors will be able to verify that employers keep a record of the inputs delivered to teleworkers; as well as ensuring that teleworkers’ wages are not lower than those paid to face-to-face workers who perform the same or similar functions; among the other obligations.

26Ene

The El-Mann family will invest 25 thousand million pesos in the logistics center T-MEC Park

enero 26, 2021 Jesus Aguirre

E-Group, a company of the El-Mann family, will invest 25 billion pesos (mdp) in the construction of the T-MEC Park complex, a logistics, industrial, railway and commercial service center neighboring to the Santa Lucia airport.

The T-MEC Park is a project that will generate more than 65 thousand jobs and will contribute to the consolidation of the development of the State of Mexico, according to the developers.

The park is one of the 29 projects announced within the second private investment package of projects to support the economic reactivation, presented las November by President Andrés Manuel López Obrador and the Treasury Minister, Arturo Herrera.

On that occasion, it was reported that the investment amount would be of $13,020 million pesos.

Max El-Mann Arazi, President of E-Group; Charles El-Mann Metta, deputy director of the group; Tufic Neme Martínez, Director of Marketing, and Charles El Mann Fasja, Director of Parks México, presented the logistics and trade center located in Nextlalpan to the Governor of the State of Mexico, Alfredo del Mazo.

The state president reported the meeting with the El-Mann family via Twitter.

The E-Group executives explained that the competitive advantages of the State of Mexico are its geographical location and its wide road network, airport and rail infrastructure; in addition, they highlighted that it is the second most important economy in the country, and being the most populated state, it is part of the largest consumer market nationwide.

T-MEC Park, a logistics project similar to the one presented in the state of Querétaro, is another great investment made by the Elman Group in Mexico.

In the presentation of the T-MEC Park, Charles El Mann Fasja commented that the real estate work is part of the actions that seek to maintain the balance between health care and continue to promote the economy of the State of Mexico.

It was also revealed that another of the reasons to start this project is that the State of Mexico has a qualified workforce, an outstanding educational system and a stable environment that generates confidence for investment, which has contributed to consolidate the entity as an exporting power, allowing it to occupy the eighth place at the national level and the third among non-border states.

Governor Del Mazo thanked the leaders of the Elman Group for the trust placed in that entity.

The president pointed out that the close work between the state government and the industry is a strategic alliance that will allow a rapid and solid economic recovery of the entity, and with this they also contribute to the economic growth of the country.

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Source: Forbes

(https://www.forbes.com.mx/negocios-familia-el-mann-25-mil-mdp-centro-logistico-t-mec-park/)

25Ene

Auto Parts Maker Timken Co. Opens Factory In Mexico

enero 25, 2021 Jesus Aguirre

Ohio-based auto parts maker The Timken Co. recently announced the start of its new factory in Mexico.

Along with the new Timken plant, Mexico-based Envases Group plans to open a $35 million aluminum can production and distribution facility in central Texas.

The two projects will create around 220 jobs in manufacturing, logistics and transportation.

The Timken Co.’s (NYSE: TKR) new manufacturing facility is in the central Mexican city of San Jose Iturbide. The factory makes tapered roller bearings for the transportation and industrial machinery industries.

“Our new facility builds on our manufacturing strategy to serve customers where they need us across the world,” Timken Executive Vice President Christopher Coughlin said in a release. “It will help us advance our global bearing leadership by providing a high level of value and service for our customers in the region and globally.”

Timken did not disclose how much the new factory cost but said it expects to have 100 employees at the facility by the end of March.

The Timken Co., founded in 1899, is based in North Canton, Ohio. The San Jose Iturbide facility is the company’s first manufacturing plant in Latin America.

Timken employs more than 18,000 people globally. The company has plants and offices in 42 countries, including North America, Europe, Asia and Africa.

Envases Group, a packing producer based in Cuautitlán Izcalli, Mexico, recently chose Waco for a 450,000-square-foot facility that will open by the end of 2021, creating 120 jobs.

