Ambos Nogales Manufacturing
Reshore, nearshore, reinvest. However you want to call it, Ambos Nogales can do it all for you. With its border location, you can take advantage of opportunities on both sides of the border.
Manufacturing vs Distribution
Connected by the brand new, state-of-the-art Mariposa Port of Entry, the Ambos Nogales region offers unique advantages and flexibility. Depending on the individual operation’s cost model, labor-intensive processes can take place in Nogales, Sonora to minimize costs in labor, while basing their distribution hubs in Nogales, Arizona.
However, trade regulations may arise in which retaliatory duties or tariffs can be placed on products finished outside the customs territory of the United States to discourage these cost savings. As a result, operations may send their final assembly division, or any other processes necessary to a U.S. facility to comply with the regulations’ guidelines, avoiding these retaliatory duties or tariffs. Once the retaliatory duties or tariffs are limited, operations may decide to return these processes to Mexico.
With different trade treaties surfacing constantly worldwide, the Border Flex region affords manufacturers the flexibility of positioning themselves in the position most beneficial to them at a particular point in time, for their given industry.
Border Flex allows companies to ask the questions:
- Where am I getting the most bank for my buck?
- Where does it make the most sense to produce a product or component, and build the finished product?
Nogales offers plenty of industrial space on both sides of the border, plus hundreds of open acres available for new construction. Twin Plant operations can be opened in Ambos Nogales to support high-tech, wire harnessing, medical device, automotive, agribusiness, injection molding, and aerospace manufacturing.
The binational market allows existing operations to reduce their inventory costs by operating under a true twin-plant operation. With inventory costs increasing in Mexico, companies can store inventory at a U.S. warehouse at a much lower cost while the inventory can be delivered to the manufacturing point in Mexico in a mere matter of minutes.
As uncertain as times have been when developing a long-term capital plan, the Ambos Nogales Flex Plan can be viewed as a chess board. The border gives operations the ability to use taxing systems from Mexico and/or the United States. They have the ability to move back and forth across the border for the benefit of the company. If a taxing system is modified during an operation’s stay, its management team does not have to change. Companies can use either side of the border and management can simply commute back and forth based upon the operation’s location.
Shelter operations are also available should a company choose to only locate on one side and have the flexibility of contracting with a shelter operation to produce a product on the Mexico side or the U.S. side.
Manufacturing on the Border
Time to market
Mexico is adjacent to the largest consumer market in the world—the United States. This becomes a key consideration of the supply chain where companies manufacturing in Mexico don’t need as much lead time for the product to reach the market.
Supply chain and logistics cost
Most companies have to change their whole supply chain structure when they outsource or offshore their processes or products. This structure involves supplier development in other countries and it is more costly to travel overseas to visit the suppliers. With transportation costs continuing to increase, logistics costs could also be higher from overseas, depending on the type and physical size of the product. As the gateway to the Western United States, Nogales, Arizona makes an ideal distribution location.
Wages in Mexico are about $3 an hour, and in Nogales, Arizona, one of the lowest cost of living cities in Arizona, the entry level manufacturing wage is about $8 an hour, ranking significantly lower than the $30 fully loaded in the US. Reduction in labor costs along often make manufacturing in Mexico an attractive option to manufacturing companies.
Companies need skilled, knowledgeable managers running their factories. This is more of a concern in China than in Mexico. By locating in Ambos NOgles, managers and their families can live in the United States while the managers work in Mexico and cross the border each day. In the Ambos Nogales region, we have over 500 managers, engineers, and other support staff that live in the United States and travel to Mexico for work everyday.
Expanding or relocating into Ambos Nogales offers a large selection of competitive advantages for companies looking to stay ahead of the competition. Likewise, those selections are also presented in different packages, with different amounts of investments in machinery and/or labor.
Under a shelter operation, a company will function under the “Shelter” of another manufacturing entity licensed and established in Mexico. This option represents a smaller capital investment and minimizes overall risks. The “Shelter” concept also allows them to bridge any cultural gaps and minimize the learning curve of doing business in Mexico.
The level of direct involvement that the company wishes to have in the day to day operation under the “Shelter” structure can be customized to account for the individual company’s needs. Likewise, companies are able to direct production schedules, quality systems, MRP systems, and more.
Terms for buy-outs or take-over processes are typically pre-negotiated, and multi-year agreements are also available. Fees will vary on individual basis and are traditionally structured based on the occupancy of the facility, and the time and size of workforce.
Items included in “Shelter Operations”
- Startup capital
- Up-to-date regulatory compliance
- Sourcing of direct/indirect labor
- Maintenance Repair Operations (MRO) procurement
- Industrial facilities with necessary utilities
- Stable relations with union and local government entities
- Established network of logistics support on the U.S. and Mexico side of the border
The Maquiladora Related Economy of Nogales and Santa Cruz County: December 02, 2014; Vera Pavlakovich-Kochi, Ph.D.
Since its inception in mid-1960s, the maquiladora sector has become the major engine of economic development in Nogales, Sonora. Although a significant industrial growth has taken place in other cities in Sonora (Hemosillo, Empalme, Guaymas and Ciudad Obregon), the border city of Nogales is still the leading location with the largest number of maquiladora employees in the state.
Nogales is home to manufacturing, warehouse, and distribution, produce, and other companies from across the world.