After focusing in the last episode on the different modes of entry for expanding into Mexico, Ricardo and David shift their attention today to where to manufacture in Mexico and how companies can work through the initial site selection process.

First, David identifies the most important criteria companies should take into account when choosing a manufacturing site in Mexico. These factors include accessibility, manpower services, customers, cost and security. Then, he divides the industrialized areas of Mexico into six options and provides pros and cons for each one. The first region is the one directly south of the U.S. border. Otherwise known as the border region, the proximity to the U.S. and high skill levels are its major benefits. Downsides include high expenses and security concerns. The northeastern area of Mexico has been industrialized for over a century. This region is the best option for companies who want to avoid the expenses and security risks of the border zone, but still want to be close to U.S. markets. Companies may consider the northwest region for its coastal logistics and low turnover rates, though there are fewer workers and customers within close proximity. Bajío is a region north of Mexico City which is rapidly growing and attracting more attention for its excellent access to Mexican markets and both ports. The southeast region has long term established infrastructure and skills. Guadalajara is the second-largest metropolitan area in Mexico and is known as the Silicon Valley of Mexico, focusing on electronics, software and computing.

Now that we’ve identified the six major areas in Mexico, David explains an effective process companies should follow in order to choose the right location for them. They should consider individually the factors of logistics, manpower, competition, local wage and benefit costs, security, and accessibility. Finally, he shares the best people to ask for advice before making a final decision.

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