Choosing a viable manufacturing locality is an important decision for investors. You do not want to invest in a manufacturing business in an area where you will have trouble with the government or locals. This is not good for business. After manufacturing your products you will need a ready market. Have you tried Durango Mexico?
Manufacturing firms from China, the US, and all over the world have established businesses here. In fact, the number of businesses is increasing. Many investors consider Durango to be Mexico’s best-kept secret. So why should you choose Durango Mexico? This article highlights the manufacturing climate in Durango Mexico, why to choose the city, and the best manufacturing practices you should adopt.
Manufacturing in Durango Mexico
Durango is one of the largest states in Mexico and is approximately the size of the US state of Mississippi. It is located in the northern region of Mexico and is strategically positioned between the country’s most vibrant economic hubs in Mexico City along the US border. This means it is in a prime position to offer business access to your manufacturing products.
Durango’s economy was once driven by mining and agriculture but has now thrived into a vibrant and diversified city of commerce after NAFTA was ratified in the early 1990s. Now there are hundreds of manufacturing and assembly facilities located throughout the city, but particularly in the region of the capital city, Durango Mexico.
Types of Industries Investing in Durango
There are a variety of industries investing in the area, including:
Examples of Companies Investing in Durango
Based on 2015 business statistics, Durango Mexico received about $176 million in Foreign Direct Investment (FDI). Most of the FDI amount went to the manufacturing sector. This implies that there is something drawing a high level of FDI.
First, Durango has developed an adequate infrastructure. Mexico invested heavily in ensuring the country’s infrastructure is excellent. Due to the many infrastructural developments, Durango Mexico now boasts one of the best infrastructures in North America. It has an international airport, and the state has about 1,200 kilometers of rail. These offer transport, which is vital for transporting the manufactured products and bringing in raw materials.
Second, Durango boasts a huge skilled labor force. Annually, it produces about 1500 graduates in construction, engineering, and construction. The state has about 60 institutions of higher learning. Based on 2015 statistics, there were approximately 200 academic researchers employed in the state. This paved way for advancement of technological and scientific expertise, especially in the agriculture, biotech, and medical fields. The labor costs for skilled and well-educated workers are typically less than the national average and companies do not have to spend more on labor.
Why Choose Durango?
There are many reasons to choose Durango. For instance, as discussed in the previous section, the labor pool is skilled enough to sustain a manufacturing business. The labor costs are affordable for any business. You do not have to hire expats, which can be costly. Cheap labor means that the profits are greater and your business is in the prime position of growing.
Durango Mexico is characterized by proximity to the market. If you manufacture products, you’ll need to have a ready market for the business to grow and make profits. Durango Mexico is located in the largest industrial corridor in North America. Your business will save money and time by being nearer to the US compared to overseas. It is a better location if you're looking to plan for a shorter period of time versus months out.
This implies that your business holds fewer items in finished form since you are ordering weeks out instead of months. Planning in the short-term is always better and more precise than planning long-term since you have to take into consideration inventory and the number of orders you have. Planning in the short-term offers you versatility as you commit less to inventory, meaning you have more flexibility of what to convert your raw materials into.
Having a manufacturing business in Durango Mexico means you can customize your product to the client’s needs and expectations. It becomes easier to build close to the sales cycle and order when you’re near your delivery location versus when you're located overseas. Lastly, most of the people in Durango are bilingual. Most of them speak English and Spanish. You do not have to worry about speaking Spanish. However, you must be able to at least converse in English.
Best Practices for a Manufacturing Business in Durango
If you aspire to start a business, have the detailed product specifications package along with the bills of materials for the products. If you do not have the product specifications, it is paramount that you seek firms offering such services. The business you consult should have a lot of experience across multiple industries and ERP systems. The consulting company should assist you with the product specifications, work aids, reporting systems, and line balance, which will ensure that your manufacturing business kicks start immediately.
Avoid Mistakes Other Companies Make
It is a bad idea to assume that you know enough about Mexico for you to dive in and do your business alone. Another mistake is committing an overhead structure you must grow into instead of starting with a partner that allows you to grow into the needs of the clients and the business. We recommend involving a local consulting firm, which will help you in delineating the optimal operability and productivity of your business.
The consultancy will help you settle in Durango Mexico and do the business without hurdles. You do not have to commit with the consultancy for a long time, not until you can run the business and have learned about how manufacturing is done in Durango.
How Long Should You Take to Set Up?
You should not hasten to get the manufacturing running without the knowledge of how the company will operate. This is especially important with the bureaucracy involved in exporting the products. The time you should take to have your manufacturing up and running depends on many variables, such as lead times and how fast you get raw materials, among other factors.
You also must train the machine operators on the manufacturing process and take time to set up the equipment. Therefore, you should not rush; rather, take time sorting these issues. You may even take a month or two before starting the manufacturing.
Understand Outsourcing Manufacturing
You need to first understand your manufacturing so you can be part of the success of the business before outsourcing. If you outsource labor, ensure that the person understands the manufacturing process. Since you have to meet the requirements set by clients, it is best to ensure whoever you’re working with and all skilled labor know about the client’s requests and specifications.
In addition, if you are not entirely sure about the manufacturing process, outsource the services to a company that knows about the process of manufacturing. That way, you’ll be able to learn over time until you’re fully aware of it and then you can run the process yourself with the necessary labor force.
Cost of Manufacturing
You’ll need capital before starting up the manufacturing business. You’ll need to buy equipment and cover all other costs associated with the manufacturing process, including labor. Therefore, we recommend that you have this ready. You should also have extra capital to cover unexpected costs as this can derail the company. You also need to cover for overhead costs. You should not make the mistake of setting up a manufacturing business without sufficient capital.
Durango Mexico is located in the northern region of Mexico and is strategically positioned between the country’s most vibrant economic hubs in Mexico City along the US border. It attracts electronic, textile, and automotive industries. Companies that have invested in the city include Delphi, Wal-Mart, and Honda. You should invest in the city as it offers international investors a highly skilled labor force, has a history of political stability, and the corporate start-up cost is low.
Durango Mexico offers adequate means of transport, which affords manufacturers easy access to markets in Asia, Europe, and North America. Durango is also located in one of the most dynamic regions that offer the largest industrial corridor in North America. You should choose the state as it has the infrastructure and labor stamina to support your business. You’ll enjoy more labor savings as Mexico is less costly compared to US labor. Compared to other offshore countries, Mexico is a better choice as the investment costs in most other countries can rise disproportionately.
However, you must first understand your product specifications, avoid mistakes some other firms make, take time to learn about the city and acquire the necessary assets for the manufacturing, including labor. You also need to understand how to outsource manufacturing, the cost of manufacturing, and have adequate capital.