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Automotive & Aerospace By Xavier Hurtado Manufacturing Expansion Facilitator [email protected] www. ManufacturingInMexico.com Business Opportunities in Mexico

Automotive & autoparts business opportunities in mexico

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Are you planning to start manufacturing or distribution operations in Mexico? Learn how you can join us in one of our Commercial Missions!

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Page 1: Automotive & autoparts business opportunities in mexico

Automotive & Aerospace

By Xavier Hurtado

Manufacturing Expansion Facilitator

[email protected]

www.ManufacturingInMexico.com

Business Opportunities

in Mexico

Page 2: Automotive & autoparts business opportunities in mexico

What we’ll cover today:

• 10 Reasons to start manufacturing or distribution operations in Mexico

• 1 Step to find business opportunities with the Aerospace, Automotive and

Autoparts industries in Mexico

• 5 Steps to do Site Selection in Mexico

• 5 ways to start up your manufacturing or distribution operations in Mexico

• 1 step to request your FREE Pass for one of our Commercial Missions in Mexico

Page 3: Automotive & autoparts business opportunities in mexico

10 REASONS TO START MANUFACTURING OR

DISTRIBUTION OPERATIONS IN MEXICO

Leveraging Mexico’s advantages for your profitability

Page 4: Automotive & autoparts business opportunities in mexico

10 Reasons to Start Manufacturing or

Distribution Operations in Mexico

1. Immediate access to the US market, the largest market

in the world.

2. Immediate re-manufacturing turnaround: 1 or 2 days.

3. Skilled, available and affordable labor: up to 80% in

savings

4. Technical training support: Schools, R&D and training

centers.

5. Quality culture: ISO900, SIX SIGMA, NADCAP, AS9100, etc

6. Solid Manufacturing Clusters & Supply Chains: more than

3,000 foreign companies doing business in Mexico.

7. Tariffs savings: free Trade Agreements with 45 countries

8. Legal certainty for Intellectual Property

9. Tax incentives: No VAT and NO Income Tax under the

Shelter Programs for the first four years of operations.

10.Developed “Soft-landing” culture to help manufacturers

and distributors to start up operations in Mexico in a

fast-track, risk-free shelter programs.

Page 5: Automotive & autoparts business opportunities in mexico

Myth: Everything in Mexico will

be inexpensive

Facts:

• Labor will be very inexpensive –

up to 80% in savings compared to

certain locations in North

America.

• Utilities, logistics, real estate

leasing and utilities will be about

the same costs as in the US.

Page 6: Automotive & autoparts business opportunities in mexico

Myth: There is low quality in the labor force in Mexico

Facts:

• The labor force in Mexico is

trained to meet international

quality standards at technical

training centers or at their

own academic institutions.

• Manufacturing plants have

gotten their certifications in

ISO 9000, NADCAP, AS9000 and

other certifications on their

first attempt.

Page 7: Automotive & autoparts business opportunities in mexico

Myth: Security in Mexico is a threat to manufacturers

Facts:

• Manufacturers have not

been threatened since they

do not handle cash in their

day-to-day operations.

• Manufacturers already

established in Mexico have

not left the country, but

they have expanded or plan

to expand their operations

in Mexico.

Page 8: Automotive & autoparts business opportunities in mexico

Mexico took the 8th place among the top 40 Vehicle producers on a global level!

International Organization of Motor Vehicle Manufacturers (OICA)

Mexico’s Light Vehicles Exports

Mexico is the #1 Autopart supplier for the US

Automotive Industry

Numbers & Trends

Page 9: Automotive & autoparts business opportunities in mexico

Automotive, Autoparts & Heavy Duty Industry in

Mexico

Page 10: Automotive & autoparts business opportunities in mexico

Automotive Clusters and

Supply Chain Integration

Page 11: Automotive & autoparts business opportunities in mexico

Ford – Success story

Diesel engines plant in

Chihuahua with an

investment of 800 million

USD, this being the first

time that the diesel engine

is being manufactured in

America with flexibility for

vehicles which can use

alternative fuel.

Page 12: Automotive & autoparts business opportunities in mexico

Mexico reported 232

aerospace companies that

employed more than

30,000 workers in 2010,

and primarily serve the US,

Canadian, German and

French markets

Source: Aerostrategy

Mexico – Global Leader in Aerospace

Manufacturing Investment Attraction

Page 13: Automotive & autoparts business opportunities in mexico

Aerospace Industry in Mexico

Page 14: Automotive & autoparts business opportunities in mexico

Aerospace Clusters and

Supply Chain Integration

Page 15: Automotive & autoparts business opportunities in mexico

Labinal – Safran Group

• Labinal operates two plants in the

state of Chihuahua that are

focused on electrical systems.

