How to Set Up a Factory in Hermosillo, Mexico
If you already have a product in the market and customers you serve, you may find that launching a factory in Hermosillo, Mexico, is somewhat similar to a factory launch in any other country. However, there are a few nuances unique to Mexico that are critical to plan for in advance.
As with setting up a factory anywhere, there will be regional differences in regulatory requirements, utility connections, recruitment strategies, and available support. That’s why we’ve put together this list of seven steps to guide companies through successfully setting up a factory in Hermosillo, Mexico.
1. Find the right site for your industrial space
Hermosillo has been a prime location for manufacturing for some time. It sits near enough to the U.S. market to allow for easy shipping while far enough away to avoid the higher border region costs. It is also close to the deep-sea port of nearby Guaymas, which supports broader international sales. Moreover, it provides the benefit of being within the robust automotive component manufacturing center located here alongside the Ford Stamping and Assembly plant. A tradeoff of these and other benefits is that industrial real estate in Hermosillo can be more competitively priced than locations further to the south.
To rent factory space in Hermosillo, Mexico, it costs approximately USD $0.48 per square foot per month. However, before signing a lease, it’s important to be sure what is included in that rental rate. Facilities located in an industrial park are more likely to have necessary manufacturing infrastructure in place, such as appropriate natural gas and electrical capacity among other utility needs, or docking space. Industrial real estate features will range depending on the specific facility, so it is essential to tour facilities before committing to lease or buy.
2. Secure any necessary permits or regulatory approvals for operation
Companies operating under a standalone business model must start the process of securing any necessary regulatory permits or approvals before moving too deeply into the process of setting up your factory in Hermosillo. For example, new operations must submit an environmental assessment or obtain a permit for some potentially hazardous activities. Permits may need to be obtained at the federal or state level.
Organizations may also need to secure project approval prior to their electrical installation, which requires a system layout prepared and certified by a qualified electrical engineer.
3. Plan your workflow
Organizations that are mirroring a setup at another manufacturing facility may have already optimized process workflow. However, setting up a new factory generally presents an opportunity to add new levels of efficiency to your operation. This is an excellent opportunity to identify potential Lean efficiencies or identify strategies for creating a smart factory. Smart factories are increasingly becoming the norm and workers in Mexico are gaining skillsets that support this approach.
Manufacturers can also use this planning time to identify sustainability practices that can reduce spending on electric or water usage.
4. Source equipment and materials
With your workflow in place, it’s time to begin bringing this vision to life by building, ordering and/or delivering the necessary machinery and equipment. Now is also the time to begin building relationships with local supply partners. While manufacturers operating under the IMMEX program benefit from the Annex 24 exception—which allows them to temporarily import production materials without having to pay taxes or duties on those materials—local partners can strengthen resiliency while potentially lowering costs.
Numerous raw materials are produced in Mexico. The country has a robust network of metal suppliers, as well as sheet metal fabricators, and is the source of many of the minerals and resins incorporated in consumer goods, electronic products, and medical devices. Many manufacturers also find that a location in Mexico provides desired supply chain visibility.
5. Build your team
While your facility is being built out, it’s time to make plans for the people who will be operating here. This will include making decisions about whether to hire local managers or move experts already versed in your processes from other locations.
You will need to create a recruitment plan for managers and direct laborers that accounts for local hiring norms. If not familiar with recruitment and hiring practices in Hermosillo, this is an area where an HR consultant may be help. An expert can advise on where to most effectively post hiring ads, as well as expectations for competitive pay and benefits.
6. Plan for distribution and logistics
Hermosillo’s location is an excellent advantage for manufacturers as it offers highway, rail, port, and air options for getting product to markets near and far. These options offer manufacturers resiliency in the face of logistical hurdles. To further smooth the distribution process, however, it’s important to connect early with any partners needed to move your goods and put plans in place to meet labeling and other customs requirements.
7. Phase in production
This pre-production phase affords manufacturers an opportunity to identify any small problems and make needed changes while working with a small production batch. This phased-in production ensures that quality controls are in place, staff training has been adequate, and equipment is able to meet expected demands. Most importantly, it ensures that your operation fully reap the benefits of manufacturing in Hermosillo, Mexico.
Begin with a strong foundation
Hermosillo’s appeal as a manufacturing location means that new space continues to be built to meet demand for Class A industrial space in Mexico. Rio Sonora, the newest and most advanced industrial park in Northern Mexico, provides manufacturers with flexible space that can be built to suit within six months. In addition to abundant access to water, reliable power, ample gas supply, and world-class security standards, the park provides access to an administrative team that can help with HR, import and export processes, and regulatory compliance.
Opening a factory in Hermosillo, Mexico, doesn’t have to be difficult. By working with an experienced partner like Tetakawi, companies can cut down the time needed to bring their factory online. To take the next step, contact Tetakawi today.