The Mexico Journey®: A Strategic Nearshoring Guide

What is The Mexico Journey®?

The Mexico Journey® is Prodensa’s proprietary framework and strategic nearshoring guide to help global manufacturers and business launch operations in Mexico. It is a turnkey solution to integrate successfully into the North American ecosystem.

With over 1,000 organizations served, The Mexico Journey® is the proven methodology behind some of the most successful manufacturing expansions in the region.

The Leaders of The Mexico Journey®

Prodensa's executive leadership forms a powerhouse of expertise guiding companies through the complexities of manufacturing in Mexico.

 

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EMILIO CADENA CHIEF EXECUTIVE OFFICERAs The Nearshoring Expert, Emilio Cadena is a recognized authority in cross-border manufacturing and a driving force behind nearshoring in North America. As CEO of Prodensa and Chairman of the U.S.-Mexico Foundation, he has guided over 1,000 companies through The Mexico Journey®—a strategic model he helped develop. With decades of experience, Emilio bridges business, policy, and innovation to position Mexico as a vital link in regional supply chains. His leadership in public-private dialogue and deep knowledge of USMCA make him the region’s go-to expert on scalable, resilient, and people-focused operations.Read full bio

EMILIO CADENA CHIEF EXECUTIVE OFFICER

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MARCO KULJACHA PRESIDENT, START UP & CONSULTING DIVISIONAs Navigator-in-Chief, Marco Kuljacha leads Prodensa’s Startup & Consulting Division, helping companies navigate the stages of setting up operations in Mexico. With expertise in compliance, government relations, and high-level networking, he has supported hundreds of clients through strategic decision-making. Marco’s broad view of Mexico’s regulatory and institutional landscape enables companies to make confident, informed choices. As Navigator-in-Chief, he is a trusted advisor for building successful, long-term industrial strategies.Read full bio

MARCO KULJACHA PRESIDENT, START UP & CONSULTING DIVISION

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ALEJANDRO MENDOZA PRESIDENT, REAL ESTATE DIVISIONAs The Location Strategist, Alejandro Mendoza serves as President of Prodensa’s Real Estate Division. He is a seasoned manufacturing operations strategist, and brings decades of industrial insight to help clients understand Mexico’s landscape and competitive dynamics.

Alejandro ensures site selection becomes a springboard for long-term success—not just a real estate decision. His business vision connects location strategy to every phase of the Mexico Journey™, from workforce planning to operational efficiency.

ALEJANDRO MENDOZA PRESIDENT, REAL ESTATE DIVISION

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ROGELIO SOTO PRESIDENT, HR SERVICES DIVISION

As The Global Integrator, Rogelio Soto brings a global perspective to operational expansion. With deep experience in workforce integration and international strategy, he helps companies align their global footprint with their long-term strategic goals. Rogelio’s understanding of talent dynamics adds value to site selection and expansion planning. His work helps global firms connect with Mexico’s domestic strengths—building operations that are agile, sustainable, and community-focused.

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ROGELIO SOTO PRESIDENT, HR SERVICES DIVISION

How to Thrive in North America through The Mexico Journey®

Step 1: Understand the Mexican Environment

As part of your strategic nearshoring journey, Step 1 helps you to navigate the business environment in Mexico.

Legal frameworks in Mexico are highly structured and formal.

The civil law system governs all transactions, with significant roles played by notaries and legal representatives. Foreign companies often require a power of attorney to operate efficiently.

Foreign investment is encouraged, but limited to certain industries.

Mexico allows 100% foreign ownership in most industries through two main corporate structures: Sociedades Anónimas (SA) and Sociedades de Responsabilidad Limitada (SRL), comparable to corporations and LLCs in the U.S.

"Doing business in Mexico requires more than regulatory knowledge--it demands intelligence, strategic stakeholder engagement, and a deep understanding of how federal, state and local dynamics shape the investment landscape." 

