Business and Political Leaders Explore Nearshoring at MBS 2023

Prominent Mexican and international business and political figures converged for the first edition of Mexico Business Summit between Nov. 28 and Nov. 30, 2023 at Expo Santa Fe, Mexico City. Addressing key sectors such as natural gas, energy, automotive, electromobility, talent, logistics, and ESG, the summit delved into strategic business opportunities within the context of the growing nearshoring trend. The event is expected to chart the course for Mexican business leaders, offering insights to drive economic growth and capitalize on potential prospects ahead.

Mexico Nearshoring Summit 2023, in the context of MBS 2023, kicked off with the presentation Ideas to Enhance Mexico’s Economic Growth, where Alberto de la Fuente, President, Global Companies’ Council (CEEG) said nearshoring is probably the biggest transformative opportunity for Mexico in recent years. During his presentation, de la Fuente outlined several challenges companies face when relocating to Mexico, including the lack of infrastructure development, technological innovation, talent skilling, and insecurity. Despite the challenges, de la Fuente noted that companies are still interested in investing in the country and stressed that Mexico has always been attractive to many of CEEG’s members. He also urged for open dialogue to improve conditions for companies. “To meet the challenge and fulfill our aspiration of becoming a nearshoring hub, the state must now provide certainty, fostering collaboration among the public, private, and academic sectors. We require dedicated spaces for constructive dialogue," de la Fuente mentioned. 

In the context of nearshoring, considering investment diversification becomes crucial, Federico Cerdas, CEO and Co-Founder, Skyhaus, highlights the advantages of investing in the real estate sector, which can bring benefits not only to individual but also to institutional investors, as it offers an asset-based investment plan that has historically a upwards trend. Cerdas considers this trend to have the potential to be the engine of Mexico’s economic growth. 

As nearshoring aims to leverage Mexico's proximity to the largest consumer market, the United States, the participation of international companies was expected. During MBS 2023, Carolina Núñez, Director General, Mexico-China Chamber of Commerce and Technology, outlined the importance of building bridges between Mexico and China, especially within the context of electrification of the automotive sector, where China has a wide experience and a market share of over 60% of electric vehicles (EV) sales globally. Núñez urged companies to see Chinese players as key allies in the future of nearshoring in Mexico, as they seek long-term investments that will generate benefits for society, governments, and the private sector. 

FDI not only brings economic benefits, as most newcomers bring international ESG standards that must be applied to ensure sustainable operations from the short to long term. In this sense, Pietro Piffaretti, Ambassador of Switzerland to Mexico and Belize, noted Switzerland's approach toward the environment, considering it both an economic and collective good that belongs to all citizens. With this in mind, Ambassador Piffaretti mentioned that Switzerland has naturally developed sustainable solutions that can be easily exported to countries like Mexico, where society, companies, and even governments can harness the countless benefits of adopting an ESG approach.

As governments’ initiatives are fundamental to harness nearshoring opportunities properly, discussions revolved around energy, international treaties, and regulation matters. During his participation, Fausto López, Customs and Free Trade Agreements Manager, Volkswagen, highlighted the influence of the shift from NAFTA to the USMCA in 2020 as it brought stricter regulations, especially in labor matters and regional content, which particularly impacted the automotive industry, allowing it to access preferential tariffs, but demanding a more skilled labor force. “(USMCA) presents significant hurdles for the sector, focusing on supply chains, workforce training, customs facilitation, adaptation to electrification, and dispute resolution. Overcoming these challenges will be pivotal for Mexico's automotive industry's future trajectory under USMCA,” López added. 

Regarding energy, state-level representatives José Ramón Silva, Tamaulipas Minister of Energy Development; Gabriela Carvajal, General Director Energy Commission, State Government of Puebla; Eduardo Sánchez, Director General Renewable Energy of Nuevo Leon; Ivonne Ramírez, Director General of the Energy Agency, State Government of Hidalgo; and Victor Cervantes, President of the Energy Commission of Jalisco, discussed the importance of a reliable energy source for the private sector, acknowledging the growing role of clean energy in investment attraction and how governmental initiatives help address this issue efficiently. Similarly, Fernando Alba, Ministry of Innovation and Economic Development, Chihuahua, showcases his state as an example of how collaboration between the private and public sectors can play a positive role in promoting nearshoring investments, as demonstrated with Chihuahua’s automotive sector growth of 4.6% in June 2023 when compared to the same period of 2021. 

The automotive sector was a key topic in MBS 2023, as it secured US$5 billion in FDI just in 1H23. During their participation, Armando Cortés, Director General, INA; Lorena Isla, Director Latin America-Mobility, Frost & Sullivan; Eric Blasco Ruiz, Director Comercial, APYMSA; Miguel Elizalde, President, ANPACT; and Carlos Mortera, Director General, AMT outlined the importance of Mexico’s automotive industry globally and its challenges, which similar to other sectors include lacking infrastructure, talent development, energy availability, and the urge to start automation of certain processes to increase productivity. 

As for talent, Eduardo Asaf, Partner at McKinsey & Company, stressed that people are the ones that give value to a company. Therefore, businesses must adopt a more dynamic approach to talent selection, going beyond traditional frameworks. He also emphasized the importance of resilience, agility, team empowerment, adaptability to change, and talent and culture as critical areas that companies must address to remain competitive, especially in a dynamic market such as the automotive industry. 

While all productive sectors are crucial within the nearshoring environment, business leaders did not forget that disruption in the global supply chain brought this phenomenon to Mexico. Thus, speaking of the supply chain was fundamental. Héctor Soto, Senior SCM and Operations International Consultant, Seraph Consulting, outlined critical challenges within the Mexican supply chain, emphasizing the role of risk management and suggesting the implementation of decision-making tools, data analytics, and standardized work protocols, among other tech-based measures. 

Soto, alongside Saulo Guzmán, Managing Director, Wieland Metal Services Mexico; Eunice Bermúdez Alvarez, Procurement Manager, Mazda; Felipe Villarreal, CEO, ALIAN Plastics; and Renato Villaseñor, President & Executive Director at Querétaro Automotive Cluster, stressed the importance of having multiple suppliers or at least avoid depending on a single supplier, as well as the continuous innovation within the manufacturing processes to properly address nearshoring. They emphasized the increasing role of technology not only applied within OEMs but also within their suppliers.

Overall, MBS 2023 attendees know that nearshoring is here to stay and, to make the most of it, collaboration is key. Opportunities are in every corner of the country and every industry has invaluable insights to offer to make nearshoring the real opportunity to make Mexico escalate to the next level. Attendees from both private and public sectors acknowledge it is a joint responsibility to ensure nearshoring not to be an ephemeral phenomenon but the bridge to a more dynamic, prosperous, and sustainable future.