“The Waco operation will focus on aluminum beverage containers commonly used for soft drinks, beers, energy drinks, teas and non-carbonated beverages,” the company said in a statement. “It represents a sizable, first phase investment that allows the company to bring in its first production line to service the U.S. market.”

Envases Group was founded in 2006 and has 66 factories and seven distribution centers around the world.

Source: Yahoo! Finance

(https://finance.yahoo.com/news/auto-parts-maker-timken-co-220419592.html?guccounter=1)

25Ene

Creation of the National Committee for trade facilitation

enero 25, 2021 Jesus Aguirre

FOREIGN TRADE NEWSLETTER

On January 22 2021, through the Agreement published in the Official Gazette of the Federation (DOF), the Ministry of Economy announced the Creation of the National Committee for Trade Facilitation, which represents greater openness of Mexico to international trade. The purpose of this document is to facilitate coordination between government agencies and entities for the design, execution and evaluation of programs and actions for the facilitation of foreign trade.

The National Committee for the Facilitation of Foreign Trade will be conformed of representatives of the following agencies (who will have the right to speak and vote):

Ministry of Economy (SE).
Ministry of Foreign Relations (SRE).
Ministry of National Defense (SEDENA).
Ministry of Finance and Public Credit (SHCP).
Ministry of the Environment and Natural Resources (Semarnat).
Ministry of Energy (Sener).
Ministry of Agriculture and Rural Development (Sader).
Ministry of Communications and Transportation (SCT).
Ministry of Health.

The representatives of these secretariats must have an undersecretary level and will be chaired by the head of the Ministry of Economy. The Committee, through its president, may invite representatives of certain government agencies to form part of it, including:

Bank of Mexico
Tax administration service
National Regulatory Improvement Commission
Federal Commission of Economic Competition

Among the functions that the Committee in question will have, the following stand out:

Serve as coordinating body of the different dependencies of the Federal Public Administration that have competence and that intervene in the different aspects related to the implementation and application of the Agreement on Trade Facilitation.
Assist with the Ministry ‘zsof Economy and the Ministry of Foreign Relations, according to the competence of their members in the design of policies, programs and actions aimed at the simplification and automation of foreign trade processes, as well as coordinating their execution .
Propose questions related to matters related to the implementation and application of the Agreement on Trade Facilitation, as well as approve questions related to matters related to its implementation and application.
Propose the signing of agreements and conventions between the representatives of the three levels of government and the social and private sectors in the scope of their competences, in order to complement the actions with the aim of achieving improvements in the processes in foreign trade matters.

Analyze and issue recommendations to improve the efficiency of processes and procedures for foreign trade in order to reduce costs and eliminate barriers to trade, in accordance with applicable national and international regulations.
Analyze the regulatory framework on foreign trade and, if applicable, issue recommendations.

According to what was published in the Official Gazette of the Federation, the creation of the National Committee for Trade Facilitation is permanent, and it was established that said Committee must be installed within 35 business days following the entry into force of the agreement.

22Ene

Mexico ‘flirting’ with Ford after U.S. carmaker bails on Brazil

enero 22, 2021 Jesus Aguirre

The Mexican government is trying to entice Ford Motor Company to consider relocating some of its operations to Mexico, a senior official said on Tuesday, after the U.S. carmaker announced the closure of three plants in Brazil.

Mexican Economy Minister Tatiana Clouthier told reporters that officials were considering some kind of overture to Ford .

“We’re now looking to make Ford an offer,” Clouthier said.

She did not go into any further detail, but said the government was “flirting” with the company.

“What do you need? How do you need it?” she said, referring to the automaker and suggesting that the government wanted to better understand tax or other incentives Ford may require in exchange for relocating some of its manufacturing operations to Mexico.

For decades, carmaking has been a key part of Mexico’s manufacturing sector.

Ford’s press office did not immediately respond to a request for comment.

Earlier this month, Ford announced plans to shutter its three plants in Brazil this year while taking pre-tax charges of about $4.1 billion as the coronavirus pandemic pushed the company to reevaluate its manufacturing capacity.

Company officials said at the time that the decision was part of a previously announced $11 billion global restructuring. (Reporting by Sharay Angulo; Editing by David Alire Garcia and Stephen Coates).

