How to Choose the Best State to Set Up Your Manufacturing Plant in Mexico

The decision of where to locate your manufacturing plant in Mexico is much more than just choosing a point on a map: it is a strategic decision that can define the success or failure of your investment.

When it comes to establishing a manufacturing plant in Mexico, location is one of the most crucial decisions. The variety of factors to consider, such as labor costs, available infrastructure, tax incentives, and local laws, makes this choice complex.

🗺️ Beyond the Map: Why Is Choosing the Right State So Critical?

The location of your plant has a direct and profound impact on three key points for your business:

🔍 Key Factors to Choose the Ideal State

Once we’ve considered the impact of state selection on your business’s success, we recommend carefully evaluating the following factors:

🏭 Industry Type

• The type of business you operate is the first point for a strategic decision. Mexico offers specific advantages depending on the sector: automotive in the Bajío, aerospace in Querétaro, electronics in Baja California, and so on. Each state has well-established industrial clusters that allow for greater supply chain efficiency, access to suppliers, and collaboration with similar companies. For example, Guanajuato is a highly competitive state in the automotive sector. Companies like General Motors and Honda have plants in this region, taking advantage of skilled labor and competitive costs.
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  🚚 Logistics and Connectivity

• The location should also take into account access to transport routes, ports, and airports. Proximity to these strategic points can significantly reduce logistics costs and transportation times. For example, Baja California is a key state for companies seeking smooth connections with international markets, due to its proximity to the Port of Ensenada and advanced infrastructure. Companies like Samsung and Honeywell have established operations in this region because of its excellent logistical infrastructure.

• 👩‍🏭 Talent Availability

• States with established industrial zones often have access to a greater supply of skilled labor. Additionally, universities and training centers located near these industrial hubs ensure a steady flow of specialized talent. For example, Querétaro and Puebla are states with universities and educational programs focused on manufacturing, making it easier to hire qualified staff and provide ongoing training. In Querétaro, universities like the Instituto Tecnológico de Querétaro produce over 2,000 engineers in various fields each year, which facilitates the recruitment of specialized talent in sectors such as aerospace and automotive.

• 💵 Tax and Government Incentives

• Mexico offers a wide range of incentives for companies that establish themselves in specific locations. These include subsidies, tax benefits, and government support that can significantly reduce operational costs. For example, Aguascalientes and San Luis Potosí are states that provide specific incentives to companies choosing to settle there, from tax exemptions to subsidies for infrastructure construction.

• ⚙️ Type of Operation, Plant Size

• The size and type of the plant, whether light, heavy, or automated manufacturing, will also influence the state selection. Some states, like Nuevo León and Chihuahua, have the right infrastructure for large automated facilities, while others, like Yucatán, offer additional benefits for smaller companies. Companies like Vitro, one of the largest glass producers in Latin America, based in Nuevo León, benefit from automated and high-capacity facilities.

• 🏗️ Available Infrastructure

• When establishing a plant, there are three main options: build from scratch, rent an industrial building, or take advantage of an already established industrial park. Industrial parks already have basic infrastructure like electricity, water, and gas, which can significantly reduce your plant's start-up time. A site selection study is crucial for evaluating the best available options, facilitating decision-making, and helping you find the most suitable infrastructure for your type of operation.

• 📦 Start-Up Times and Productivity

• States that already have well-developed industrial infrastructure can speed up the start-up time of your plant. Additionally, proximity to suppliers and the speed of administrative processes can make a significant difference. For example, State of Mexico and Jalisco have established industrial infrastructures, making for a quicker implementation compared to less developed states like Chiapas.

📍 What’s the Best State for Your Manufacturing Plant?

There is no one-size-fits-all answer to this question. The "best" state is the one that aligns perfectly with your company’s needs, industry type, operational model, and business objectives.

For example, if your company’s priority is exporting to the United States and accessing first-level logistical infrastructure, border states like Baja California or Nuevo León may be your best option. Meanwhile, if the focus is on automotive manufacturing and you need a robust supply chain and skilled labor, the Bajío states are unmatched.

🚀 Take the First Step Towards a Successful Investment

Choosing the right location for your manufacturing plant in Mexico is the first step towards a successful and profitable investment. The correct state selection is key to optimizing costs, start-up times, and maximizing ROI. Investing time in thoroughly analyzing each factor can be the key to the success of your manufacturing plant in Mexico.

Don’t leave such an important decision to chance. At American Industries, we’re ready to help you find the ideal state for your project. We have a presence in major cities in states like Chihuahua, Jalisco, Nuevo León, Guanajuato, and Querétaro, where we offer site selection solutions and a detailed cost model that will provide you with the necessary data to make a secure decision.

Contact us to learn about the advantages of our locations and how we can be your ally in Mexico.