Nearshoring is at its peak level of development. The advantages for Mexico, such as the geographical location, developed infrastructure and qualified workforce, allow small and medium sized companies to have extraordinary opportunities to be part of this trend and grow.
Today there are around 400 companies seeking to settle and start operations within the country. According to Sergio Argüelles, president and CEO of FINSA, 40 investment projects are being considered in Nearshoring, of which 52% come from China, 13% from Italy, 8% from Germany, 6% from Taiwan and Sout Korea.
Keep reading, we are going to delve into how Nearshoring is a growth opportunity for new companies, but also for companies that are already established in the country and want to expand their horizons.
Competitive advantages of Nearshoring in Mexico
Nearshoring ensures greater economic stability and growth in the industrial sector, in addition to generating unique opportunities for all industries, where distribution offers great possibilities to develop and plan projects in the medium and long term.
The development of Mexico is based on maintaining competitive wages, economic stability and logistics infrastructure, which will allow more and more manufacturing plants to be obtained. Adding to the fact that with the T-MEC we have competitive advantages such as being exempt from import duties and facilities to move merchandise within the North American region.
These are some of the advantages that describe nearshoring in Mexico:
1. Reduces time and costs in the supply chain: This is one of the main factors why Mexico is being one of the big winners in Nearshoring. Being close to the United States and Canada reduces production and transportation times, in addition to strengthening the value chain, since there is no longer so much dependence on China for supplies.
2. Skille workers: Mexico has a large pool of highly skilled and trained workers, especially in the manufacturing and technology sectors. So, companies can invest without problem not only in manufacturing plants, but also in R&D. A clear example is Ford, which inaugurated its Global Technology and Business Center here in Mexico last October.
3. Infrastructure: Mexico has large industrial parks which have the services that industries demand today. So, companies that invest in Mexico do not start from scratch.
4. Efficient logistics and shipping: Being the neighbor of the United States and Canada, this proximity represents a lower cost in freight and transportation of the merchandise, since it does not have to be sent by ship or plane and everything can be sent by land, thus achieving significant savings in transportation costs, as well as a reduction in transportation times.
What are the challenges facing manufacturing with Nearshoring?
As we have mentioned, the advantages that come with nearshoring open an immersed window of opportunities for everyone, especially for the Mexican economy, however, we must also mention the challenges that are looming.
1. Use of information technologies: Robotics is envisioned replacing human labor and activity, optimizing competitive advantages in labor is more than essential.
2. Security: Mexico has great security challenges that could stop investments if the problem worsens and there is no solution in the medium and long term.
3. Clean energy production: Many of the large companies are looking for the energy they use in their production processes to come from clean energy, which is why in order not to stop investment in the country, they must invest in modernizing and strengthening the electrical industry.
As we can see, Mexico can benefit greatly from the investments, which will be an economic benefit and generate new jobs.
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