Source: Reuters

(https://www.reuters.com/article/mexico-ford-motor/mexico-flirting-with-ford-after-us-carmaker-bails-on-brazil-idUSL1N2JV009)

08Ene

How to Start Manufacturing Operations in Mexico?

enero 8, 2021 Paulina Aguirre

One of the main challenges for foreign companies to establish in Mexico, is they think that some aspects can be done similarly to how it is done in their country of origin or assume it can be done in a specific way without consulting with the experts. This is where a shelter company in Mexico becomes very useful.

It is very important to note each country counts with different laws, regulations, and procedures. Therefore, starting and running operations in Mexico is not complicated, but it is different, and for this reason it is important to be informed beforehand, get help from the experts, and understand what and how it must be done.
Below you will find some main steps you must consider for starting manufacturing operations in Mexico.

1) Define your business model scheme

Standalone: The foreign company creates a new entity in Mexico, with total control of all operations including administrative functions, and with total independence from third parties.
Joint Venture: There is an equal partnership between a Mexican manufacturer and a foreign company. Within this model, the foreign company faces more risks and liabilities than a shelter business model and provides an immediate knowledge base and experience.
Shelter: A company is hired by another to manage all administrative and legal tasks, while the other company can focus on its core business. Through a shelter company in Mexico, there is no need to hire personnel for administrative functions. Shelter companies can facilitate the start operations without the need for an established and legal presence in the country, in a faster way and through a risk mitigation approach.
Contract manufacturing: A company is hired by another to produce goods or provide a service. Nevertheless, the company does not have full control and oversight of production and quality assurance. Contract manufacturing is not as common in Mexico as in other countries as Mexico materials manufacturers most of the time do not need help to approach the US markets, so there is less need in Mexico to partner with larger foreign investors.

There are different options in which a foreign company can operate in Mexico, depending on the business model that fits best their needs:

2) Company Incorporation, Permits, and Programs

Depending on the business model you choose, the company must proceed with obtaining the required registrations and permits. For example, in a standalone business scheme, the first step for the company is to incorporate a new entity in Mexico, and register it before the Public Registry of Commerce, Tax Authorities, and Social Security among other registrations. Or to obtain the Importers Registration, IMMEX Program, or any other program that applies. An experienced partner can support your company in determining which foreign trade incentive programs you can benefit from.

3) Site Selection

Once you have decided to establish in Mexico, the next step is to decide in which State. The main deciding factor for most companies is the location of their clients or suppliers. Other companies also take into account if they want to be in the north of Mexico right on the border with the United States or on the coast. Furthermore, the incentives received from the government can also be a deciding factor.

Afterward, you must decide between leasing or building in Mexico. Depending on the needs of your company you can decide to build a new facility from scratch, find a built–to–suit lease, or make a small improvement to an already existing building. The cost to lease industrial space in Mexico will vary highly on which region of Mexico, or if it is located in an industrial park, among other factors.

Leasing and buying costs in Mexico:

The cost to lease industrial space in Mexico can be as low as $0.40 USD per sq. ft. per month. And the cost to buy and industrial land in Mexico can be as low as $2.50 USD per square feet.

4) Recruiting and Training of Personnel

Recruiting the first employees is an important step. The recruiting process in each country is different, and in Mexico, it can be considered as a complex process. Therefore, looking for support from experts is always a good idea. An experienced shelter company in Mexico can speed up and facilitate the recruiting process, personnel ramp-up, and training for employees.

5) Building your supply chain in Mexico

Mexico counts with an important supply chain network for various industries, as it is home to different industry clusters. Therefore, it is important to establish with the material you will source locally and which from abroad, and make sure any new suppliers meet the company’s quality standards.

6) Start of Production

Once you have covered the above-mentioned steps, the logistics process has been planned, the equipment has been installed, the testing stage has been completed, it’s time to proceed with the start of production.

Is your business considering moving to Mexico? Mexcentrix can help you by facilitating the process through a smooth start and running of operations. Contact us!

