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We Take The Guesswork Out Of Operating In Mexico

All rights reserved © 2014 Offshore International, Incorporated

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Industry problems are we solving …

Cost Reduction Pressures

Establishing a Presence in a

Lower-Cost Country

Operational & CostPredictability

Maintaining Proximity To Customers

& Supply-Chain

For manufacturing operations of any size

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The Offshore Group Today

We Employ

16,223

In Mexico and U.S.

We Manage

4,255,137

Sqft. of Industrial Space

We Support

57Manufacturers

a ffi l i a t e c o m p a n i e s & b r a n d s

Offshore International, IncorporatedMaquilas Tetakawi S.A. de C.V.

Offshore International, LLCManufacturas Zapaliname S.A. de C.V.

Helping companies successfully operate since 1986

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Our solutions in Mexico help companies of any size

1. Employ their own talent without all the risk

2. Operate in class A manufacturing space that is scalable and secure

3. Move their factory inputs and outputs seamlessly across the border

4. Comply with all government regulations without the burdens and distractions

5. Leverage economies of scale to attain lower operating costs

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Current Clients

Other Industries

• APSM • Greenheck Fan • Kromet• Minco (Demmer)• Parker (Camfil Farr)

Automotive & Transportation

• Cooper Standard Automotive

• DCM• Gemini Plastics• Intec Group• Liberty Steel• Mico• Neapco • Powerbrace• Senior Flexonics• St. Clair Technologies• TE Connectivity• TitanX• Unlimited Services• Waukesha Bearings

(Dover)

Aerospace

• BAE Systems• Benchmark Electronics • Bodycote Thermal

Processing • CPP (formerly Esco)• Ducommun

Aerostructures • Ellison Surface

Technologies• G.S. Precision• GE-Unison Industries • Horst Engineering• Incertec Special

Processes• JJ Churchhill• Paradigm Precision

(Carlyle.)• Parker Aerospace• Sargent Controls (Dover)• Senior Aerospace• SPS Tech (a PCC

company)• Trac Tool (Carlyle) • UTC Aerospace Systems • Vermillion• Williams International

Electrical, Electronic & Medical Devices

• Avalon Labs (Am.Cap.) • Blickman• Cardiva Medical• C&M Corporation• CBC Connect (Westcor)• Electronic Evolution• Huber-Suhner• IKOR• Medtronic • Novacap (Dover)• The Phoenix Company • Precision Interconnect

(TE)• Turck• Whitepath • Younger Optics

• 40 clients in Guaymas/Empalme

• 16 clients in Saltillo

• 20 clients are publicly traded

• 8 clients also have standalone operations

• 32% of clients between 10 and 20 years

• 45% of clients between 5 and 9 years

• 23% of clients less than 5 years

Client operations range from 12 people to 3,500. Facilities size range from 5,000 sf to 175,000 sf

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Our LocationsUnique labor & talent characteristics and logistical advantages

Guaymas /Empalme

Saltillo

Houston, TXHermosillo

Nogales

Tucson, AZ

Mission, TX

GuadalajaraQueretaro

Manzanillo

Distances

• Port of Los Angeles to Guaymas: 758 Miles

• Port of Houston to Saltillo: 523 Miles

• Port of Manzanillo to Guadalajara: 204 Miles

• Tucson to Guaymas/Empalme: 333 Miles

• Mission to Saltillo: 205 Miles

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Our Services Solutions for manufacturing operations of any size

StartupImplementation

Receive expert hands-on support to plan and

execute the key elements needed to successfully setup a

manufacturing presence in Mexico.

Legal Structure, Staffing, Facilities Setup, & Regulatory

Compliance

Is Mexico Right For You?

How Should You Operate In Mexico?

As a Standalone With Support

AdvisoryServices

Obtain reliable and useful information to determine if and/or how a business

case exists for establishing a

manufacturing presence in Mexico.

Costing, Site Selection, Workforce Evaluation, Logistics, Regulatory

Compliance

Shelter Framework & Administrative Services

Immediately leverage a world-class infrastructure built specifically for manufacturers to achieve a globally competitive advantage in a predictable lower cost

environment.

Legal Structure, Staffing, Facilities Setup, & Regulatory ComplianceShared ServiceFor users requiring smaller spaces and are willing to share infrastructure.

Full ServiceProvided in our integrated and secure manufacturing communities located in Guaymas / Empalme, Sonora and Saltillo, Coahuila.

Flex ServiceFor users operating outside our manufacturing communities with potential transition to standalone. Flex Services are available in Guadalajara, Queretaro, Hermosillo, and Saltillo.

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Our Business Model

LegalFramework

ManufacturingCommunities

Support Services

You in Mexico

Leverage economies of scale

Focuson production

Minimizetaxes

Mitigaterisk and exposure

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2La Angostura – Manufacturing Community in Saltillo, Coahuila Mexico

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Shelter Legal Framework

Mexico

Client

A U.S. or other foreign country legal entity.

Offshore International

A U.S. Corporation

MTK or ZAPA

Mexico affiliates of Offshore International

IMMEX - Shelter

U.S. Contract

Related PartiesU.S.

ClientOperatio

n

Various Client

Operations

Benefits:

First 4 Years:

• No Permanent Establishment

• No Income Taxes

Reference Articles 181 and 183 of Mexico’s New Income Tax Law published in Mexico’s Official Federation Daily Register dated December 11, 2013.

