The Shelter operator performs most tasks associated with establishing and
operating manufacturing facility in Mexico. It provides the industrial space,
hires all workers, administers payroll, coordinates labor relations, pays all
utilities, obtains all permits, imports the foreign manufacturer's equipment,
machinery and raw materials, and exports all finished products. The shelter
serves as a "pass through" vehicle in which all costs, plus a markup, are charged
to the foreign-owned manufacturer. The fee can also be based on the number of
workers employed by the shelter operator. Under the shelter agreement, the
foreign-owned manufacturer has no legal presence in Mexico, it merely remits a fee.
These options can be classified according to the degree of risk foreign company is
willing to assume while manufacturing its product in Mexico. Shelter contracts
provide a relative risk-free method to begin manufacturing or assembling product
in Mexico. Under a properly designed shelter agreement, foreign manufacturers can
avoid getting bogged down in the day-to-day maze of operating a business in Mexico.