Isabel Clavijo, VP Institutional Relations

Step 2: Design the Business Case for your Nearshoring Operation

Before launching new operations, organizations must build a strong business case:

• Institutional Relations Strategy: Engage proactively with government bodies, chambers, and regulatory institutions.

• Market and Industry Analysis: Validate the opportunity through competitor benchmarking, supplier mapping, and cost analysis.

• Define the Project: Outline key drivers, project needs, and define must-haves vs. nice-to-haves.

This planning stage translates vision into an actionable roadmap tailored to market conditions, political dynamics, and operational needs.

Did you Know?

Turnkey Operations Models: Mexico

Prodensa can support clients explore more than 10 different operational models for launching and managing a business in Mexico. There is no one-size-fits-all approach.

Step 3: Select the Location

Choosing the right location for your nearshoring operation is a strategic decision. Beyond real estate options and costs, consider:

• Proximity to raw materials and customers

• Access to skilled labor and public transportation

• Infrastructure: cargo crossings, ports, rail, and airports

• Local cost structures, tax incentives, and customs activity

A cross-functional evaluation (operations, HR, engineering, finance) is key and a thorough and unbiased site selection analysis is imperative. Additionally, integrating a constructibility analysis early in the process helps avoid future delays and unexpected costs.

Step 4: Set up and Launch the Nearshoring Operation

Once a site is selected and the business case validated, the next phase of The Mexico Journey® focuses on building and launching a fully compliant, tax-efficient, and talent-ready manufacturing or services operation.

This step is more comprehensive, as it integrates regulatory compliance, workforce setup, tax strategy, and sustainability practices into a single, coordinated launch effort.

Determine which operating structure fits your strategy.

Depending on your business strategy, you may choose a wholly owned subsidiary, shelter model, joint venture, or contract manufacturing setup. If incorporating a new legal entity, expect a 2- to 3-month process to prepare bylaws, POA, proof of capital, and tax ID registration.

The tax strategy is one of the key components to a successful nearshoring operation.

Businesses must comply with several key tax obligations in Mexico:

• Income Tax: 30% corporate rate

• VAT: 16% (with exemptions through IMMEX)

• Payroll & Profit-Sharing: 2-3% payroll tax and 10% annual profit sharing

• Withholding Tax: Applied to royalties, technical assistance, and other cross-border payments

• Property Tax: Paid at acquisition and annually

Manufacturers have numerous tax incentive programs--both domestic like the IMMEX program with VAT Certification, or international like the USMCA and other trade agreements. These provide critical cost savings, but also include strict compliance mandates.

"Understanding VAT in Mexico isn’t just about compliance—it’s a strategic opportunity. With the right structure and certifications, certain businesses can significantly improve cash flow and reduce tax exposure through proper VAT reimbursement mechanisms."

Arturo Quintero, Finance Director

Mexico's workforce culture and regulatory requirements are unique.

Mexico’s labor system is structured and protective of workers. Employers must:

• Comply with overtime rules, and provide competitive benefits

• Enroll all employees in the national social security system (IMSS)

• Establish a termination process that respects just cause laws or pays mandated severance

• Navigate collective bargaining agreements and union representation, especially after the 2019 reforms and USMCA labor rules (Annex 23-A)

Download the free e-book to learn more about Mexico's evolving labor laws.

USMCA benefits depend on strict international trade and customs compliance.

Businesses and especially manufacturers must meet stringent trade requirements:

• Accurate import/export declarations, certificates of origin, and updated documentation per USMCA

• Compliance with 2022’s mandatory Bill of Lading Supplement

• Use of IMMEX Program and VAT Certification to minimize customs costs

Part of the IMMEX Program is reserved for the export of services from Mexico. Read more about the opportunities for service-providers in Mexico here.

"The recent updates to Annex 24 are a reminder that trade incentives come with responsibility. When companies embrace compliance not just as a requirement, but as a best practice, they position themselves to fully benefit from the IMMEX program and strengthen their role in North America’s export ecosystem."