• The future plan is to bring other

service lines to Mexico, thanks to

the positive experience the

company has enjoyed operating in

Mexico over the last 20 years,

where the great advantage has

been based on Mexican engineering

talent.

• Labinal is the company that offers

the largest number of jobs in the

entire sector, with more than

2,000 employees including

engineers and technicians.

Page 16: Automotive & autoparts business opportunities in mexico

Bombardier Success Story

• Bombardier opened its new plant

in Querétaro Aerospace Park, with

an investment of 255.9 million

USD. This project will generate

approximately 1,105 direct jobs.

• The Learjet 85 is a project

surrounded by technological

innovation, the use of new

compound materials for the

production of structures such as

the fuselage, wings, control

surfaces, among other pieces, will

facilitate the creation of a

completely different airplane from

the current Learjet models.

The production of the first

Learjet 85 prototype is an

achievement for the Mexican

aerospace sector.

Page 17: Automotive & autoparts business opportunities in mexico

Other Industries that have

grown in Mexico:

From OEMs and assembly operators to Tiers 3

• Appliances

• Engineering Design

• Electronic

• Food

• Heavy industry

• Metal Mechanical

• Multimedia

• Petrochemical & plastics

• Pharmaceutical

• Software

• Textile

Page 18: Automotive & autoparts business opportunities in mexico

Mexico is the most cost effective

location for US companies as far as

labor and freight2011 US Manufacturing-Outsourcing Cost Index

Page 19: Automotive & autoparts business opportunities in mexico

1 STEP TO FIND BUSINESS OPPORTUNITIES

WITH THE AEROSPACE, AUTOMOTIVE AND

AUTOPARTS INDUSTRIES IN MEXICO

Locating opportunities in the supply chain in Mexico

Page 20: Automotive & autoparts business opportunities in mexico

Company

A

StampingMachining

Company

B

Company

C

Supplier

Company B

Stamping

Stamping

Supplier

Company A

Supplier

Company C

Plastic Injection

MachiningMachining

Plastic Injection

Plastic Injection

In 2013, in coordination with the National Manufacturing

Association (INDEX) we detected similar needs in the supply

chain of different companies. We integrated their needs into a

common purchasing pool and organized a B2B event between

purchasers and suppliers in the city of Chihuahua, Mexico.

Page 21: Automotive & autoparts business opportunities in mexico

v

v

Some of the Companies that participated in

the pool:

Aerospace Automotive Metal Mechanic Electronic

Plastics Energy GenerationMedical

Various

Page 22: Automotive & autoparts business opportunities in mexico

Who was this opportunity for?Key suppliers from these industries will be able to bid

$357,070,791.18 USD

109 M

79 M

116M

3 M

27 M 4 M 19 M

Automotive

Aerospace

Electronic

Energy Generation

Medical

Metal-Mechanic

Plastic

Page 23: Automotive & autoparts business opportunities in mexico

CURRENT POOL

US $357 M

Products• Electronic Components• Wire / Cable• Metals• Resins• Packaging•Screws• Labels• Plastic Injection Molds• Springs• Chemicals• Rubber

Processes• Stamping• Plastic Injection• Die Casting• Machining• Sheet Metal• Forging• Welding• Finishing

Specific Products• Non Woven Rolls• Clear Plastics• Metal Structures• Coated Fabrics• Solar Glasses• Hardware

US$132M

US $52M

US$174M

Who was this opportunity for?Suppliers who provide…

Page 24: Automotive & autoparts business opportunities in mexico

14 M USD

41 M USD

26 M USD

22 M USD

0.6 M USD

12 M USD8 M USD 6 M USD

0.2 M USD

Who was this opportunity for?Do you provide these type of processes?

$132,750,723.26 USD

Processes Pool

Page 25: Automotive & autoparts business opportunities in mexico

$-

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

Products Pool

18 M USD

49 M USD

56 M USD

28 M USD

12 M USD

3M USD1 M USD

.3 M USD .2M USD .1 M USD

$174,260,128.39 USD

Who was this opportunity for?Do you provide these type of products?

Page 26: Automotive & autoparts business opportunities in mexico

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

No

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3 M USD

18 M USD

5.8 M USD

2 M USD

10.3M

1 M USD

Specific Products Pool $50,059,197.61

Who was this opportunity for?Do you provide these type of specific products?

Page 27: Automotive & autoparts business opportunities in mexico

This 2014, we will develop the same business framework: we will determine the purchasing pool of the 22 most industrialized regions in the country and

host a B2B event in November in Mexico city.

