Q: Can The Offshore Group manufacture my product in Mexico?A: The Offshore Group does not engage in subcontract manufacturing (although some of its client companies provide this service). The Offshore Group provides comprehensive outsourced manufacturing support, or “shelter” services that allow manufacturers to operate their own plants in Mexico at reduced expense and risk, as well as with full focus on their core manufacturing processes. Our clients manufacture… we do the rest.
Q: Under The Offshore Group Shelter Program, what are my responsibilities?
A: Offshore Group Shelter Program clients perform engineering, design, materials management, and manufacturing and quality functions. The Offshore Group provides service in the following areas:
• Human Resources Management & Administration
• Medical Services
• Payroll Management Services
• Accounting Services
• Logistics Management Services
• Facilities Management
• Park Management
• Procurement Services (MRO items)
• Environmental Services
• Government and Community Affairs
• Information Services
• Client Courtesy Services
• Consultation Services
Q: What are the advantages over operating under The Offshore Shelter Program, when compared with other options available for manufacturing in Mexico?A: Contract manufacturing is preferable for operations that require limited man hours, experience cycle demand, and that do not require direct control over production quality. Joint ventures are sometimes beneficial for firms that partner with domestic firms with pre-established distribution channels in order to sell into the Mexican market. While the wholly-owned subsidiaries may be the best vehicle for organizations with the high control requirements, The Offshore Shelter Program is the option of choice for companies that are seeking to start operations rapidly in order best leverage their own competencies by outsourcing non-core functions to a trusted partner.
Q: Aren’t other countries more attractive to manufacturing in than Mexico?A: Some countries have superior comparative advantage in the production of some items (this often depends upon their characteristics, as well as on the markets to which they will be delivered and consumed). Mexico is an excellent place to establish manufacturing for products for which one or more of the following characteristics are evidenced:
• High Engineering Content
• Inability to Automate Processes
• Intellectual Property Considerations
• Just-in-Time Production Demands (Mexico’s proximity to the U.S)
• Inventory Cost Concerns
• Stringent Quality Requirements
• Duty Reduction Needs
• High Levels of Interaction with US Regulatory Agencies
• Global Customer Base
• Political Risk Concerns
Q: The Offshore Group’s manufacturing locations are in the country’s interior. Isn’t the border a better place to set up a maquiladora operation?A: While the border may be a more suitable location for some types of operations, the interior of the country has a stable, well-rooted population. Workers at plants in the interior are typically from the area. Strong family ties make turnover rates in these communities lower than those typically experienced on the border.
Q: Haven’t costs in Mexico risen over the last few years?
A: Mexico’s economy has benefited as a result of both political and economic stability. Disciplined fiscal policy has kept inflation levels at historical lows, and, as a result, workers have made wage gains. Mexico is, however, competitive when one considers all the costs that must be calculated when making an overall assessment.
Some of these are:
• The cost of lost intellectual property
• The cost of additional inventory of goods in transit over long distances.
• The cost of implementing engineering changes
• The cost of additional safety stocks to ensure uninterrupted supply
• The cost of expensive expedited shipments.
• The cost of warranty claims, if a new facility or supplier has a long learning curve.
• The cost of engineer visits or resident engineers to get manufacturing processes right.
• The cost of senior executive visits to set up operations or to straighten out relationships with managers and suppliers operating in an alien business environment.
• The cost of out-of-stocks and lost sales caused by long lead times.
• The cost of remaindered goods or of scrapped stocks, ordered to a long range forecast that is never actually needed.
• The potential cost of your supplier becoming your competitor.
• Connectivity costs of many sorts in managing product hand-offs and information flows in highly complex supply chains across long distances in countries with different business practices.
Q: How does The Offshore Group reduce my risk and expense?
A: The Offshore Group Shelter Program’s unique structure accomplishes this.
Offshore International, Inc. in Tucson, Arizona has agreements with its Mexican sister companies, Maquilas Tetakawi, S.A. de C.V. and Manufacturas Zapalinamé S.A. de C.V., for the provision of outsourced manufacturing support, or “shelter” services to firms with whom it signs Shelter Program contracts with in the United States. Shelter Program clients minimize risks by operating in Mexico within a US legal framework. Since The Offshore Group owns its real estate it can provide leased manufacturing space, as well as provide build to suit facilities, thereby eliminating the need for manufacturers to make expensive capital investments.
Q: What kind of organizations derive the most benefit from The Offshore Group Shelter Plan?
A: The Offshore Group has manufacturing firm clients that occupy prominent positions in the Fortune 500, as well as serves mid-size manufacturers with little or no prior international experience. Large corporations understand the value derived from outsourcing non-core, but vital functions to The Offshore Group, while smaller companies enjoy this benefit as well as the instant acquisition of the numerous skill sets required to operate globally.
Q: What sets The Offshore Group apart from other providers of similar services?
A The Offshore Group is a vertically integrated service provider. It was among the first outsourced manufacturing support, or “shelter” service providers to achieve ISO quality standard certification. It was recognized by the Mexican government in 2000 for the quality of its service and its corporate citizenship through the award of its prestigious Premio Nacional de Exportacion. The Offshore Group is the largest private sector employer in the Mexican state of Sonora, and is one of the 10 largest maquiladora operations in the Republic of Mexico. Its Sonora and Coahuila locations are strategically located to serve all North American geographies.
Q: How does The Offshore Group bill its clients?
A: All Offshore Group invoicing is done from the U.S. The Offshore Group charges its customers market rates for leased industrial space, charges customers for costs incurred in Mexico (payroll, utilities, customs fees, transportation costs, Mexico purchases) on a straight, pass through basis (no mark up) and charges a negotiated Goods and Services Fee that is based on labor hours.
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