For this reason, since the maquiladora industry was launched in Mexico in the sixties, the Shelter service also began. Shelter’s main function is to ensure that businesses feel protected and supported as they establish and operate foreign companies in Mexico.
A Shelter’s principal goal is to provide administrative support, which includes accounting, logistics, imports and exports, the environment, health and safety, and human resources: that is, hiring, job recruitment, union and payroll contacts, and everything else a company needs to be in compliance with Mexican law.
In this way, the foreign company stays responsible for its core work, i.e. production processes, purchase and control of materials, equipment, product engineering, quality control, production, maintenance, and all of the essential aspects of the company: namely, its product.
This service offers great advantages to foreign investors. First of all, it reduces or minimizes risks or failures in controlling inventory, temporarily imported goods, the submission of tax calculations, appropriate staffing for the company, and labor union relations.
In addition to economic resources, failures cost vital time that could be used for starting business operations.
"Through Shelter we save foreign firms the future costs that they might have if they were to carry out an activity poorly or make mistakes because of their ignorance of the market, law, culture, and lifestyle," said Gregorio Canales, Director of New Business for DIMSA, a company that began operations in Monterrey more than 16 years ago and has ample experience in operating foreign-owned businesses in Mexico.
"We offer foreign companies the option of having operations in Mexico, both as their subsidiary under an ‘Administrative Outsourcing’ contract and as a DIMSA tax entity under the Shelter concept. We have experience in operating businesses in this country, so foreign investors can focus on doing what they know how to do and what they specialize in," said the executive.
"The main advantage for foreign investors in having a Shelter is that there will be someone more efficient than them who can do their administrative work in Mexico," said Canales.
The director indicated that the Shelter service is ideal for businesses with up to 500 employees, since it is very difficult for companies of that size or smaller to have a finance director, a director of human resources, and a director of imports and exports. By using its service concept, a company can achieve efficient administration of the "overhead" of its operations.
"The services we provide range from the planning process to the startup of the project, and they continue during the foreign company’s operation. [These services include] defining the project, the type of personnel required, the products manufactured, the processes, etc. All of this is information that the client has, but we help them to better define their variables, since we understand how everything is handled in Mexico," said Canales. He mentioned that, later, DIMSA can also verify for the company the size of prospective locations, the number of employees that will be needed, energy and water consumption, work days, the different phases of the project, and logistics management, among many other variables.
"We help them to assess the ideal location for the project and give them several options for operating in Mexico. Upon completing their contract, companies have the flexibility to change the type or scope of our service," said Canales, who stressed that 100% of clients have renewed their contracts with DIMSA, a testimony to the company’s excellent quality of services.
The company currently serves over 50 active clients in various industries, such as aerospace, automotive, electrical, electronic, plastic, chemical, medical, mechanical metal, packaging, and consumer products, among others.
For his part, Ramiro Arias, Regional Director of American Industries in Monterrey – another Shelter company – said that one of the main challenges for foreign companies settling in Mexico is being able to reach the desired quality and levels of production as quickly as possible so that they can justify a project's profitability. Companies must do so while facing administrative tasks made more complex due to the fact that they are operating in a country with different laws, culture, language, and business environment. And it is here where American Industries’ Shelter services aid new businesses to start up and stay successfully in Mexico by avoiding exposure to a variety of administrative errors that could delay and complicate the start of operations.
The main benefit of hiring a Shelter, said Arias, is that the foreign company can focus on production and quality and leave all of the administration in the Shelter’s hands. Such administration can include the different areas of human resources, accounting, customs, imports and exports, and logistics, among others.
"With our support, companies reduce the time that it takes to settle in, hire personnel, and conduct import and export transactions, all while complying with applicable Mexican laws and achieving their projected production levels efficiently," said the executive. He went on to say that the average time necessary to start operations through the Shelter service is approximately 45 days, beginning once the company has the physical space in which to install itself.
With over 34 years of experience, the company offers services ranging from site selection, hiring, recruitment and human resource management, accounting, customs, logistics and support in government negotiations. The company also helps foreign executives who work in the Mexican plant to adapt to the city.
Throughout its history, American Industries has supported nearly 200 foreign companies in their startup and operation in Mexico.
In the State of Nuevo León, these companies include Brooks Automation, Friedrich, and Intercepta, whereas, in other cities, they include such names as Cessna, Hawker Beechcraf, Emerson Electric, Sumitomo, Superior Essex, Curtiss Wright, AE Petsche, Motorola, and Lear, among others.
Nowadays, American Industries has around 40 companies in their Shelter program. As a result, they stand out in the industrial real estate market for having more than 11 million square feet of industrial buildings in the country, of which 1.2 million square feet are in Monterrey’s metropolitan area.
For 2012, American Industries is managing some projects for automotive and home appliance companies that will settle in Nuevo Leon.
An alternative
The Shelter is another option for operating in Mexico. And Prodensa has over 27 years of experience in providing services to foreign investors who are interested in making the country their base of operations.
"We tailor our services to customers’ needs. We can be a pure Shelter, i.e., foreign companies operating under our management and our law firm, or companies can choose our start-up service or Management Outsourcing Service," said Carlos Alvarado, Director of Prodensa.
"We help companies by taking care of their administrative needs, as these are areas in which they are less familiar since – productively speaking – they are in a new country. And, thanks to our experience in matters of law, taxes, accounting, human resources, social security, payroll, hiring and recruitment of personnel, we can ensure them stability and a successful start," remarked the executive.
Alvarado assured that the main advantage of a Shelter does not come from the direct cost of the service, but from minimizing risk of entering a new market with different laws and ways of operating.
"Thanks to our services, companies ensure that they can stay in Mexico by fulfilling the appropriate processes and regulations for operating here and by avoiding interruption in their startup because of environmental, foreign trade, or tax issues," remarked the director.
Throughout its history, Prodensa stands out for having partnered with 170 foreign companies.
Today, the company serves about 45 customers. A third of them receive services under the pure Shelter program, another third under the Start Up program, and yet another third with Management Outsourcing.
Polaris, Embraco, Light Science, and May Steel are among the companies that have recently been launched in Nuevo Leon and that receive the Shelter service, while Pirelli stands out in the Bajío region.
"We are working hard in the hopes that this year some automotive and metalworking companies may choose to settle in our country," said Alvarado.
Background
The Shelter concept has existed for over 30 years, when the maquiladora industry began to arrive in the sixties, mainly at the Mexican border.
The abovementioned concept came about in order to help foreign companies to settle in Mexico, leaving a third party in charge of everything related to the administration of peripheral activities.
For any company that needs to move operations to Mexico, either to be closer to its customers, to reduce operating costs, or to enter a new market, a Shelter can be its ally and help support its administrative activities so as to facilitate the company’s establishment in the country.
TABLE
Activities to Complete:
Investor:
- Equipment
- Manufacturing
- Product Design
- Materials
- Quality
- Packaging
Shelter:
- Regulations and Permits
- Legal Structure
- Accounting
- Customs
- Human Resources
- Payroll
- Taxation
- Logistics
- Safety, Environment, and Hygiene
