Time to Capitalize on Mexico’s Nearshoring Momentum

Mexico finds itself at the forefront of nearshoring investment considerations for businesses seeking to optimize their supply chains and enhance operational efficiency. Recognizing the significance of this opportunity, economic development ministers from various states are doubling down on efforts to showcase the unique advantages and investment potential of their respective regions.

Marco Antonio Del Prete, President of the Association of Mexican Ministers of Economic Development (AMSDE), highlighted the unprecedented opportunity that nearshoring presents to Mexico and its constituent states.  Focused on the imperative of harnessing this momentum, Del Prete underscored the concerted efforts of economic development ministers across Mexico to attract investments, foster connections, and address the needs of companies considering relocation to the country.

Del Prete explained that nearshoring is not a new phenomenon to Mexico, citing its historical utilization during the 1970s and 1980s when maquiladoras flourished, capitalizing on Mexico's lower labor costs. However, nearshoring has adapted to contemporary challenges, notably during the COVID-19 pandemic, which disrupted global supply chains and prompted companies to seek closer proximity to their markets. This strategic shift has allowed businesses to reduce time and costs, leverage local talent, and avoid compounding challenges such as the container crisis. 

Del Prete emphasized that nearshoring is increasingly influenced by climate change, as companies strive to minimize their carbon footprint by decreasing export distances. This trend is incentivizing businesses to establish closer relationships with both suppliers and customers, enabling them to pursue net-zero goals more effectively.

“Nearshoring involves more than just relocating plants; it encompasses the relocation of entire processes. While other strategies like friendshoring prioritize alliances, nearshoring primarily addresses logistical considerations. This presents a significant opportunity for Mexico, given its strategic geographic location between the Atlantic and Pacific Oceans, its proximity to the United States, a competitive labor force, and numerous trade agreements facilitating smooth business operations for foreign companies, ” said Del Prete.

Economic development ministers are keenly aware of these strengths and are actively promoting them to prospective investors. However, amidst the promising prospects of nearshoring, several challenges loom on the horizon including those related to energy infrastructure, availability of industrial real estate, legal certainty, and a skilled workforce to boost competitiveness. 

In the realm of energy, efforts are underway to bolster infrastructure and ensure a reliable supply to support industrial growth. Initiatives aimed at enhancing vocational training and upskilling programs are being rolled out to meet the demand for skilled labor in key sectors. "We have to promote our capabilities, encourage exports, ensure the best infrastructure and boost renewable energy projects to promote Mexico's economic and sustainable development," said Del Prete.

The holistic approach taken by economic development ministers underscores a shared commitment to unlocking Mexico's full potential as a premier nearshoring destination. By listening to the needs of businesses and proactively addressing challenges, these ministers are paving the way for sustained economic growth and prosperity across the country. 

Furthermore, the minister aims for Mexico not only to leverage new technologies but also to be at the forefront of their creation. "We cannot persist solely as maquiladoras, reliant solely on foreign investment. It is imperative that we invest in technology, innovation, and the development of local suppliers, not just to provide solutions, but to originate them from the ground up."

As Mexico continues to capitalize on its nearshoring momentum, the role of economic development ministers remains paramount as it will facilitate inter-government coordination.