Experts Highlight Energy as Driver for Nearshoring in Mexico
Nearshoring and energy were recurring themes at Monterrey’s 8th Mexico Infrastructure Projects Forum. In light of the relocation of manufacturing companies due to supply chain disruptions, Monterrey is working hard to attract new investment. For Nuevo Leon’s Minister of Economy, Iván Rivas, this is a clear opportunity.
Rivas highlighted Nuevo León’s infrastructure, human capital and industrial parks as the state’s main advantages for newcomers. Rivas also mentioned this at the recently celebrated World Economic Forum, touting Monterrey and Mexico as the main targets for the regionalization of supply chains.
The proximity of Mexico's northern states to the US border has driven FDI growth fueled by nearshoring goals. FDI in Nuevo Leon reached US$4.36 billion from October 2021 to October 2022, leading to the creation of 50,191 new jobs. The manufacturing industry represented 37.6% of the investment, followed by the automotive sector (19.8%), logistics (8.9%), furniture (6.9%), IT/software (5.9%) and others (20.8%). The Minister of Economy of Nuevo Leon predicts FDI to reach US$4 billion by the end of 2022.
Nevertheless, Rivas also mentioned one of Mexico's main challenges to exploit nearshoring opportunities: energy, particularly transmission and distribution as the country’s infrastructure weak links.
During the Monterrey conference, the Mexican Association of Energy (AME) also underlined Mexico’s energy impediments. Despite this big global shift opportunity, AME stated that Mexico does not have enough electricity. According to Natural Gas intelligence, “Mexico needs US$100 billion in new power plants between 2022 and 2036 or 56 GW of extra capacity.” The Nuevo Leon Energy Cluster has also expressed concerns that the state does not have enough power available to meet the energy needs of companies in industrial parks.
Furthermore, energy demand increased in 2022. Last year, Mexico consumed 333.5GWh of electricity, which was an increase of 10.8% compared to the consumption of 301GWh in 2021. Rivas announced that the state government and CFE are working on an energy census to determine where new transmission and distribution lines are needed in the state. Despite Nuevo Leon's capability to generate surplus electricity for export to other states, the issue lies in the transmission and distribution of electricity to areas that need it.