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Insight

Collaborating with Clusters to Select Locations

Tue, 09/01/2015 - 12:59

Traditionally, industrial supply chains around the world are in place before OEMs arrive and their degree of comprehensiveness is commonly correlated with the maturity of the relevant clusters. Mexico is unique in that this trend is inverted as in certain locations the OEMs arrived first and are now working diligently to attract suppliers. Unfortunately, this has resulted in infrastructure challenges related to key variables such as the supply of electrical power, water, drainage services, and even primary services for human capital, such as housing and education.

INTERMEX has decided to address this issue, approaching OEMs and their accompanying suppliers to help them with site selection processes. The company’s pro forma cost model allows the strategic sourcing candidate to evaluate various locations and quantitatively evaluate each site before making a decision. “It is important to define the key variables in each company’s criteria in order to assemble a sound list of potential locations with the customer,” states Salomón Noble, Director General and CEO of INTERMEX. “We have to consider the local availability of labor, the proximity to customers and supply sources, accessibility, and infrastructure. INTERMEX focuses on the most fundamental variables; we have available assets and territorial reserves in key strategic markets, which are serviced with the right infrastructure, as well as zoning and industrial permits. Fundamentally, they are located in areas that are close to densely populated areas, as this tends to be the most important variable in the site selection process.”

INTERMEX collaborates with automotive clusters by strategically locating industrial buildings and land offerings within industrial parks, making the most of Mexico’s geographical advantages. The supply chain developments of OEMs and Tier 1 companies can generally be anticipated, so INTERMEX has found that it can position strategic industrial assets accordingly, and offers new companies the appropriate infrastructure, zoning, and industrial permits, with a location that is close to densely populated areas. Clusters are creating opportunities for new foreign companies, as well as national players or co-investors that are interested in supplying OEMs. In central Mexico, investors and suppliers are focusing on the domestic market potential, but also capitalizing on the favorable location for exports to South American markets. “As workers relocate and training is implemented, I expect there will be a shift on the supply side of the equation, but until supply matches demand, there will also be temporary labor shortages,” states Noble. This conclusion was reached in light of a similar situation in Ciudad Juarez, which was led by the US driving a surge in demand for production. The result was a talent migration phenomenon from Veracruz and Oaxaca to Ciudad Juarez, as workers moved to take advantage of the abundant job opportunities. Evidently, higher demand is attracting qualified laborers that are willing to relocate, but the ideal solution to satisfying demand for manpower is intelligent locations that are close to transport infrastructure or existing populations of skilled labor. INTERMEX has recognized this trend and is primed to help more than 200 companies with premier locations near large cities in the center and north of Mexico.