Are you interested in participating in this opportunity?

If these opportunities, make sense for your company to be

in Mexico, in the following pages, you will learn how to

find the right location, how to start your operation and how to join us for our Commercial

Missions in key regions in Mexico.

To Pre-register for this business opportunity go to:http://Opportunities.ManufacturingInMexico.com

Page 28: Automotive & autoparts business opportunities in mexico

5 STEPS TO DO SITE SELECTION IN MEXICO

Elements to consider to find the most cost-effective location

Page 29: Automotive & autoparts business opportunities in mexico

Site Selection Process

Selected Site

Due Dilligence

Specific Site Selcetion

Site Rough Cut Cost Analylsis Evaluation Matrix Final Site Selection

Regional Site Selection

Cities Rough Cut Cost Analysis Evaluation Matrix Final City Selection

Understanding the Project

Project Scope Company Objective Corporate Criteria

Page 30: Automotive & autoparts business opportunities in mexico

Understanding the Project

• Project Scope: What?– Product, Facility Size, Volumes, Equipment, Headcount & Skills,

Utilities & Consumption, Raw Material(s), Supply Base, Customer(s)...

• Company Objective: Why Mexico? – Cost reduction, Proximity to Customer(s), Logistics, Suppliers....

• Corporate Criteria– Time Frame

– Buy or Lease

– Existing or BTS Facility

– Project Confidentiality / Company Exposure

– City Profile • Border, interior, big, small.

– Expat Quality of life

– Outside or Inside Industrial Park

– Curb Appeal

Page 31: Automotive & autoparts business opportunities in mexico

“Information IS NOT

Knowledge”- Albert Einstein

Page 32: Automotive & autoparts business opportunities in mexico

Key Factors to consider for Regional &

Specific Site Selection:

Business Environment

Labor

Demographics

Academic Infrastructure

Quality of Life

Political Environment

Geography & Climate

Accessibility

Supply Base

Infrastructure

Page 33: Automotive & autoparts business opportunities in mexico

Business Environment

• Labor

• Demographics

• Academic Infrastructure

• Quality of Life

• Political Environment

• Geography & Climate

• Accessibility

• Supply Base

• Infrastructure

• Turnover Rate

• Absenteeism

• Labor Environment

• Unemployment Rate*

• Labor Availability

• Labor Culture / Vocation

• Union Presence

• Established Companies & Competitors

Key Factors to consider for Regional &

Specific Site Selection:

Page 34: Automotive & autoparts business opportunities in mexico

• Business Environment

Labor

• Demographics

• Academic Infrastructure

• Quality of Life

• Political Environment

• Geography & Climate

• Accessibility

• Supply Base

• Infrastructure

• Availability

• Skills

• Fully Loaded Cost

Key Factors to consider for Regional &

Specific Site Selection:

Page 35: Automotive & autoparts business opportunities in mexico

• Business Environment

• Labor

Demographics

• Academic Infrastructure

• Quality of Life

• Political Environment

• Geography & Climate

• Accessibility

• Supply Base

• Infrastructure

• Population

• Total

• Economically Active

• Average Age

• People Entering the Workforce

Key Factors to consider for Regional &

Specific Site Selection:

Page 36: Automotive & autoparts business opportunities in mexico

• Business Environment

• Labor

• Demographics

Academic Infrastructure

• Quality of Life

• Political Environment

• Geography & Climate

• Accessibility

• Supply Base

• Infrastructure

• Universities

• Community Colleges

• Technical Schools

• Training Centers

• Research Centers

Key Factors to consider for Regional &

Specific Site Selection:

Page 37: Automotive & autoparts business opportunities in mexico

• Business Environment

• Labor

• Demographics

• Academic Infrastructure

Quality of Life

• Political Environment

• Geography & Climate

• Accessibility

• Supply Base

• Infrastructure

• Residential Areas

• Country Clubs

• Lodging

• Restaurants

• Hospitals

• Shopping Malls

• Convention Centers

• Cultural / Sport Activities

• Financial Services

• Bilingual Schools & Universities

• Expat Community

Key Factors to consider for Regional &

Specific Site Selection:

Page 38: Automotive & autoparts business opportunities in mexico

• Business Environment

• Labor

• Demographics

• Academic Infrastructure

• Quality of Life

Political Environment

• Geography & Climate

• Accessibility

• Supply Base

• Infrastructure

• Attitude towards business

• Incentives

• Political party in power

Key Factors to consider for Regional &

Specific Site Selection:

