Salomón Noble
Director General and CEO
INTERMEX
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View from the Top

Site Selection Facilitating New Automotive Arrivals

Tue, 09/01/2015 - 09:58

Q: How has INTERMEX evolved within the automotive sector and what new projects have been introduced as a result of the company’s participation?

A: The main concerns of companies when they enter a new country are human capital training, strategic sourcing for manufacturing, and whether an effective technology transfer will be achievable. INTERMEX provides a soft landing through mechanisms that guarantee compliance with Mexico’s legal framework, allowing the client to focus on its technology transfer process and training. The shelter program is an excellent tool for all companies that are new to Mexico, and are not familiar with the legislature or how to attract talent. We have proven methods that help companies attract a qualified workforce, even in highdemand conditions. Through this program, INTERMEX also addresses accounting, international commerce, and environmental requirements on the newcomer’s behalf.

In 2014, INTERMEX implemented its shelter program to ease the entry of Heil Trailer in Ciudad Juarez. Heil Trailer established a sophisticated fabrication facility for heavy aluminum trailers designed for hauling fossil fuels, and is now exporting trailers to Saudi Arabia via the port of Galveston, Houston. Typically the trailers are made from steel, but Heil’s innovative aluminum solution is superior in terms of reduced weight, resulting in lower operational expenses and improved safety. Their manufacture required more specialized labor in order to operate state-of-the-art processes such as aluminum plank cutting, cold forming, and welding processes, boosting Mexico’s added value and competitiveness. Additionally, in May 2015, Oshkosh began the operation of a world-class manufacturing plant in Colinas del Leon Industrial Park, Guanajuato, which produces access equipment such as scissor elevators.

Q: What impact will new regulations have on your clients, now that the duration of the shelter program has been reduced to only four years?

A: The fundamental change in the regulation for the shelter program is that international companies will have to deploy a wholly foreign-owned enterprise (WFOE) through a permanent establishment in Mexico after four years of working with the new shelter program. Nevertheless, the shelter service’s intrinsic value prevails beyond the permanent establishment requirement, because the need for human resources, accounting, international commerce, environmental and quality of life services are inherent to the customers’ operations, even years after installing facilities in a new country. These services can eventually be rendered to the customer’s WFOE.

Now that many companies are entering the country, attracted by newly developing clusters and improved infrastructure in those areas, INTERMEX is approaching these new players and the accompanying suppliers with a strategy focused on the customer’s site selection process. It is important to define key variables to assemble a sound list of potential locations for the customer. The most common criteria include qualified labor availability, proximity to the customer or source of supply, accessibility, and infrastructure. INTERMEX’s pro forma cost model allows the strategic sourcing candidate to evaluate various locations and quantitatively evaluate each site.

Q: How will the shelter program evolve in the next few years, and what are your priorities for INTERMEX in the automotive industry?

A: The current trend among suppliers is to move toward specialization, and our shelter services allow suppliers to focus on their core business. The INTERMEX team offers knowledge and expertise to complement the manufacturing operations of our clients throughout their companies’ life cycle but especially in the early stages, so demand for the program continues to grow. The shelter program’s evolution is intrinsically linked to the rate at which technology is developing. Collaborative environments are growing in popularity, and there is an increasing need to take advantage of this virtual infrastructure to create more user-friendly interfaces. The challenge of every shelter provider is deciding how to employ the technology in order to generate faster and more effective collaborative services. Nevertheless, when a new investor comes to the country, the value of the shelter program goes beyond technology. INTERMEX provides the new investor with a strategic ally, smoothing the transition into the unknown environment in terms of language, culture, and legislation.