05Ene

Why Should Your Company Move Manufacturing Operations to Mexico?

enero 5, 2021 Jesus Aguirre

Considering moving your manufacturing operations? Shelter services in Mexico can help you!

For many years, Mexico has been considered an attractive location to establish manufacturing operations. Shelter services in Mexico are becoming more popular due to the different advantages it offers for manufacturing companies, such as:

Competitive Labor Costs:

One of the main advantages driving companies to establish manufacturing operations in Mexico is its competitive labor cost.

In 2021, the minimum wage in Mexico increased by 15%, with an increase from minimum wage will increase from $123.22 MXN pesos to $141.70 MXN pesos per day in most of the country, while in the Free Zone of the North Border it will increase from $185.56 MXN pesos to $213.39 MXN pesos per day. Nevertheless, most workers in Mexico earn more than the minimum wage. The average wage for a direct worker in Mexico $3.50 USD per hour.

The chart below shows the average hourly fully burdened labor rates in USD for different direct labor positions in Mexico. Please note that the above numbers are an average and can vary depending on the region/ state in which the company is established.

Moreover, average manufacturing wages in Mexico are more competitive than other countries that are considered to have low labor costs such as China, which counts with an average manufacturing labor cost per hour of $6.50 USD compared to $4.82 USD in Mexico. Below you can find a chart with the average manufacturing labor costs in Mexico compared to other countries:

13 free trade agreements with 50 countries

Up to date, Mexico has signed over 13 free trade agreements with 46 countries, including one of the most important which is the USMCA (United States-Mexico-Canada Agreement) which allows foreign companies to import some raw materials and products free of duties. Additionally, these FTA’s provide Mexico with access to around 60% of the world’s GDP.

No restrictions on foreign ownership

Additionally, compared to other countries, such as China, shelter services in Mexico do not have any restriction on foreign ownership of manufacturing. And the government does not interfere directly with private companies. Furthermore, the government promotes foreign investment by providing incentives to foreign companies.

Economies of scale

Mexico benefits from economies of scale due to its existing industrial clusters. It offers a wide number of customers and supplier options, as Mexico occupies:

Advanced supply chain

In addition, due to the above-mentioned, Mexico counts with advanced manufacturing supply chains from various industries including automotive, aerospace, electro-domestics, among others. Manufacturers can easily find in Mexico strong supply chains which support different activities such as plastic injection, stamping, machining, foundry among others.

Lower shipping costs

As neighbor of one of the most important markets, United States, it offers important advantages such as streamlined logistics, cheaper shipping costs and shorter overall times for shipping.

As an example, it costs around $6,000 to ship a 53 foot container from China to Los Angeles, compared to $720 USD to ship a 53 foot container from Tijuana (in the border of Mexico) to Los Angeles.

Foreign Trade and Tax Incentives Programs

Mexico counts with diverse foreign trade incentive programs such as:

- IMMEX Program: This is an instrument which allows the temporary import of goods that are used in an industrial process or service, to produce, transform or repair foreign goods imported temporarily for subsequent export, without paying VAT (16%) and countervailing duties, and deferring or not paying General Import Tax. In order to not pay VAT, the company in addition to being registered under the IMMEX program must count with the VAT and IEPS certification.
- PROSEC: These programs are aimed at legal entities that produce certain goods, allowing them to import diverse goods for use in the development of specific products at preferential ad-valorem tariffs (General Import Tax), regardless of whether the goods to be produced are for export or the domestic market.
- 8^thRule: It is the license or permits issued by the Ministry of Economy through any of the tariff fractions with heading 98.02, that allows companies to import machinery and equipment, materials, inputs, parts, and components in order to obtain administrative facilities and preferential tariffs.

All the above mentioned are some main reasons why shelter services in Mexico have become a preferred destination for transnational manufacturing companies. Therefore, in Mexico, you can find the manufacturing facilities of some of the biggest companies worldwide. Within the automotive industry, you can find Volkswagen Group, BMW, GM, Toyota, Daimler, Ford Motors among others. In addition to Bombardier INC, Safran, and EATON Corporation from the aerospace industry, among other big companies from various industries such as 3M, Becton Dickinson, GE, Jhonson & Jhonson, and Plexus, among many others.

