Using Sheltered Services for Electronics Manufacturing in Mexico

Javid LLC is an AZ- based company that helps manufacturers benefit from cost-savings and additional advantages of manufacturing in Mexico. Javid is a one-stop manufacturing source that specializes in Sheltered Services. The Javid LLC Sheltered Program is a secure, “nearshore” outsourcing arrangement that takes full advantage of the United States’ proximity to Mexico and its competitive costs in the industrial sector. Most companies can save from 40-60% in labor costs. Javid LLC currently has 27 Clients in over 1.5 Million Square feet of buildings and over 3,500 employees working for them. They are located just 10 miles over the southern border, so products travel quickly.

The clients of Javid LLC span a wide range of industries, from promotional products to furniture to Medical devices and the Aerospace industry. Javid has nine operations that are in the electronic manufacturing sector and they service many different industries from automotive to infrastructure. There is a very strong foundation of electronic manufacturing in Mexico today. Over the years this sector has grown exponentially due to the highly skilled labor, which can be up to 70% cheaper than labor in the United States. While unskilled laborers often seek work in the manufacturing industry, 115,000 engineers graduate from Mexico annually.

The electronic sector in Mexico has traded over $109b USD, and we are seeing an increase by an annual average rate of 2.5% through 2020. 25% of the electronic export revenue is coming from the flat screen plasma, LCD, and LED televisions being produced in Mexico.

“The wiring harness business is going to grow a great deal,” predicts Oscar Albin, president of Mexico’s National Auto Parts Industry Association (INA). And that growth is likely to be centered in Mexico, which Albin calls “king in the USMCA region at producing wiring harness.” With that, CNN Reported that 70% of the wire harnesses that are used to produce vehicles are manufactured in Mexico. There are over 200,000 employees and over 730 facilities that support this industry, with 8 out of 10 of the world’s largest electronic manufacturers currently operate in the
country. The rapid advancement in manufacturing and supply in Mexico cannot be overemphasized as Mexico stands out as the country with the lowest operating costs in the Americas in the manufacturing of electronic components and equipment, according to a study by KPMG.

The Electronics Industry in Mexico has been able to grow due to the Government of Mexico working to ensure a safe and protected environment for those wanting to operate, by the signing of 28 IPPAs (Investment Promotion and Protection Agreements) and DTTs (Double Taxation Treaties), Mexico has done this with more than 40 countries, providing access to a potential market of more than one million consumers and 63% of the worlds GDP.

Mexico’s close proximity to the USA gives some of the largest TV and consumer electronics producers on the globe like Sony, Toshiba, Samsung, Zenith, LG, RCA, Phillips, Panasonic, Dell, Compaq, Siemens, and Vizio, the opportunity to build great products faster, and ensure they reach their customers faster, making a reduction is costs. Mexico not only has the close proximity to the USA but the geographic orientation of the country allows for them to have access to both the Pacific and Atlantic Oceans. This allows for all traded goods to reach its final destination quicker, reducing costs.

In 2019, Mexico become the number one trading partner with the USA, which places this country in a new category when it comes to nearshore operations for those American Companies. With the relationship growing and strengthening between these 2 countries, we will see the investment grow in both.
The relationship between these two countries has been beneficial for the increase of the industry, and with the new USMCA deal actively working, we are seeing the formation of large industrial cluster for the electronic manufacturing industry opening up all over Mexico. These types of new trade agreements with Mexico helps ease the exporting from the country and brings more players to the game for companies to source material. Mexico is a great solution to open up operations compared to those locations that do not offer the IP protections and healthy labor force.

To find out more visit www.javidllc.com