As nearshoring gains traction in Mexico thanks to the country’s proximity to the US and ability to offer cost-effective production, troubled businesses north of the border might consider moving operations to the Latin American country. For example, the United Auto Workers (UAW) strike continues to disrupt operations for the Detroit Big Three, leading CNBC's Expert Jim Cramer to raise the possibility of Ford moving production to Mexico.
While negotiations between Ford and the UAW are ongoing, Cramer indicates a potential move if an agreement is not reached soon.
Cramer emphasized the ongoing negotiations between Ford and the UAW, acknowledging the delicate balance at play. However, he expressed his belief that if the parties fail to reach a resolution soon, Mexico could become a viable option for Ford. He went on to suggest that such a shift might occur within a "couple of weeks," pointing out that Ford already has assembly plants located south of the border.
The concept of automakers relocating production to Mexico is not a new one. Over the past several years, Mexico has emerged as a major player in the global automotive industry, thanks to its competitive labor costs, well-established supply chain infrastructure and advantageous trade agreements such as the USMCA.
Several automakers, including Ford, have made significant investments in Mexico to take advantage of these benefits. The country's automotive sector has experienced substantial growth, with many major manufacturers establishing or expanding their presence in Mexico to serve the North American market.