Is your business considering moving to Mexico? Mexcentrix can help you by facilitating the process through a smooth start and running of operations. Contact us!

30Dic

Advantages of Manufacturing in Mexico

diciembre 30, 2020 Jesus Aguirre

Benefits of Working with Shelter Companies in Mexico

In the last couple of years, several transnational companies have decided to set up manufacturing operations in Mexico, due to the benefits Mexico offers for companies of different industries. Converting Mexico into one of the largest provider of shelter companies worldwide.

Below you can find 6 of the main advantages of manufacturing in Mexico:

13 free trade agreements with 50 countries: Up to date Mexico has signed over 12 free trade agreements with 46 countries, which allows foreign companies to import some raw materials and products free of duties. Additionally, this FTA’s provide Mexico with access to around 60% of the world’s GDP.
Competitive labor costs: In Mexico direct labor cost is considered to be approximately 70% cheaper than United States. In which on average, a direct worker earns approximately $3.50 USD per hour. Furthermore, the average minimum wage in Mexico is of $123.22 MXN pesos per day, except for the northern area, which is $185.56 MXN pesos per day. According to the minimum wage in most of the country it corresponds to approximate $6.16USD per day (taking into account an exchange rate of $20 MXN pesos per dollar) compared to a minimum wage in the US of $7.25 USD per hour.
Highly educated and skilled labor force. Mexico graduates on average more than 110,000 engineers from universities and technical institutes, per year. In addition
Economies of scale: Mexico benefits of economies of scale due to its existing industrial clusters. It offers a wide number of customers and supplier options, as Mexico occupies:

Competitive geographical location: Mexico has a competitive geographical location, its proximity to one of the main markets worldwide, USA, provides Mexico an advantage in logistic cost savings. It also facilitates transportation, for example managers in the US can take a flight and reach Mexico within a few hours to visit facilities. Furthermore, due to a similar time zone to the USA or Canada, it facilitates communication and there is a less language barrier.
Export incentive programs: Mexico counts with diverse foreign trade incentive programs such as:
- IMMEX Program: Is an instrument which allows the temporary import of goods that are used in an industrial process or service , to produce, transform or repair foreign goods imported temporarily for subsequent export, without paying VAT and countervailing duties, and deferring or not paying General Import Tax.
- PROSEC: These programs are aimed at legal entities that produce certain goods, allowing them to import diverse goods for use in the development of specific products at preferential ad-valorem tariffs (General Import Tax), regardless of whether the goods to be produced are for export or the domestic market.
- 8^th Rule: It is the license or permit issued by the Ministry of Economy through any of the tariff fractions with heading 98.02 of the Tariff of the Law of General Import and Export Taxes that allows companies to import machinery and equipment, materials , inputs, parts and components in order to obtain administrative facilities and preferential tariffs.

Shelter companies play an important role in helping foreign companies establish in Mexico, without dealing with the associated risks such as labor liability, ownership of facilities and limitation of liability in Mexico. Learn more about the advantages of shelter companies in Mexico, and what Mexcentrix can do for your company.

Want to learn more about manufacturing in Mexico? Mexcentrix can support you with a cost model for your operations in Mexico or a feasibility study. Contact us!

FOREIGN TRADE NEWSLETTER

FOREIGN TRADE NEWSLETTER

DEFINITION OF TELEWORKING:

Employers’ obligations

Worker’s obligations

FOREIGN TRADE NEWSLETTER

1) Define your business model scheme

2) Company Incorporation, Permits, and Programs

3) Site Selection

4) Recruiting and Training of Personnel

5) Building your supply chain in Mexico

6) Start of Production

Considering moving your manufacturing operations? Shelter services in Mexico can help you!

Competitive Labor Costs:

13 free trade agreements with 50 countries

No restrictions on foreign ownership

Economies of scale

Advanced supply chain

Lower shipping costs

Foreign Trade and Tax Incentives Programs

Benefits of Working with Shelter Companies in Mexico