As a result, the US and Mexican governments agreed to The Border Industrialization Program, which permitted US companies to assemble product in Mexico using raw materials and components from the US with reduced duties.
Once this number is surpassed, other options would provide savings as a result of economies of scale derived from increased labor content.
Joint venturing can be an effective means to achieving organizational goals given the local partner's detailed knowledge of the market and its prevailing conditions.
Establishing and maintaining a joint-venture relationship can be challenging in that both parties must share a compatibility of organizational culture, as well as pursue similar goals and objectives.
In addition to committing the organization to the investment of “bricks and mortar,” the manufacturer must take the time, make the effort and assume the cost of assembling the skill sets required to navigate new waters.
A fourth option that allows firms to fully control their own production and quality, to benefit from the experience of an organization that knows the local market, and which eliminates the need to make sizeable investments in physical and human assets is the manufacturing Shelter.
Working through a shelter service provider, foreign-based manufacturers are able to initiate operations quickly without actually establishing a legal presence in the country.
Shelter service providers typically offer their clients services in some or all of the following areas: human resources, payroll and benefits administration, logistics, import/export operations, accounting, taxation, legal, risk management, plant and park management, procurement, environmental, customs compliance, and real estate leasing.
The manufacturing outsource option is rapidly becoming a reality for many foreign companies interested in utilizing Mexico's cost-effective workforce.