Mexico’s Nearshoring Edge at Risk Without Strong Policies

Business leaders, academics, and government officials agree: Mexico is in a strategic position to benefit from the nearshoring trend reshaping global supply chains. Its geographic location, economic advantages, and trade agreements like the USMCA position the country as a crucial hub for regional manufacturing and logistics.

However, this opportunity is not new. Mexico has had competitive advantages for over a decade but has only partially leveraged them. Without focused public policies to enhance local value chain integration, Mexico risks missing the moment created by the USMCA renegotiation and previous trade deals.

Building Resilient Local Supply Chains in a Globalized World

Developing strong, efficient local supply chains is critical for Mexico’s industrial growth. Though globalization once favored offshoring to low-cost countries, corporate strategies are shifting towards nearshoring, friendshoring, and reshoring, emphasizing factors beyond labor cost, including logistics, political stability, and development potential.

“In automotive, nearshoring thrives due to labor cost advantages for manufacturing. Aerospace requires a different approach because of lower volumes and stringent quality standards,” says Dennis Schunigi, Partner, Ingenics.

Recent global disruptions—from the Suez Canal blockage and the pandemic to geopolitical tensions—have revealed the risks of distant supply dependencies. As a result, companies are increasingly regionalizing and developing local suppliers to safeguard operational continuity.

Miguel Pacheco, President, Bridgestone North and Latin America, notes, “Combining international contracts with local sourcing helped ensure raw materials during the pandemic. Our diverse supplier base and risk management strategies, such as inventory buffers, are key to resilience.”

Addressing Supply Chain Gaps to Unlock Nearshoring Potential

Mexico faces several challenges to fully benefit from nearshoring. Recognizing the urgency is the first step.

“Some companies hesitate to acknowledge electrification’s impact on their supply chains. This delay hinders adaptation, especially as challenges will peak between 2028 and 2032,” explains Matthias Bauer, Managing Director, Ergo-Efeso.

Key gaps include limited local supply capacity in specialized sectors, certification hurdles for Tier 2 and 3 suppliers, and the need for advanced manufacturing capabilities.

“The aerospace sector’s rapid nearshoring growth strains supply chain delivery and technician availability. We invest in talent development because specialized local labor is scarce,” says Vladimir Lara, General Manager Mexico, Element Material Technologies.

Talent shortages, particularly in emerging fields like electromobility and automotive software, remain a pressing concern. Companies such as ZF Group are partnering with educational institutions to build the next generation of engineers.

Small and medium-sized enterprises also struggle with limited access to competitive financing, restricting modernization efforts. Industrial clusters and associations like INA and FEMIA play a vital role in addressing these challenges.

Felipe García from British Standards Institution emphasizes, “Mexico needs more investment and a stronger internal market. Leveraging programs like ‘Plan México’ can help offset risks from external markets and foster sustainable growth.”

Preparing for USMCA Renegotiation and Evolving Trade Realities

The upcoming USMCA review introduces uncertainties, especially around rules of origin and regional content requirements. Rising protectionism and tariffs complicate industrial integration efforts.

While Mexico has secured some tariff exemptions, companies must realistically evaluate their readiness to meet evolving production and regulatory standards.

Mexico stands at a critical crossroads. To secure its role as a regional supply chain leader, the country must urgently strengthen local suppliers, invest in specialized talent, and improve access to financing. Without decisive action, Mexico risks losing momentum in the evolving global industrial landscape.

Follow our MBS 2025 tag and do not miss our coverage leading to Mexico Business Summit 2025 on October 28–29, 2025. On Tuesday, July 29, 2025, we will delve into how supply chain optimization can help companies counter geopolitical uncertainty. 
Interested in staying ahead in the nearshoring landscape? Mexico Business Summit 2025 offers exclusive insights from leading industry experts and government officials on the key trends, risks, and opportunities fueling Mexico’s emergence as a global nearshoring powerhouse. Discover how supply chain innovations, workforce development, and sustainability strategies can strengthen your competitive edge.
Register now to secure your place and position your business at the forefront of this dynamic market: https://mexicobusiness.events/MBS/2025