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ORGANIZER;CN=David Gibbens:MAILTO:djgibbens@outlook.com
SUMMARY:THE FENG: Nearshoring in Mexico: Understanding the Differences Between the Chinese and Mexican Business Cultures
LOCATION:Join Zoom Meeting\r\nhttps://us06web.zoom.us/j/81375723779\r\nMeeting ID: 813 7572 3779
DESCRIPTION:Topic: &nbsp;Nearshoring in Mexico:&nbsp;Understanding the Differences Between the Chinese and Mexican Business CulturesSpeaker: Jeffrey P Cartwright, Founding Partner and John Hyatt, Founding Partner, Mexico Strategic Sourcing AlliancePresentation:Nearshoring follows 2 paths.&nbsp; First, most companies in the US purchase products from Chinese factories with whom they have a long-standing relationship. Second, fewer companies in the US own manufacturing plants in China.&nbsp; Mexico offers both paths.&nbsp;The first is more prevalent and identifying, qualifying, and competitively bidding with potential factories is far more complex in Mexico than China for the simple reason is that in China that factory will have a history of providing similar products to various customers in the US and Europe.&nbsp; In the case of Mexico, there are few factories that currently manufacture the products which the US imports from China. The reason for this is that China largely provides finished products to the US and that Mexico has developed as an intermediate good manufacturer. The approach in Mexico for finished products is to identify an assembly factory with one or more of the key manufacturing processes. There are few factories in Mexico with the level of vertical integration that there is in China. Then the supply chain needs to be built out to furnish the components that are required for the assembly operation. This process invariably requires outside assistance as the factories have limited knowledge of component suppliers. Sometimes the components are not available in Mexico and that will require a blended supply chain with components from Asia (generally, electronics such as fractional motors, lithium batteries, etc.).&nbsp;The second approach of relocating a manufacturing operation is also possible.&nbsp; Mexico has a history of factory relocations from the US and other countries. The US company will need to acquire land, build a factory, relocate, or purchase equipment and train a workforce.&nbsp; The US client should expect this process to take longer in Mexico than China.&nbsp; It should also expect a learning curve with reduced productivity for the first year or two.&nbsp; There are many resources than can assist in navigating the legal, regulatory, and other aspects of the start up and different resources for factory construction.&nbsp; There is also an intermediate process of operating within a shelter.&nbsp; This is basically an industrial real estate enterprise that provides the building, administrative services (taxes, payroll administration, security, registrations allowing for the importing and exporting of materials which avoid duties and tariffs under USMCA). However, the US company must provide equipment, training, operations management, and purchase of materials and components. Again, there are resources that are available to assist in the negotiations and set up of shelter operations.&nbsp;Key Points:Positive factors for Nearshoring to Mexico.&nbsp; Proximity, bi-lingual factory management and engineers. Direct labor costs favorable to China and Vietnam. Lower inventory levels. Theft of intellectual property is not a concern.&nbsp;Negative factors for Nearshoring to Mexico are on the near-term aspects of the process of negotiations. These often start with the US company not clearly understanding the manufacturing of its current products. &nbsp;Mexican factories (as any new factory, anywhere in the world) require specifications and drawings in order to begin the quoting process.&nbsp; Many US importers do not have current drawings (as the Chinese will sometimes change the product without informing the customer).&nbsp; There are resources available to reverse engineer from sample to drawings and specifications.&nbsp; However, unlike a Chinese factory that has a history of R &amp; D (replicate and duplicate), this is not common at factories.&nbsp;Response time is a challenge in Mexico and the process often takes significantly longer.The pattern of price negotiations is significantly different in Mexico than the US or China.Lastly, going alone in Mexico generally will result in disappointment rather than success.&nbsp; Our best customers are those that who have tried Mexico on their own and failed.&nbsp; They believed that because they could source in China that they could source in Mexico.Unlike the US and China, there are no large trade shows in Mexico and no data sources like Thomas.net in the US or Alibaba in China to identify potential factories. Mexico is a relationship country and the only ways to know which factories have a needed manufacturing capability is through trusted networking or prior experience.&nbsp; Even if a factory could be identified via the internet, without having a relationship with the potential customer, the vast majority of factories will not submit quotations.After starting up, things significantly shift to advantages for the US company.&nbsp; Short lead time from order to arrival. Quality concerns are alleviated in a culture that has focused on automobiles, medical devices, and aerospace manufacturing. In China, there is a degree of buyer beware that does not exist in Mexico.Speakers' bios:&nbsp;Jeffrey P Cartwright&nbsp;is a growth and bottom line-oriented senior-level executive with a strong record of success at Procter &amp; Gamble, Frito-Lay, Newell-Rubbermaid, Dorel, and Igloo. Strong organizational, leadership, and product development skills. Experienced in mergers, acquisitions, turnarounds, and consolidations. Full P &amp; L responsibilities at several businesses. Successful integration of 5 newly acquired companies. General Engineering degree from West Point and an MBA from East Carolina University. Portfolio PE company and public company successes.&nbsp;In 2020 Jeff became a founding partner of the Mexico Strategic Sourcing Alliance focused on moving sourcing from China to Mexico. Whether you need help assessing the viability of a factory move or have already made the decision to move and now need to make it happen, MSSA is your resource.Jeff also has in-depth experience in operations, supply chain, and China sourcing. Sales leadership with Wal-Mart (including 6 Vendor of the Year Award’s in 4 different departments), Sam’s, COSTCO, Target, Lowe’s, Office Depot, etc. Introduced new product categories with greatly enhanced margins. Launched new brands. Achieved placement at Target, Wal-Mart, Costco, and other major retailers.&nbsp;Specialties include management, consumer products marketing and sales at Wal-Mart, Target, Costco, and Lowe’s. Industrial products including power tools and home building products. Asian sourcing including offices in China. Product development from concept (including IP) to retailer distribution. Manufacturing and supply chain, including new plants and distribution centers, site consolidations, purchasing, and transportation. Excellent talent evaluation and team building skills. Mergers and acquisitions and post-acquisition integration well beyond expectations.John Hyatt is a global supply chain professional who has spent the last 16 years in Mexico City assisting international firms with manufacturing and supply chain projects in the United States, Latin America, and the Caribbean.&nbsp;He has true expertise in assisting international firms in Latin America, preventing them from committing costly, legal, logistical and cultural errors that can end up costing millions in lost revenues. Additionally, John has a high level of expertise in analyzing, consulting, and assisting foreign firms in launching and managing successful operations in Latin America and the Caribbean. As the founder and CEO of Southward Advisors, he currently devotes his work to manufacturing re-nearshoring for clients who wish to establish manufacturing solutions in Mexico and other LATAM countries as a viable alternative to producing in Asia.John is the co-editor of Mexican Business Culture, Essays on Tradition, Ethics, Entrepreneurship and Commerce and the State, a book dedicated to giving the foreign businessperson the necessary cultural information and know-how for navigating the challenge of doing business in Latin America’s second largest economy. He is also a contributor to The State of Nearshoring: And the Case for Moving from China to Mexico, a series of essays that outlines the rationale and process for firms’ supply chain migration from China to Mexico.Shoreview Management Advisors&nbsp;is a trusted advisor to a variety of businesses in the consumer products and industrial products industries. We generate bottom line impact and results for business leaders and executives, allowing them to achieve major operational success in a variety of areas from increased capacity to reduced manufacturing costs to outstanding customer service. In many cases, we enable significant revenue growth by turning operations and supply chain into distinct competitive advantages.&nbsp;
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