María Elena Sierra, VP of International Trade, Prodensa

Obtain environmental permits and adhere to EHS regulations.

Operations must comply with local, state, and federal environmental laws:

• Obtain Environmental Impact Assessments and land use permits

• Perform feasibility studies for electricity, water, and other utility services

• Classify fire risk, install safety protocols, and follow NOM-based inspections

Ongoing safety, hygiene, and environmental monitoring is required to maintain compliance. Internal audits, mixed safety commissions, and monthly reports are standard best practices.

Combining all these factors, the launch phase ensures a sustainable and compliant operation—from hiring the first employee to producing the first shipment.

Step 5: Maximize Operations and Thrive

The final phase of The Mexico Journey® strategic nearshoring guide focuses on long-term growth and continuous improvement:

• Market Adaptation: Stay ahead of demand and consumer preferences

• Cost Optimization: Align supply chains for efficiency

• Technological Integration: Leverage Industry 4.0 and automation

• Sustainability: Meet environmental standards and consumer expectations

• Workforce Development: Invest in talent retention and become an Employer of Choice

"Manufacturing in Mexico is entering a new era—where people and technology work side by side. Operational excellence today means investing in both digital tools and human potential to build smarter, more adaptive production systems."

Luis Hernandez, Chief Manufacturing Officer

The Role of Mexico in North America's Regional Strategy

Mexico’s position in a strategic nearshoring context under the USMCA framework fosters nearshoring, cross-border trade, and shared production platforms that benefits multiple industries.

Operations in Mexico support vital sectors such as automotive, aerospace, electronics, and medical devices—providing cost-effective manufacturing and just-in-time delivery across borders. With components often crossing borders multiple times before final assembly, Mexico's manufacturing base strengthens regional supply chains and increases resilience.

Additionally, investing in operations in Mexico boosts employment not only locally but across North America by expanding supplier ecosystems, stimulating logistics infrastructure, and enabling companies to reinvest in innovation and workforce development.

For companies adopting nearshore outsourcing strategies, Mexico offers

• Greater agility and reduced supply chain risks

• Alignment with USMCA rules of origin for tariff-free trade

• Access to bilingual, STEM-capable talent pools

• Competitive total cost of ownership

• Business continuity amid global disruptions

The Mexico Journey® positions companies to harness these advantages—enhancing their role in the regional economy while strengthening ties across the continent.

Tips for Getting Started on The Mexico Journey®

Starting a manufacturing project in Mexico can feel complex, but the right preparation will set the foundation for long-term success. Use this strategic nearshoring guide as your launchpad.

Here are a few expert tips:

• Start Early: Legal, regulatory, and tax timelines often take longer than expected. Begin planning 9–12 months in advance, or more for more complex operations.

• Engage Local Experts: Navigating bureaucracy, culture, and compliance is smoother with trusted advisors who know the territory.

• Clarify Your Objectives: Define what success looks like across your organization and align leadership on timelines, investment thresholds, and operational goals--recognizing that different teams may have distinct perspectives of 'success'

• Prioritize People: Talent strategy is as important as logistics. Think about recruiting, training, and workforce development from day one.

• Stay Agile: Mexico offers multiple operational models. Stay open to different structures that may reduce risk or accelerate launch.

Taking the first step on The Mexico Journey® means investing in a tailored plan, supported by regional expertise and a proven roadmap.

Additional Resources:

Download free eBooks:

• The Labor Law in Mexico 

• Trade Trends 2025

• Nearshoring Supply Chain to Mexico

Explore more topics:

• Learn about IMMEX Program Advantages

• Explore Industrial Corridors in Mexico

• The Workforce Transition to Electric Vehicles

• Everything you Need to Know about EOR in Mexico

For expert guidance on expanding into North America, The Mexico Journey® is your roadmap to operational success. Schedule a meeting to explore your options with one of our Advisors.