Page 39: Automotive & autoparts business opportunities in mexico

• Business Environment

• Labor

• Demographics

• Academic Infrastructure

• Quality of Life

• Political Environment

Geography & Climate

• Accessibility

• Supply Base

• Infrastructure

• Topography

• Temperature

• Humidity

• Prevailing Winds

• Rainfall

• Elevation

Key Factors to consider for Regional &

Specific Site Selection:

Page 40: Automotive & autoparts business opportunities in mexico

• Business Environment

• Labor

• Demographics

• Academic Infrastructure

• Quality of Life

• Political Environment

• Geography & Climate

Accessibility

• Supply Base

• Infrastructure

• Airports • Commercial / Cargo

• Domestic / international flight’s frequency

• Main roads connections

• Railroad connections

• Distance to other cities

• Distance to the port of entry

• Parcel services

• Freight services

• Freight costs• Air

• Land

• Rail

• Sea

Key Factors to consider for Regional &

Specific Site Selection:

Page 41: Automotive & autoparts business opportunities in mexico

• Business Environment

• Labor

• Demographics

• Academic Infrastructure

• Quality of Life

• Political Environment

• Geography & Climate

• Accessibility

Supply Base

• Infrastructure

• Services• Maintenance

• Special processes• Heat treatment

• CNC Machining

• Chemical

• Tool & Die Casting

• Injection Molding

• NDT

• Other

• Metrology

• Laboratory

• Raw Materials.

Key Factors to consider for Regional &

Specific Site Selection:

Page 42: Automotive & autoparts business opportunities in mexico

• Business Environment

• Labor

• Demographics

• Academic Infrastructure

• Quality of Life

• Political Environment

• Geography & Climate

• Accessibility

• Supply Base

Infrastructure

• Industrial Parks• Location

• Available Buildings

• Available Land

• Building Lease Rate

• Land Prices

• Rail Spur

• Utilities• Water

• Potable

• Treated

• Sewage

• Electricity• Tension (Low, High, Mid)

• Natural Gas

• Telecommunications• Copper, Fiber, Wireless

Key Factors to consider for Regional &

Specific Site Selection:

Page 43: Automotive & autoparts business opportunities in mexico

Cost Analysis

For both the Regional & Specific Site Analysis, operating

cost scenarios must be determined by considering the

following:

+ Labor

+ Process Utilities

+ Freight, Customs & Logistics

+ Building (Lease Rate, Triple Net, Utilities, CAM Fees)

+ Administrative

= Monthly Operating Cost & Fully Burdened Cost/hr

Page 44: Automotive & autoparts business opportunities in mexico

Evaluation Matrix

City / Site / Building

Option A Option B Option C

Key Factors

Company defines priorities & weights of the factors to be considered

Page 45: Automotive & autoparts business opportunities in mexico

Due Diligence

Zoning

Ownership

Utilities FeasibilityWater

Sewage

Electricity

Natural Gas

Permits & Registrations

Easements

Site Studies Soil Mechanics

Topographic

Environmental Studies Phase One

Phase Two

After selecting a site, a due diligence process is

required:

Note: you can by-pass this long and costly process by leasing your industrial facility in Mexico with a credited real estate company

Page 46: Automotive & autoparts business opportunities in mexico

Local Knowledge is Key to :

Obtain up-to-date & detailed information

Clearly differentiate pros and cons of the available

options

Avoid unnecessary problems & costly mistakes before

and after the operation.

Page 47: Automotive & autoparts business opportunities in mexico

5 Business models to start

manufacturing or distribution

operations in Mexico

Different ways to leverage Mexico’s advantages for your operations

Page 48: Automotive & autoparts business opportunities in mexico

5 Business models

• Finding a Joint Venture Partner

• Acquiring an existing operation

• Starting up with a Stand Alone operation

• Contract Manufacturing

• Starting up with a Shelter Program

Page 49: Automotive & autoparts business opportunities in mexico

5 Business models

Finding a Joint Venture Partner

• Acquiring an existing operation

• Starting up with a Stand Alone operation

• Contract Manufacturing

• Starting up with a Shelter Program

– They might be experts to do business in Mexico

– They might speed up the start up process due

to local networking

– They might be well connected to help you

import & export

– You do not have full control of your operation

– You have the risk of losing your intellectual

property

– You will face liabilities in Mexico in case of any

mistakes or problems with the operations

Page 50: Automotive & autoparts business opportunities in mexico

5 Business models

• Finding a Joint Venture Partner

Acquiring an existing operation

• Starting up with a Stand Alone operation

• Contract Manufacturing

• Starting up with a Shelter Program

– Employees will already have the

needed training for your process

– Legal and operational permits

might already be compliant

– High entrance cost

– You will be responsible for all

the previous and ongoing legal and

operational liabilities

Page 51: Automotive & autoparts business opportunities in mexico

5 Business models

• Finding a Joint Venture Partner

• Acquiring an existing operation

Starting up with a Stand Alone operation

• Contract Manufacturing

• Starting up with a Shelter Program

– You will have full control of your

operation

– High entrance cost

– High and costly learning curve

– Lack of local networking

– High risk and liabilities for all

legal, labor, fiscal and customs

start-up and operational permits

(functions that are not your core

business)

