One-Time Start-Up Costs for Manufacturing in Mexico

In this episode, Ricardo Rascon welcomes back David McQueen to build on their previous conversations about manufacturing in Mexico. Today, they discuss the one-time start-up costs manufacturers must take into account when expanding into Mexico. David explains that there are generally 5 types of non-recurring costs for new operations to consider. These are legal and incorporation costs, leasehold improvements and facility expenses, regulatory fees and expenses, physical assets and the internal staffing and training costs. The conversation begins with discussing legal and incorporation costs. First and foremost, founders need to know the types of entities you will require depending on the activities you will be engaging with in Mexico. Then, David highlights the two main types of IMMEX corporations for foreign countries. Generally, foreign entities can own as many Mexican corporations as they would like. Forming your company doesn’t have to be a great expense. You do, however, need to make sure that you have a competent Mexican accountant and legal assistant who have previous experience establishing foreign entities in Mexico. Next, David unpacks the Mexican facility upgrades which organizations will likely want to tackle. While some industrial park landlords will not finance any building improvements, others will finance a limited number of items. It may, however, be in your interest to directly pay for certain items which you can take with you after your lease. Other potential one-time costs include utility connection fees, gas and water fees, security bonds and more. Regulatory fees include wastewater fees, approval of your health and safety plans and development of fire prevention plans and training. While physical asset costs will vary, signage is a universal item to consider. Finally, David unpacks the costs associated with start-up and training. He emphasizes the importance of the initial investment in recruiting, testing and interviewing candidates. When it comes to brand new organizations, everybody top to bottom needs to be trained, largely in Spanish. In closing, he offers helpful guidelines for training strategies. Thank you for joining us on our Manufacturing in Mexico Podcast! For more information about manufacturing in Mexico visit our website: www.tetakawi.com