The Strategic Investor’s Playbook: Essential Due Diligence for Tijuana Expansion
When global manufacturers mention nearshoring to Mexico, Tijuana consistently emerges as a top contender. But moving beyond the headlines requires asking the right questions. Smart investors don’t just evaluate locations, they interrogate them.
If you’re considering Tijuana for your aerospace, electronics, medical device, or logistics operation, these seven strategic questions will help you make a decision based on facts, not assumptions.
1. Does My Industry Have Deep Roots Here?
The Question Behind the Question: Am I walking into an established ecosystem or pioneering new ground?
Tijuana isn’t just another manufacturing city, it’s home to specialized industrial clusters that have been decades in the making. The medical device sector alone employs over 42,000 people across 60+ companies, with three decades of production experience. Electronics manufacturing spans 120+ companies, from Tier 1 suppliers to global brands like Samsung and Foxconn. Aerospace operations include 37 Tier 1 companies employing 11,690 skilled workers.
This clustering effect matters more than you might think. It means your suppliers, technical talent, and even quality certifications are already in place. When DJO Global expanded its orthopedic device manufacturing in Tijuana, they didn’t build from scratch, they tapped into an existing network that helped them achieve 80% faster lead times compared to their other global facilities.
What to Investigate: Research the specific companies in your sector already operating in Tijuana. Are they competitors or potential partners? What certifications and standards are already established? The deeper the cluster, the faster your ramp-up.
2. How Will Tijuana’s Location Serve My Supply Chain Strategy?
The Question Behind the Question: Can proximity to the U.S. border transform my logistics from a cost center into a competitive advantage?
Tijuana sits 19 miles from San Diego, making it the closest major Mexican manufacturing hub to Southern California’s massive consumer and technology markets. The Otay Mesa port of entry, the second-busiest U.S.-Mexico land crossing, processes hundreds of thousands of trucks annually with dedicated lanes for qualified manufacturers.
But location advantages go beyond shipping time. Companies report that nearshoring to Tijuana significantly reduces total transportation costs compared to Asian supply chains, while enabling just-in-time inventory management that was previously impossible due to 30-day ocean transit times.
What to Investigate: Map your current supply chain costs and transit times, factor in not just freight, but inventory carrying costs, quality control visits, and management travel. Many companies discover that Tijuana’s proximity enables them to significantly reduce their working capital requirements.
3. What’s the Real Cost Differential, and What Are the Hidden Savings?
The Question Behind the Question: Beyond obvious labor savings, where else can Tijuana impact my bottom line?
Yes, skilled manufacturing labor in Tijuana costs roughly $4.50 per hour/hour compared to $ 20 or more in comparable U.S. locations. But smart investors look deeper. Industrial real estate runs $0.68-$0.80 per square foot monthly, a fraction of California costs. Electricity rates are 30% lower than in Monterrey and significantly below U.S. industrial rates.
The IMMEX program delivers additional value through VAT exemptions on imported materials and streamlined customs procedures. Companies operating under IMMEX can receive VAT refunds within 20 days, versus the standard 90 days elsewhere in Mexico.
What to Investigate: Build a comprehensive cost model that includes real estate, utilities, taxes, and logistics, not just labor. Many companies find that total operational savings reach 40-50% compared to equivalent U.S. facilities.
4. Can I Access the Talent I Need, When I Need It?
The Question Behind the Question: Is Tijuana’s workforce deep enough to support my growth plans, or will I hit a talent ceiling?
Tijuana maintains a 98% employment rate among its economically active population, which sounds impressive until you realize it means talent competition is fierce. Annual turnover in manufacturing averages 7%, rising to 9% during holiday seasons when workers return to families, confident they can find new jobs quickly.
However, the city’s educational infrastructure is robust. Over 50 universities in Baja California specialize in engineering and technical fields, with many offering specialized programs developed in collaboration with industry. CETYS University partners with Embry-Riddle Aeronautical University for specialized aerospace training.
What to Investigate: Beyond current availability, assess the talent pipeline. What training partnerships exist? Can you implement effective retention strategies in this competitive market? Companies that succeed in Tijuana typically invest heavily in employee development and competitive benefits packages.
5. How Complex Will Regulatory Compliance Be for My Sector?
The Question Behind the Question: Will Regulatory Hurdles Slow My Time-to-Market or Create Ongoing Operational Friction?
Tijuana’s regulatory environment is mature, particularly for established sectors. Aerospace companies must comply with AS9100 quality certification and international export controls; however, the city hosts over 55 aerospace firms that have successfully navigated these requirements. Medical device manufacturers require COFEPRIS approval for Mexican sales; however, since most production is exported to the U.S., FDA compliance typically suffices.
The IMMEX registration process typically takes 30-45 days, and many companies utilize “shelter” service providers to handle setup and ongoing compliance, thereby reducing both the timeline and risk.
What to Investigate: Connect with companies in your specific sector to gain insight into real-world compliance experiences. What certifications are standard? How do local service providers handle regulatory management? Don’t assume, verify the actual process timeline and requirements.
6. What Infrastructure Investments Will I Need to Make?
The Question Behind the Question: Can existing infrastructure support my operational requirements, or will I need significant additional investment?
Tijuana’s infrastructure is generally strong, with modern industrial parks offering reliable power, water, and internet connectivity. However, rapid growth means some constraints. Industrial real estate vacancy rates often run below 3%, and new construction can take 8-12 months due to high demand.
Water management is a crucial concern in this desert region, although municipal grants can cover 20-50% of water infrastructure investments. Many companies invest in on-site recycling systems as both a cost-saving and a sustainability measure.
What to Investigate: Assess infrastructure requirements specific to your operation. Are specialized facilities available, or will you need a build-to-suit? What backup systems are in place for critical utilities? Factor infrastructure timing into your expansion schedule.
7. How Will I Manage Operational Risk in This Environment?
The Question Behind the Question: What risks am I accepting, and how can I mitigate them effectively?
Security concerns often dominate discussions about Mexican operations, but context matters. Most violence is cartel-related and doesn’t target businesses or foreign nationals. The vast majority of Tijuana’s manufacturing occurs in secure, gated industrial parks with 24/7 security and dedicated police patrols.
Companies typically implement standard precautions: secure transportation for executives, vetted logistics providers, and emergency protocols. Many firms report that with common-sense security measures, operations proceed without disruption.
What to Investigate: Speak directly with security professionals and current operators about real-world conditions. What measures do successful companies implement? How do insurance and risk management strategies differ from domestic operations?
The Strategic Decision Framework
These questions form a comprehensive due diligence framework; however, the best decisions often come from direct engagement. Site visits, stakeholder meetings, and conversations with current operators provide insights that no report can capture.
Tijuana’s value proposition, proximity to U.S. markets, established industrial clusters, competitive costs, and mature infrastructure, has attracted over $8 billion in foreign investment over the past decade. But success requires matching your specific operational requirements with the city’s capabilities.
The companies thriving in Tijuana aren’t just those that ask the right questions; they’re the ones that plan for both the opportunities and the challenges their answers reveal.
Ready to dive deeper? The next step is connecting with local partners who can provide sector-specific insights and facilitate the due diligence process that will inform your final investment decision. Tijuana EDC can assist you with that and more, contact us.
