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Implement Site Strategy

Identifying the optimal site and production network strategy in Mexico.

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Turnkey Operations Models

Leverage our 39+ years of experience and partner with us on your Mexico project.

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Doing Business in Mexico
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Our 5-step methodology to launch or expand your operations in Mexico, and thrive in a booming market.

Mastering Mexico’s Manufacturing and Trade Policies

A Client Success Story
PROJECT

Prepare and launch a new manufacturing factory in Mexico

WHAT WE DID
Real estate, construction management, startup advisory
CLIENT
A Chinese manufacturer of powersports equipment
TIMELINE
Start May 2022 and finish May 2023
Client Success

Launching New Facility for a Chinese Automotive Manufacturer in Mexico

PROJECT INFORMATION

Our client, a Chinese manufacturer of power sports equipment wanted to launch a new manufacturing site outside of China. After successful distribution of their products in Mexico, the decision was made to invest in a facility to better attend the market. Their U.S. headquarters in Minnesota also underwent an expansion, consolidating full sales, marketing, vehicle development, design, parts and accessories, tech support and domestic shipping and receiving departments.

They faced a significant challenge in obtaining the "Made in Mexico" certificate or origin with their current process and supply chain. They wanted their products to qualify for treatment under the USMCA (United States-Mexico-Canada Agreement). Their initial plan was not going to achieve the goal. And that's where PRODENSA stepped in.

This project involved launching their manufacturing facility in Mexico, starting from the selection and negotiation of real estate to establishing work formats and reaching key administrative and foreign trade milestones.

To address this complex set of tasks, the company sought expert guidance to navigate Mexico’s regulatory landscape and to ensure compliance across various areas, including customs processes and labor management. Our team provided end-to-end project management support, helping them differentiate between a cost center and a profit center, while acting as their overhead during the crucial early phases of development. Additionally, we played a key role in helping them establish essential policies for human resources, accounting, and foreign trade.

 

Project Leadership

Xu Yu

Xu Yu

Executive Director China Strategy

  • Located between Germany and China
  • +9 years delivering operational management solutions in North America for PRODENSA
  • Supported +25 Chinese investments in Mexico
Cesar Hernandez

Cesar Hernandez

Sr. Project Manager

  • Located in Monterrey, Mexico
  • PRODENSA project manager since 2017 with background in process engineering and lean manufacturing
  • Supported +25 manufacturing operations launch in Monterrey
Humberto Elias

Humberto Elias

Junior Advisor

  • Located in Monterrey, Mexico
  • PRODENSA project manager and advisor since 2022
  • +4 years previous supplier development projects while living in China
Industrial Real Estate

Locating the Perfect Site

Scope

Their initial plan called for 86-107,000 ft2 for an assembly operation. After multiple changes of the scope, the client ended up renting two buildings within an industrial park in northern Mexico, totaling 400,000 ft2 that housed their multiple production processes. As part of the negotiation, an adjacent plot of land within the same park was set aside for future development. 

In early 2023 the company expanded their operation into a nearby 278,000 ft2 building that currently houses warehousing and plastic injection processes.

A large part of PRODENSA's real estate strategy was to provide flexibility and agility, and the company still has an option plot set aside.

Challenges

The primary challenge in the real estate strategy was the evolution of the project alongside the consulting that PRODENSA provided. As the project developed, it had to drastically change in order to meet initial goals. The client's initial idea was not feasible, but the alignment of PRODENSA's trade compliance consulting with the real estate and project strategy was essential to meeting the timeline.

 

Ismael-3
ISMAEL VILLA
Sr. Industrial Advisory, Principal, SIOR

Comprehensive Construction Management Services

Scope of the project:

  • Set of two buildings, one 248,815 ft2 with two floors of offices (6,458 ft2 and 6,568 ft2), and the second 136,897 ft2 for the production area with 3,229 ft2 in offices
  • Featuring an internal/external conveyor bridge connecting two different buildings and joining the painting line process with the welding line
  • Utilities and systems: city water supply (120 m3 tank), natural gas, electrical distribution, welding gas (CO2 and argon) distribution system, compressed air system, sewage treatment system
  • Special foundation for assembly line
Luis Rodriguez-3
LUIS RODRIGUEZ
Construction Solutions Director
The Strategy

OPTIMIZING TRADE & OPERATIONS

The project started with a PRODENSA Feasibility Analysis to determine the viability of the project and the budget. The analysis took the client business strategy and compared multiple models for operating in Mexico. The goal was to:

  • Have reliable estimate of the operational cost of the facility in Mexico
  • Develop the operational structure flow and explore potential alternatives, aligned with the trade compliance strategy
  • Mexican entity tax projections 
  • Analysis of the impacts on the corporation from the standpoint of tax and repatriation

Part of PRODENSA's Feasibility Analysis included an analysis of the trade strategy. The client sought to source enough local material to comply with USMCA rules of origin, with their products destined for the US market. The goal was:

  • Understand content requirements in the USMCA as well as Mexican trade programs
  • Identify and develop local capabilities to increase regional content
  • Evaluate the production and assembly processes to determine which should be included in the facility 
  • Obtain necessary permits in time for importation of machinery

The Mexico Journey

The client leveraged PRODENSA's start-up support to successfully launch their operations in Mexico. Aligned with their business and trade strategy, as well as the real estate and construction plans, PRODENSA’s project management team efficiently streamlined the operation’s launch and ramp-up. Working closely with the client, PRODENSA co-developed policies and frameworks tailored for their Mexican operations. The hands-on consulting provided essential data and expert recommendations, enabling the client to make informed decisions while exploring various options. PRODENSA's comprehensive start-up service achieved key operational milestones, transitioning the project smoothly to the client's newly hired and trained workforce.

Due to the team's dedication and expertise, the client became a strong advocate for PRODENSA, actively recommending our services for multiple projects involving Chinese clients.

ARE YOU READY TO START YOUR OWN JOURNEY?