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Labor Management

StaffingPlan

SkillsDevelopmentCoordination

JobDescriptions

Recruiting & Prequalification

Selection

Hiring & Induction,EmployerOf Record

JobTraining

BusingCoordination

• Problem Resolution & Corrective Actions

• Turnover & Absenteeism Monitoring• Labor Union Relations• Employee Event Coordination• Employment Termination• Labor Arbitration & Legal

• Manage Employee Activities• Organizational Development

Us

You

Schools &Government

A proven process built around manufacturer’s needs

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Labor Management Administrative and support services delivered by experts and state-of-the-art systems through economies of scale

• First-hand labor market knowledge• Recruiting of labor, technical, and leadership

positions• Employer of record and compliance with labor

law• Labor union relations & negotiations• Skills development facilitation• Employee and employment problem

resolution• Employee busing coordination• Medical care provision and employee

amenities

f e a t u r e s

• Hiring best-practices• Employee retention• Reduced absenteeism and turnover• Personnel cost predictability and containment• Reduced labor-related legal compliance risk• Employment flexibility

b e n e fi t s

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Import & Export Management

Cross DockFreight Consolidation in the U.S.

Import & Export• Pre-border crossing inspection• Documentation• Classification and valuation• NAFTA, Prosec, & import duties• Border crossing coordination• Customs broker relations• Mexico importer/exporter of

record• Mexican Customs compliance• Compliance & operations

systems• U.S. Customs assistance• Regulatory audit management

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Import & Export ManagementAdministrative and support services delivered by experts and state-of-the-art systems through economies of scale

• Startup training and logistics resource alignment

• Determination and mitigation of import duties• U.S. based cross docking facilities and

infrastructure • Importer and exporter of record in Mexico• Mexican Customs regulatory compliance• Trade agreement compliance (NAFTA, EFTA,

etc.)• Customs brokerage relationship management• Inbound and outbound operations• Regulatory audit management

f e a t u r e s

• Customs cost predictability and containment• Reduced financial and operating risk through 100%

compliance• Reduction in delays at border crossing ports

b e n e fi t s

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Park & Facilities Management

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Park & Facilities ManagementAdministrative and support services delivered by experts and state-of-the-art systems through economies of scale

• 24/7 park security, surveillance, and controlled access

• Utilities provision monitoring and corrective actions

• Infrastructure preventive maintenance• Building repairs and maintenance• Tenant improvement management

f e a t u r e s

• Achieve maximum operational continuity • Lower costs through preventative

maintenance• Operate in safe and secure park

environments• Complete building improvement projects on

time and on budget

b e n e fi t s

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Environmental and Occupational Health & Safety

U.S. Standards Mexico Standards Our Role Your Role

• Stay current on regulatory requirements

• Advise on best practices

• Conduct internal audits

• Recommend preventive actions

• Implement best practices

• Cooperate with internal and external audits

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Payroll & Benefits, Indirect Spend & Local Vendors, A/P, Accounting, and Taxes

Over 14,000 paid each week through direct deposit with onsite ATM’s

Managing benefits required by law, from labor union contract, and employer provided fringes including social security, housing, and retirement

System to access regional suppliers and service providers, and process In-Mexico indirect spend

• Corporate income taxes

• Payroll taxes• Value added tax• State & local taxes

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Payroll & Benefits, Indirect Spend & Local Vendors, A/P, Accounting, and TaxesAdministrative and support services delivered by experts and state-of-the-art systems through economies of scale

• Electronic and networked time and attendance systems

• Direct deposit and in-park ATM machines.• Federal, regional, labor union, and employer-

provided benefits management.• Mexico indirect-spend order processing

systems and controls.• Value added tax tracking and reimbursement

processing• Federal, state, and municipal tax and fiscal

reporting

f e a t u r e s

• Employee retention• Indirect spend cost predictability• Income tax haven through shelter legal

framework

b e n e fi t s

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Mexico Operating Costs Based on a compilation of 2013 costs in USD of 57 operations manufacturing in various regions of Mexico

Direct Labor Cost Overhead Cost Total (Labor + Overhead)

(fully fringed cost per hour including overtime and bonuses)

(cost per direct labor hour including indirect and salaried positions, facilities,

utilities, in-Mexico indirect spend, administrative costs and taxes)

(Mexico-incurred cost per direct labor hour)

Manufacturing Process Min. Avg. Max. Min. Avg. Max. Min. Avg. Max.

Electromechanical & Electronics $2.35 $3.20 $4.42 $4.60 $9.32

$23.13

$6.95$12.8

1$28.2

0

Machining & Metalworking $3.01 $4.62 $7.04

$10.18

$18.67

$32.34

$14.11

$23.78

$35.62

Molding, casting, materials

processing$2.42 $2.99 $4.19 $6.84

$15.30

$26.52

$9.72$19.4

9$29.3

5Variations are due to employee

qualification levels, overtime, and locations.

Variations are due to space utilizations, ratio of indirect to direct positions,

utilities usage, and logistics efficiencies.

Not included are allocated burdens from foreign company support or asset

depreciation.

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{For more information:

Eduardo Saavedra EVP, Business Development

Eduardo.Saavedra@OffshoreGroup.comOfc: 520-574-6209

www.OffshoreGroup.com