Page 52: Automotive & autoparts business opportunities in mexico

5 Business models

• Finding a Joint Venture Partner

• Acquiring an existing operation

• Starting up with a Stand Alone operation

Contract Manufacturing

• Starting up with a Shelter Program

– You will never have control

of your production

– You risk your intellectual

property

Page 53: Automotive & autoparts business opportunities in mexico

5 Business models

• Finding a Joint Venture Partner

• Acquiring an existing operation

• Starting up with a Stand Alone operation

• Contract Manufacturing

Starting up with a Shelter Program

– You will have immediate access

to the local networking and know-

how to do business in Mexico

– You have full control of your

operation

– You can start up in less than 9

weeks

– You can choose to not have a

legal entity in Mexico

– No liabilities in Mexico: labor,

fiscal, legal and other operational

permits

Page 54: Automotive & autoparts business opportunities in mexico

10 things to look for in a Startup Partner or Shelter Program

Make sure you get the following benefits:

1. Free Cost Model Simulation comparing different regions

2. Flexible commitment: on any size project (headcount or Sq. Ft.)

3. No entrance or exit fee at the termination of your contract (with

coordinated exit strategies)

4. Fast and worry free start-up operations (9 weeks)

5. Flexibility on how to operate in Mexico: incorporated or not Incorporated

6. Tax Savings: No VAT and no INCOME TAX

7. Billing transparency & no mark ups on purchasing in Mexico

8. Full Compliance Assistance: fiscal, customs, labor and environmental (no

red tape and no administrative risk or liabilities)

9. Customs Certified Program: quick processing on cross-border transactions

10. Ask for full administrative support: it will allow you to concentrate 100%

on your manufacturing operation, not on human resources recruitment,

looking for suppliers and so on.

Page 55: Automotive & autoparts business opportunities in mexico

How to start up manufacturing or distribution operations in Mexico

You can start up in a shelter program protecting your company from risks and liabilities, including:

• Start up, operational and environmental permits • Human resources: recruiting & managing skilled labor• Customs: Setting your importation & exportation proper documentation to save on taxes and duties• Fiscal & Accounting: preparing your company to save on taxes like VAT, and Income Tax • Freight forwarding services

Page 56: Automotive & autoparts business opportunities in mexico

10 things to look for in a Start up Partner or Shelter Program

Make sure you get the following benefits:

1. Free Cost Model Simulation

2. Flexible commitment: on any size project (headcount or Sq. Ft.)

3. No entrance or exit fee at the termination of your contract (with coordinated exit strategies)

4. Fast and worry free start-up operations (9 weeks)

5. Flexibility on how to operate in Mexico: incorporated or not Incorporated

6. Tax Savings: No VAT and no INCOME TAX

7. Billing transparency & no mark ups on purchasing in Mexico

8. Full Compliance Assistance: fiscal, customs, labor and environmental (no red tape and no administrative risk or liabilities)

9. Customs Certified Program: quick processing on cross-border transactions

10. Ask for full administrative support: it will allow you to concentrate 100% on your manufacturing operation, not on human resources recruitment, looking for suppliers and so on.

Page 57: Automotive & autoparts business opportunities in mexico

Request your seat for one of our next commercial

missions in key automotive and aerospace clusters.

You will visit:

• 2 automotive / aerospace companies

• The State Government Secretary of Economy High

Technology Training Centers and Technical

universities

• Industrial Parks: available buildings and Land

reserves for Build-to-suit projects

• Start Up & Shelter Operation concept

• Logistics in Mexico

Join us for one of our next Commercial Missions

To learn about specific dates go to:

http://CommercialMission.ManufacturingInMexico.com

Page 58: Automotive & autoparts business opportunities in mexico

Request your seat for our next commercial mission in Key

Automotive and Aerospace `regions

http://CommercialMission.ManufacturingInMexico.com.

Thank you!

By Xavier Hurtado

Manufacturing Expansion Facilitator

[email protected]

www.ManufacturingInMexico.com