Boosting Digital Signature Legitimateness for Manufacturing in Mexico

How to eSign a document: digital signature legitimateness for Manufacturing in Mexico

[Music] hey thank you for joining us today on uptime logistics powered by capla gistic Sime your host Doug Draper with the Denver transportation Club and we're excited about today's guest Veronica Contreras who is the president of Severo consulting we're going to talk a little bit about Mexican and Mexico manufacturing some of the trends some things to look look out for in 2020 and how things have really evolved and change over time so we're really excited to have you with us Veronica thanks for joining awesome before we jump into our content we always like to learn a little bit about our guests so maybe you talked to the audience it's kind of about yourself your background and how you got into the to the industry and where you are today that started in the industry about 18 years ago I actually went to high school with the owner's son co-production International and when I graduated college he hired me and I started working for their company their shelter company and after 10 years of working for them I became an independent consultant and I continued doing that and basically what I do is I work with US manufacturers who are in the process of evaluating whether or not they want to set up a factory in Mexico so I work with either owners and manufacturing companies or CEO CFO's presidents and I help them gather all of the information that they're gonna need to set up their manufacturer manufacturing operations in Mexico everything from cost analysis to process timelines get you know I help them get ready to to make a decision on whether or not it makes sense for them that's great so I know you've used the term shelter right and when you and I were speaking before I think of shelter personally kind of like we got a shelter some money or shelter something away from something that you're trying to hide it but that's not at all what you guys are doing so give us a real quick definition of what you mean by shelter you explained it a little bit but I want to make sure we have that term clarified before we really jump in that's a great great question so what is shelter does is basically it's a US company that has several Mexican companies that are completely permitted and operational under the maquiladora program there's another term that we can get into into finding but basically weren't able to start up a company a manufacturing company were able to set them up can start them up in a very short period of time I couldn't as quickly as two to three months or we can have a company fully operational because we're plugging them in Mexico now the word shelter comes from that is us manufacturers that are operating in Mexico they have an option to operate under the shelter meaning that they don't have any liability in Mexico the shelter does so somebody is guaranteeing all everything that's happening in Mexico on your behalf that makes sense absolutely yeah it certainly does so thank you for that then maquiladora I may have per mispronounced that but explain that term since we're defining things and then we'll jump in so explain that a little bit for audience yeah that's a really common term in our industry whenever a company or program will come up at some point actually started back in 1964 back when the when a federal program was allowing us our Mexican workers to work in the farm fields in the US when that program ended we had a bunch of Labor that was sitting there Mexican labor that was in the border region and that's when the Mikey load our program was born and basically what it allows is foreign investment typically u.s. foreign investment working in Metz under a favorable trade agreement which you know right now the famous US MCA Falls and plays into that but basically we're trading goods back and forth at no duty at a no duty rate so there's a lot of tax benefits that are part of that okay excellent all right thank you so much appreciate that so let's talk about some general manufacturing trends right we understand you've kind of helped navigate and the shelter takes care of fools I'm into Mexico let's talk kind of a holistic picture and maybe talk about some not only North America but maybe some world trends that you're seeing related to manufacturing and maybe how that differs from 20 years ago to now and what I mean maybe 20 years ago only people carry about cheap labor and now there's other factors that are involved with that so maybe compare and contrast what it was like 20 years ago and maybe some trends that you're seeing in in manufacturing sure so this started about a year and a half ago when we started the us-china trade war prior to that we were seeing an influx of companies who had a lot of interest in manufacturing in Mexico who were manufacturing in other locations besides the US maybe they had operations in China or Europe or different locations on us they were already kind of kicking the tires we were seeing a big uptick on companies who are looking at reshoring or coming back to North America and Mexico once the China trade war went into effect our that went up to huge anything this kind of movement and years of companies evaluating and really considering serious ones to Mexico and then when we had the u.s. MCA negotiations of ones that finalized we started seeing companies who were much more serious on movie and now with the kovin you know it's basically companies are now in process of changing their strategies coming near shore and it's not necessarily to Mexico so I'm starting to see a lot of companies leaving China and setting up in North American us or evaluating setting up operations in Mexico are doing combination of both so that movement is happening and it's all caused by the you know all of the different events that have happened over the last year year and a half a lot of US companies but I'm also seeing a lot of Chinese companies moving into the area so in my pipeline I'm talking to a lot of Chinese companies who want to set up in different parts of Mexico to serve the US factories that are already set up there for example an automotive I have some company from China that sometimes set up just to serve his automotive client in Mexico do you think are the Chinese factories realizing if we don't adapt to the turn to the the trends that we're gonna lose the business altogether is that is