Infrastructure Gaps Hinder Mexico's Nearshoring Plans: Scotiabank

Mexico is not yet ready to fully capitalize on investment opportunities arising from nearshoring and the recently announced Plan México, due to persistent deficiencies in infrastructure, energy, and water supply, according to Scotiabank’s Chief Economist, Rodolfo Mitchel.

Speaking at the Energy and Infrastructure 2025 forum organized by the Mexican Institute of Finance Executives (IMEF), Mitchel emphasized that companies continue to cite inadequate infrastructure and power outages as major barriers to investment, as reflected in various business surveys, including the Bank of Mexico’s quarterly Regional Economies Report.

“The companies and corporations surveyed consistently identify infrastructure and the energy sector—where they face blackouts and interruptions—as key barriers. This creates a challenge for continuing investments,” said Mitchel.

Beyond energy instability, water scarcity is limiting production capacity and hindering industrial development. These structural issues, he noted, are compounded by insecurity, weak governance, and a shortage of qualified labor—factors that significantly impact operations and logistics across industries.

“There is the structural aspect, where governance, insecurity, and a deficit of skilled labor create barriers and challenges for companies seeking to capitalize on growing domestic and international demand,” he added.

While electricity infrastructure could be improved relatively quickly under the right legal and economic conditions, other structural challenges will require more time. “Road infrastructure and governance take substantial time to develop, and it is essential to establish legal frameworks conducive to new investments,” he said.

Mitchel also expressed concern over a weakening business climate due to recent judicial reforms and the dissolution of autonomous institutions. “This could negatively affect Plan México, alongside external factors such as the designation of cartels as terrorist organizations, which also has adverse effects,” he warned.

Plan México, a strategic initiative aimed at boosting domestic production and attracting foreign investment, sets ambitious targets to elevate the country into the ranks of the world’s top ten economies. The plan prioritizes sectors that intensively use energy and water, including textiles, footwear, and semiconductors.

However, Mónica Rodríguez, deputy director of public affairs for Energy and Chemicals, Integralia, noted that the energy component of Plan México remains vaguely defined. “The ideal scenario is to provide clean, affordable, and high-quality energy,” she said.

Rodríguez also highlighted the need for stronger road and port infrastructure to support Mexico’s broader industrial ambitions. “We’ll have to figure out how to adapt to these new rules in order to achieve at least some of the plan’s objectives,” she said, referencing evolving domestic policies and bilateral trade conditions with the United States.

Despite its ambition, both experts agree that without significant improvements in energy reliability, security, water access, and regulatory clarity, Mexico risks missing a critical window to benefit from nearshoring-driven investment.