When a company brings back manufacturing or any other process from overseas or offshore locations, we call it reshoring. When it brings back manufacturing from overseas to a close location within the mainland, we call it nearshoring.
In the past few decades, many industries decided to move offshore (mainly to China), as a cost-driven strategy.
China was, as the world knows it, the manufacturing facility for the world.
As China continued its strong development in technology and its middle class grew substantially, due to the “boom” involved in their industrial development, the low cost the world was used to in many markets started disappearing. Renowned brands started populating the biggest cities in China as people started growing in their aspirational goals, provoking an important rise in wages.
Also, China’s restrictions on many products and services raised many eyebrows as companies started losing the advantages that made them move far away from the USA, their main market.
As if this wasn’t enough, the USA and China started a commercial war that generated huge uncertainty at the possibility of unpredictable tariffs. This alerted not only the occidental companies that had moved overseas, but also some of the biggest manufacturing companies born in China that had already found a market in America.
Similar situations are happening with companies established in India and even in Brazil.
And then, Mexico happened.
Even with its security issues, and its political whirlpool, Mexico has silently, relentlessly, and resiliently, been attracting many of those manufacturers that left years ago. The new come backers already have a market in North America. They just need a place to establish, again within the region, and continue to grow.
Now, with a re-negotiated commercial agreement with the USA and Canada, the field is in the best shape possible to sow and grow a prosperous industrial boom in many of the country’s regions.
There are numerous advantages for companies that decide to re-shore or near-shore in Mexico. Some of them include lower labor costs for highly skilled workers, vicinity to North American markets, same or similar time zones, lower shipping costs, shorter transit times, among others.
There are approximately 35 trillion USD of sunk costs in China only that need to relocate to this side of the world. A lot of that business will come to Mexico.
Mexico’s manufacturing capabilities have proven to be wide and robust. Look into it when analyzing a reshoring or nearshoring strategy.
And, make sure you plan to stay at least for a weekend. You won’t regret it.