that why they're coming to Mexico hey I know you're going to Mexico let me be a part of the engagement we'll set up shop in Mexico is that kind of what you're saying exactly yet they in order for them to stay in the game they have to change their way of doing business and so they're sending locally but they can be a local partner to that supply chain and service our clients because that's that's really to your question that's really the change that I've seen over the last 20 years it's about becoming a local solution to your clients and that's what companies are in the manufacturing industry that's what companies are Gennady now is you need to be here in order to provide me with quick turnaround you know inventory solutions immediate service so that we can be more efficient more cost competitive and service our customer better do you see companies doing a wholesale change from China to say you know because of the factors you just mentioned quicker turnaround closer to your to your clients reduced overhead are they just saying we're pulling out of China altogether we're gonna set up shop or are they looking to diversify and say we're gonna make certain products in China still and maybe some in Vietnam and some of Mexico how's that looking from your client yeah what I'm seeing is its own market and there's a huge market so even if it's a Chinese company or a US company who has operations in Mexico they're not planning to pull that out they're planning to keep those there to serve their local the local market which is very large the companies that I'm talking to that are setting up presence in Mexico is to serve the North American market so it's a different market and that's really the trend that I'm seeing is more localization manufacturing mobilization in the areas depending on your client base so but I'll see a lot of companies I'm in the Baja California area of Southern California and I'll see a lot of companies even in the US who are who will set up operations in and let's say south of the border in Tijuana to serve as their West Coast manufacturing and distribution for the US but we'll cover you know the this part of the world was part of the United States and then they'll continue with their East Coast manufacturing operation to serve that part of the world that part of the United States gotcha all right so this is what they call the 30 second elevator speech right so my next question is tell me kind of the the value proposition that Mexico can bring to the table because there's some other sourcing that you could do and you know North America but obviously your focus is Mexico you know it very well so what would be two or three key factors that you would talk to a company about say this is why you need to be in Mexico it's all about really the number one drivers proximity the fact that it all comes down to where's your client and the companies that I'm talking to us manufacturing companies anywhere in the United States being you need a near shore location Mexico is right next door and it's literally a day a day delivery time from the Mexican facility to the US facility versus you Asia which is a free month 2 month process so you can't beat the proximity to our neighbor in Mexico and the second point would be the labor cost and the cost savings obviously is huge so fully direct employee in Mexico could be about 3 dollars and 50 cents an hour for a manufacturing employee and that's fully earning or in and you know those savings are is a driver it's not the number one driver though I would say the third is the experience and the the strengths and the industry so for example medical devices aerospace electronics automotive those are really strong industries in Mexico so we'll find a lot of companies that are in that industry in that sector and they're coming to set up in Mexico because they can't find in that labor force in the US they can't find enough engineers they can't find enough people to serve their industry with the experience and Mexico has of that and offers that yeah it's good points okay so you you've sold me I want to go to Mexico and let's say I make a this is a terrible example but a cup holder for a car right and let's just call it a widget and I need to be closer to my clients with car manufacturers and I'm just using automotive as an example so you sold me Veronica I'm good to go let's walk me through the steps and walk our audience through the steps of what comes next I may refer to this kind of the nuts and the bolts of how do you set it up so Veronica I'm all-in I get the proximity I'm ready to go what do we do now what are those type of steps look like okay so first I'm gonna ask where's your client base so that we can figure out what part of Mexico makes sense so we evaluate a lot of the logistics side of that process so where's the final product going is it going to be going to your client is going to a warehouse so we first determine what part of Mexico makes the boat most sense from a logistics standpoint and from a labor standpoint is there certain areas or certain expertise that you need that will drive us to a certain part in Mexico so we'll determine the location and then once we determine the location then I'm gonna ask you lots of questions to help understand the scope of your project how many employees what kind of employees what kind of skill sets engineers etc how many years of experience you need what's the square footage on the building that you're gonna need what's your utility demands electricity water you need natural gas I'm going to extrapolate all of this information so that I can understand what your needs will be and then we'll put this all on cost analysis for you so you'll be able to quickly see what your monthly operational expenses will be as well as your startup expenses and you can expect for let's say a company with 70 employees who's operating in California let's say they would be saving about to north of 2 million dollars a year on labor so I'll show you how that all works and then we'll help you understand what your startup expenses are going to be and once all that's kind of put together then I help you understand what your timelines gonna look like right because what you're sold you're ready to move forward but we gotta talk about timeframes these are can take I think longer than we like and talk about options right do you want to operate under the shelter program or do you want to own your own medicine corporation