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

1. Automotive & Aerospace
By Xavier Hurtado
Manufacturing Expansion Facilitator
facilitator@ManufacturingInMexico.com
www.ManufacturingInMexico.com
Business Opportunities
in Mexico

2. 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

3. 10 REASONS TO START MANUFACTURING OR
DISTRIBUTION OPERATIONS IN MEXICO
Leveraging Mexico’s advantages for your profitability

4. 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.

5. 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.

6. 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.

7. 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.

8. 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

9. Automotive, Autoparts & Heavy Duty Industry in
Mexico

10. Automotive Clusters and
Supply Chain Integration

11. 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.

12. 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

13. Aerospace Industry in Mexico

14. Aerospace Clusters and
Supply Chain Integration

15. 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.

16. 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.

17. 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

18. Mexico is the most cost effective
location for US companies as far as
labor and freight
2011 US Manufacturing-Outsourcing Cost Index

19. 1 STEP TO FIND BUSINESS OPPORTUNITIES
WITH THE AEROSPACE, AUTOMOTIVE AND
AUTOPARTS INDUSTRIES IN MEXICO
Locating opportunities in the supply chain in Mexico

20. Company
A
Stamping
Machining
Company
B
Company
C
Supplier
Company B
Stamping
Stamping
Supplier
Company A
Supplier
Company C
Plastic
Injection
Machining
Machining
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.

21. v
v
Some of the Companies that participated in
the pool:
Aerospace Automotive Metal Mechanic Electronic
Plastics Energy GenerationMedical
Various

22. 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

23. 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…

24. 14 M USD
41 M USD
26 M USD
22 M USD
0.6 M USD
12 M USD
8 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

25. $-
$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 USD
1 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?

26. $-
$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
Nonwovenrolls(co-polyester)
Nonwovenrollspolipropileno
MetalicStructures
AirHoseandCylindres
CoatedFabrics
ElectricandElectronicSupplies
SolarGlass
TFMChemicals
Formsofcardboard/plaster
Encoders,Cards,USB,Sensors
PersonalProtectiveEquipment
Bearings
Various
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?

27. 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

28. 5 STEPS TO DO SITE SELECTION IN MEXICO
Elements to consider to find the most cost-effective location

29. 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

30. 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

31. “Information IS NOT
Knowledge”
- Albert Einstein

32. 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

33.  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:

34. • 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:

35. • 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:

36. • 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:

37. • 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:

38. • 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:

39. • 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:

40. • 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:

41. • 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:

42. • 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:

43. 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

44. Evaluation Matrix
City / Site / Building
Option A Option B Option C
Key Factors
 Company defines priorities & weights of the
factors to be considered

45. Due Diligence
 Zoning
 Ownership
 Utilities Feasibility
 Water
 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

46. 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.

47. 5 Business models to start
manufacturing or distribution
operations in Mexico
Different ways to leverage Mexico’s advantages for your operations

48. 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

49. 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

50. 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

51. 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)

52. 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

53. 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

54. 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 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.

55. 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

56. 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.

57. 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

58. 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
facilitator@ManufacturingInMexico.com
www.ManufacturingInMexico.com