Nearshoring’s Biggest Challenge: Operational Reliability

Nearshoring is no longer just a trend. It’s a fundamental shift in global manufacturing. Companies are moving production closer to their key markets, and Mexico has become one of the biggest beneficiaries of this strategy. Lower costs, geographic proximity, and free trade agreements make it an attractive choice for businesses looking to de-risk their supply chains.

But here’s the reality: lower costs and logistics advantages won’t be enough to make nearshoring truly successful. As someone who works closely with industrial leaders across Mexico, I see firsthand how operational reliability will be the defining factor in whether this shift meets expectations — or falls short.

Attracting investment is just the beginning. What really matters is keeping those operations running smoothly, avoiding costly downtime, and ensuring that factories in Mexico can compete with the best in the world. That’s where many companies fail to prepare.

The Hidden Risks of Nearshoring

There’s a lot of optimism around nearshoring, and for good reason. But if we take a closer look, there are three critical challenges that could undermine its long-term success.

First, we have the infrastructure strains. Mexico’s industrial growth is pushing energy, water, and transportation networks to their limits. Many companies entering the market assume that the infrastructure will support their needs, but once they begin operations, they realize that’s not always the case.

In northern Mexico, for example, energy supply has become a real concern. Some manufacturing zones are already experiencing power limitations, forcing companies to rethink their energy consumption and reliability strategies. If we don’t address these bottlenecks now, the very cost savings that make nearshoring attractive could quickly disappear.

Then, we have the talent shortage in advanced manufacturing. Nearshoring isn’t just about moving factories; it’s about operating them efficiently. And that requires skilled labor.

The problem? Mexico faces a shortage of experienced technicians, engineers, and maintenance specialists, especially in automation, AI-driven maintenance, and industrial data analysis. Many of the companies relocating to Mexico need a workforce that can handle highly automated production lines, but the reality is that many of these skills are still in development.

If companies don’t invest in training and upskilling programs, they will face longer downtime, inconsistent production, and lower overall efficiency. A factory is only as strong as the people running it.

Finally, there is downtime as a serious profit killer. If there’s one thing I’ve seen hurt manufacturers the most, it’s underestimating the cost of unplanned downtime. Every industrial leader I speak with knows that stopping production is expensive, but many don’t realize just how much it impacts profitability.

For context, the world’s 500 largest companies lose US$1.4 trillion annually due to downtime. And as supply chains become more interdependent, even small disruptions can have ripple effects across an entire operation.

Mexico’s competitive advantage in nearshoring depends on minimizing these disruptions. The companies that integrate predictive maintenance and real-time asset monitoring into their operations will be the ones that stay ahead of the curve. Those that don’t? They’ll be the ones constantly putting out fires instead of focusing on growth.

Why Operational Reliability Is the Key to Success

Operational reliability is the real foundation of nearshoring success, yet it’s often treated as an afterthought. Too many companies focus on labor costs, tax incentives, and supply chain logistics, assuming those will determine the profitability of their operations in Mexico. But in my experience working with manufacturers across different sectors, I’ve seen that the real differentiator is how well they can ensure efficiency, uptime, and resilience in their production lines. No matter how attractive the financial benefits of relocating might seem, if a factory can’t maintain continuous, optimized operations, those benefits will quickly disappear.

A reactive approach to maintenance no longer works in the nearshoring era. Manufacturers can no longer afford to wait until machines fail and then scramble to fix them. Downtime costs are rising across the board, and in industries like automotive or food and beverages, a single failure can translate into millions in losses. The manufacturers that are succeeding in nearshoring are those that treat predictive maintenance as a strategic asset. AI-driven solutions allow companies to detect early warning signs, schedule interventions before breakdowns occur, and keep production running at peak efficiency. I’ve spoken with industrial leaders who once saw maintenance as an unavoidable cost, but after adopting proactive, AI-assisted strategies, they now see it as a profitability driver. Those who make this shift will have a clear competitive advantage in an increasingly demanding global supply chain.

Beyond technology, workforce development is just as critical. The assumption that Mexico’s large labor pool is enough to sustain industrial growth is flawed. What matters is not just having workers available, but having the right skills in place. I see this challenge every day: factories expanding their operations but struggling to find technicians and engineers trained in advanced automation and AI-assisted maintenance. Nearshoring is bringing new levels of technological sophistication, and if we don’t address the skills gap, production efficiency will suffer. It’s up to manufacturers to take ownership of training and upskilling initiatives, ensuring that local workforces are equipped to handle the demands of modern manufacturing. Those who invest in building a resilient workforce will see faster scalability, lower downtime, and higher reliability in their operations.

Finally, we can’t talk about nearshoring without talking about digital transformation. Today’s most successful manufacturers are not just moving production, they are transforming how they operate. Companies that treat nearshoring as a simple relocation strategy — without integrating real-time monitoring, AI-powered analytics, and automated workflows — will struggle to keep up. The industrial landscape is no longer about who can manufacture the cheapest but who can manufacture the smartest. I’ve seen companies dramatically improve efficiency simply by implementing real-time machine monitoring to track equipment performance and predict potential failures. These tools are no longer optional, they are essential for maintaining operational reliability and maximizing the full potential of nearshoring.

At the end of the day, nearshoring isn’t just about bringing production closer, it’s about making it better. The companies that prioritize reliability, invest in workforce development, and fully embrace digital transformation will be the ones that truly thrive in Mexico’s nearshoring boom. The rest will face the same challenges they had before — only now, they’ll be dealing with them in a different location.

As I mentioned at the beginning of this article, nearshoring presents an extraordinary opportunity for Mexico, but success is not guaranteed. Too often, companies see relocation as the finish line, assuming that lower labor costs and proximity to key markets will naturally lead to higher efficiency and profitability. That’s a mistake. The real challenge isn’t just moving operations, it’s making them work smarter, more reliably, and more competitively.

The manufacturers that will thrive in this new landscape are those that treat operational reliability as a strategic priority, not an afterthought. That means investing in predictive maintenance to prevent costly downtime, building a skilled workforce capable of managing automation and AI-driven operations, and fully embracing digital transformation to optimize every aspect of production. This isn’t just about adopting new technologies, it’s about embedding reliability into the core of industrial operations.