WHAT DOES IT COST TO MANUFACTURE IN MEXICO?

The costs to import raw materials into Mexico may be significantly reduced when operating under the CPI Shelter program that includes the IMMEX permit if those goods are processed and exported within the IMMEX program timeframes. Transportation of final goods to your markets are going to be notably less from Mexico versus China due to proximity to the US and Canada.

According to the Kearney 2020 Reshoring Index, it takes 75% less time to transport goods to the customer from Mexico versus Asia.

Mexico has a modern and mature industrial real estate market. Class A to Class C spaces are available where you will find shell, semi-finished and built-to-suit options, as well as inexpensive land for new facility construction. Let’s look at some major manufacturing hub’s average monthly leasing rates:

• Tijuana average $0.48 -$0.52 US Dollars per square foot.
• Mexicali, average $0.34 - $0.42 US Dollars per square foot.
• Ciudad Juarez, average $0.40-$0.42 US Dollars per square foot
• Visit our strategic locations section to see more location-specific industrial real estate information.

When CPI helps you during the site selection process additional costs such as tenant improvements, monthly maintenance fees, security, and sewer hook ups and disposal will be discussed with the industrial real estate representative and may be a part of your negotiations. Some industrial parks offer free months’ rent as well as TI allowances.

Each city in Mexico has its own average utility costs. CPI will give you more specific costs when we run your free cost analysis based on your ideal location and production needs. Some utility costs for Mexico manufacturing facilities may be commiserate with the U.S.

•  Electricity: Electrical costs while manufacturing in Mexico vary by city, however on average you can expect $0.11 per kWh. Demand and usage can play a factor in monthly rates which CPI will help you plan for based on your electrical needs with production equipment. CPI will also outline which costs are needed for initial hook ups and a deposit if required by the electrical company.

• Water: Water costs in Mexico are typically around $0.007 USD per gallon. Depending on location and your needs, the government-run water company may require a deposit. CPI will help you determine what regulations and restrictions may exist for companies needing water discharge as a part of their manufacturing process.

Executives should consider the regulatory costs of doing business in Mexico. Many of these costs such as company incorporation, permits, and registration activities are incurred during the startup phase of your expansion to Mexico. When companies choose to work with a shelter company provider like CPI, these costs can be reduced or eliminated by operating under CPIs existing corporation and IMMEX permits as a part of the shelter maquiladora program.

When exploring foreign sites for manufacturing expansion, the local currency exchange rate can be an important factor. Just how far will your dollar go when buying goods and services to support your manufacturing operation? In Mexico, not only will you realize labor, transportation, logistics and real estate cost savings, but your purchasing power using the dollar is advantageous.

We at CPI are always looking at every way a manufacturer can save money by operating in Mexico and that includes the US Mexico exchange rate. The US Dollar to Mexican peso exchange rate has highly favored foreign companies operating in the region. For an in depth look at just how much you can save, click here to read our interview with a currency specialist and find out the cost savings benefits for manufacturers.