and what those differences are and the differences and responsibilities and cost etc so once we do all that then we get into contract execution and you know basically my team will provide a full full turnkey service which means everything from real estate to hiring all the employees to full execution and getting you started and once we get you started then we continue providing all of the administrative services resources finance international trade in compliance environmental health and safety so we're basically your boots on the ground in Mexico so that way your your key executives are focused on manufacturing and training employees excellent so you would actually so to make my cup holder right you say Guadalajara is the place to be and we would say all right here's the specs of the building on that so you would go out and find the physical structure yeah and then would we sign the lease directly or would that be through the shelter the lease agreement hire the employees Wow that's that's um that's amazing and then there's the ongoing support right so hey you got me up and running I got my crew I'm rocking and rolling and six months down the road there's problems my labor force is challenged I'm losing people or I was just audited because the machine I'm using is emitting too much pollution I can then come back to you and say hey I need help these are all of our that's what the shelter does so we handle all of those problems all those audits like with coal bed right now all of the situations all the audits from the health department's really keeping the doors open for our clients if they're essential managing all the communication with the government and doing what's necessary to to you know support our clients there that have manufacturing operations in Mexico gotcha and that's an ongoing service or is that kind of sunset after a period of time like hey will we'll help you for a year and then we're going to turn the keys over and you're in charge or does the shelter program help and manage indefinitely I was so I'd say that's one of the big differences between the shelter operators there's a handful of us that work throughout Mexico and so the one that I represent co-production international we're very much about getting our clients started for a certain period of time and that could anywhere from five to ten the client that I've had the longest I think 14 years now under the shelter program but with the intention of when they're ready hunting them roll off to become independent of the shelter we think that that's a really healthy way to operate so our business model is structured that way there are other shelters out there that don't want you to leave and they you know they want you to they want to support you for for the life that you're in Mexico so it just really depends on what your long-term goals are as a company and understanding what your shelter operator is offering you so let's talk a little bit about the the human capital right I know that's kind of a general term and so here's an example I'm big on examples to help explain my questions right so let's say there's more so the general skill set of the labor force in Mexico right let's say that I need more than somebody just to push a button the tournament scene on and make sure the assembly nine doesn't doesn't malfunction I need somebody that can do a little bit more than that that may need some engineering experience maybe a higher level type of Workforce employee in general in Mexico are those type of people readily accessible or is there more automation that goes into making sure the the program runs smoothly no wonder here is no question but probably the biggest difference that I've seen in the last twenty years so maybe in twenty years there was less automation to manufacture products but the labor force is very experienced they've been in manufacturing for at least four years so there's lots of experienced people who live in Mexico more available to the manufacturing industry what we're starting to see now though it's more implementation for example industry 4.0 which is a worldwide initiative just automating and having more technology manufacturing you know Mexico's definitely clean clean clean so in that industry for example I have a claim that in the air space industry connectors I have about 14 years ago and at the beginning large full of Engineers we had about 20 engineers working for an operation that was eventually going to be about 500 employees and what the change I've seen and then is that implementation of industry 4.0 becoming more automated more efficient so that they can reduce their overall cause have less people but evolve from from highly labor-intensive operation to a you know a better mix more automation but still having that labor component because there's certain production processes that that will always require some such labor do you assist in helping to find that automation so let's say that there's a machine that will improve my efficiencies by 20% but I'm not sure where to get it I'm not sure where to buy it I don't know Joyce or sit in Mexico do I do that those type of things as the business valves in Agoura evolves and grows are you there as you know the consultant making suggestions and here's where you need to go by this piece equipment things of that nature there's much smarter people than myself and the engineers that work for my clients the Mexican engineers they're amazing and that's what they're doing that's the value that I see when companies are operating in Mexico is the ability of the Mexican engineers to be able to take the companies to a completely different level not just locally not just North America but for their entire companies for all the operations worldwide I see a lot of that coming from the Mexican talent that's great let's shift to safety and security right I know that there's a lot of folks that have perception sometimes real sometimes not related to security a lot of transport across scenes and things of that nature hey I have a concern about theft crime things of that nature how is that not specific to to your business but in general in Mexico how is that changing and how does that impact the clients out there so safety and security talk a little bit about that ok so I for example I spent a lot of time in the city of Tijuana which is I've eaten the Mia definitely trade that's one of the most negative cities when it comes to to violence I