Steps to Setup Operations in México

Assumes you’ve tentatively:

• decided you need to establish a presence in México.
• identified your products and customers.
• narrowed you’re site selection to two or three cities.
• identified the size of organization and facility you’ll need in México.

 Your next steps are to:

• Decide on the type of Corporate entity or entities that are most appropriate of your situation.
• Establish the name of the corporate entity and get it registered.
• Apply for Pitex
• You can’t do these steps too early, but they can hold you up later.
• You’ll need advise from your foreign & Mexican lawyers and accountants.
•  

Next you’ll need to zero in on the city for your site location:

• Use the resources of the state foreign investment agencies. They can:
• Give you an overview of the economics of the area & the government incentives that can be expected.
• Introduce you to:
  • Other companies that have recently established in the area that would be willing to share their experiences.
  • Potential joint venture partners.
  • Industrial Park Developers.
  • Contract management companies
  • Construction companies.
  • Real Estate companies.
  • Local consultants.
• Talk to as many of the above as you can, in each location, in a few days.
• Make a spreadsheet of the key factors.
• Make a preliminary selection, it’ll probably be fairly clear, & zero in to verify.

 Now for the specific site:

• Have the specific requirements for your facility well defined.
• Ask for proposals including the cost of land, plant, office, & utilities from several:
  • Industrial Parks
  • Developers
  • Contractors
  • Real Estate companies.
• Compare the proposals, checkout their references, get the opinion of your lawyers and accountants, and customers.
• Your decision should get to be fairly clear at this point.

Now that you’ve identified the city start, looking for people while you complete your negotiations for your facility.

• Define a proposed organization structure, but be willing to change it based on the talent you discover.
• Advertise in the local newspaper for you top management positions.
• Have the applicants fax their resumés to your office.
• You’ll get flooded with resumés.
• You’ll find most Mexican have changed jobs much more frequently that you’re used to.
• What about salaries and benefits:
  • You’ll pay more to the higher level individuals in México than you will in the states or Canada.
  • You’ll pay less for supervisors & engineers and much less for hourly and skilled trades.
• Talk to some of the other companies is the area to get a feel of what you’ll need to pay.
• Subscribe to the Mercer Report.
• Join the local Centro Patronal.
• Try to hire your top manager first in order that he/she may participate in the selection of the lower levels.

 Finalize Your Key Service Providers

Once you’ve hired your top manager, the top individuals in finance, human resources, and material it’s time to finalize your key service providers:

• The law firm
• The accounting firm
• The custom brokers on both sides of the border.
• The transportation companies on both sides of the border.
• Keep in mind that the Mexican affiliates of the service providers you use at home are not necessarily the best alternative in México.
• Sometimes the Mexican affiliate will have some other huge customer whose requirements will overshadow yours and thus leave you waiting.
• Sometimes two affiliates don’t work together as well in México as they do at home.
• You need to visit all the candidates with your Méxican managers before you decide. Meet the individuals you’ll be working with, not just the managers.

How do you find the key material suppliers:

• The foreign investment agencies can give you many good leads.
• BancoMex has a directory that’s updated annually.
• Talk to the other manufactures in your area.
• Your Méxican employees will also be an excellence source, ask them during your interview process.

What about the Union?

 It’s not like the states or Canada. In México, under the federal labor law any 20 employees can form a Union. You might be able to keep your facility non-union for a long while, however someday you could lose it. Therefore, many believe, it’s better to pick the union you want, rather than wait to see which one picks you. This of course differs greatly by location. Talk to other employers in your area. Interview the unions if you like. The choice will most likely be very clear.

How do I learn more detail about all of this stuff?

• Most law firms and accounting firms provide as good summary of "Doing Business in México". Get a lot of copies and give it to your top people at home that have anything to do with the Méxican operation. Make sure they’re all reading out of the same book as you key service provider. These books will summarize such topics as:
  • General Considerations
  • Investment Framework
  • NAFTA
  • Intellectual Property
  • Branches, Subsidiaries and Companies
  • The Tax System
  • Labor & the Labor Law
  • Real Estate & Taxes
  • Immigration
• Attend a few seminars on doing business in México.
  • MexCon ’98, Manufacturing in Mexico, March 23-25, 1998, San Diego, California is very good.
  • TE&A's partners attended, MexCon '97, it was great.
• Join the various chambers of commerce
  • US-Mexico Chamber of Commerce
  • Mexican American Chamber of Commerce
  • Centro Patronal
• Subscribe to Key Periodicals
  • US / Mexico Business
  • Twin Plant News
  • El Financiero
  • Transport Topics
  • Mexico Watch

Any other Key Advise?

• Recognize that it’s a different culture, learn Spanish and enjoy the experience.

Return to Home Page

L. J. Tibbitts, Partner
Tibbitts, Edwards & Associates
219 Cloverly Road
Grosse Pointe, MI 48236

Phone (313) 882-0409 ---- * ---- Fax: (313) 885-7561

Larry's E-mail address is: ljt@te-assoc.com
or: TibbittsL@aol.com

Last update: October 9, 1999