Drive into Tijuana at least twice a week in my Infiniti and have been since I was 16 years old and have yet to ever encounter any security issues I'm not saying that it's not an issue and that it's not happening do you wanna from a statistical standpoint it's a big city with big city problems and we do have cartels and we do have our issues but as a whole it's it's a problem that they stick to themselves so from a business standpoint our business community is not impacted by what's going on from you know with all their mess and you know with the cartel stuff so my clients my u.s. American clients will drive in and out to their factories whenever they need to they fly in to San Diego across the border and they're in their facility within half an hour from when they landed at the San Diego International Airport so there is no concern daily concern in regards to their well-being if you will so it doesn't impact our our business as a whole but it's not to say that it's not something that that we're vigilant on that we keep an eye on and communicate is should we see any movement in security but in general it's business as usual when it comes to to our industry manufacturing that's great I'm great and it's great to hear that you know sometimes perception is not reality and so that's terrific to hear that your organization is really has that under control and and really explains the realities of the situation so let's shift to kind of the future of sourcing and manufacturing in Mexico so we talked a little bit about how things were in the past where they are now where do you see the manufacturing aspects of Mexico 5 10 years out 10 10 maybe a little long but did say five years out from now what's changed and what's improved so companies are aggressively looking at long term investments in Mexico whereas before they were you know maybe evaluating leases that were three to five years they wanted to you know dip their toe in the water to see what works and that mindset has completely changed I'm seeing very companies and billion-dollar manufacturing companies who are making very sophisticated equipment or for example the medical device industry and they it's no longer a question if Mexico is going to work they know it's been a word now it's just it's full investment multi-million dollar investments attend improvements and infrastructure and really looking at it from a long-term perspective lease agreements perfect example the three to five is now 10 to 15 years so companies that are going in there they're no longer concerned whether or not they're gonna find the labor force whether or not the trade agreements are going to be favorable or not they're very favorable to foreign investors who are operating in Mexico so they're not afraid to make the long-term commitment and I'm seeing much more sophisticated manufacturing processes being brought down which is really exciting yeah terrific what would be a couple of you know final thoughts or recommendations right so two customers that may have an interest to move down there engage your company and in really open shop so two or three things like hey you make sure you got to dot your i's and cross your T's on this one stay away from that one what are some you know parting thoughts that you would give out to our audience members I would say find some good local partners in the city if you already haven't see identified make sure that you're working with partners who really understand the city if Mexico so really operates under the local know-how know who very important when setting up shop in in Mexico and in the city or location or region that you want to set up in and I would say buy-in from your key executives that are gonna be a part of the mood of your US executives so what I do find a lot is that these projects are kept very confidential and they're really very small group is aware of it and when it comes to actually moving into Mexico that's where a lot of the the company may find some issues because they're u.s. executives haven't bought in to the process so really thinking that through appropriately I think it's it's important because these u.s. executives are really what are gonna create breathe some life into this project and I would say one more tip it would be to consider hiring local plant managers to come and work in the US facility and train train not work in the u.s. facility for a couple months prior to setting up the operations so that they can really understand the culture and the know-how and create a relationship with you so that when the transfer starts to happen they have they have a really good connection with with all the players who are going to be involved in and overseeing the manufacturing operation in Mexico mm-hmm that's a great piece of advice that sometimes can be overseen you're so focused on a spreadsheet analysis you know I've used the terms you're looking at the 15 feet in front of you but you got to look at the 50 feet ahead of you so you can have the right people with the right education and the right know-how to run your business so I would not have thought of that last point so I appreciate you bringing it up yeah so tell us a little bit as we as we wind down here obviously there's some folks like very interested tell our audience how to get in touch with you or what the best if they wanted to dive deeper and learn more about your services what's the best way to do that you can find me on LinkedIn my name is Veronica Contreras and it's a little consulting you can shoot me an email or give me a call my cell phone and I will schedule some time with you so that we can talk about what your projects interest cards so we can work on a cost analysis that's excellent that's terrific well Veronica I can't thank you enough for being part of the uptime logistics group today I think it was very informative I know we just touched the surface of everything but I think the goal today was to kind of understand what you do and the nuances and the positive things coming out of manufacturing at Mexico so again thank you for joining us thank you all right I'd like to thank our audience for joining us today on uptime logistics of course that's powered by kappa logistics you can find more information about the show in the description below and don't forget to Like and subscribe to the channel and please visit cap logistics comm for all of your customized transportation solutions thanks again have a great day [Music]