More about nearshoring

Regionalization, or approach, or nearshoring, is the main economic phenomenon that encourages the Mexican economy. It is a truly peculiar opportunity, at a time when the global economy tends towards services, Mexico can escape this trend and strengthen its industrial activity, which generates higher quality jobs and added value. That is of particular relevance in an economy that, given its size, is relatively poorly supplied with natural resources to extract.

Due to our location, the trade agreement, the logistics infrastructure and the development of economic environments capable of linking to the value chains of the north of the continent, the investments linked to the rapprochement with the United States are already happening.

Manufacturing exports from Mexico have grown by 6.6% during the last 12 months. For this reason, as the BBVA study on the subject points out, the industrial zones of Tijuana, Coahuila, Juárez and Monterrey have already reached or are close to being used to their maximum capacity. This phenomenon also explains the notable growth of the machinery and equipment item in the national product. This means that several of the factories that were already engaged in exporting to North America have recently expanded their facilities and equipment to incorporate more processes, inputs and parts to replace others that were previously carried out in China. This includes complex activities, linked to sectors such as the automotive or electronics, but also others more related to traditional maquila, such as textiles or plastics, with export growth of more than two decades.

Nearshoring, in fact, is going to increase the national content of our exports, something that we should have sought long ago through industrial policies.

There is a consensus among the US political class on few things, one of which is to reduce its dependence on trade with China. This means that the rapprochement processes will continue for several years, a large part of them will take place in the United States or Canada, but, for reasons of cost and Mexican efficiency in various processes and sectors, Mexico is a option for which you will necessarily have to choose. The main problem is that the saturation of industrial plants, as well as electrical and hydraulic supply problems, can put a limit on the investments that are already being made.

The port, rail and highway connections linked to North America are important, but they would have to be strengthened, especially if you want regions that are not on the border, such as the Centro-Bajío, Toluca, the Valley of Mexico, Guadalajara or Puebla to integrate to the approach processes. Until now, a good part of the new investment has been concentrated in Nuevo León, Chihuahua, Baja California and Coahuila. This requires significant public and private investment for the coming years. In fact, it would be important to have an infrastructure plan in order to improve the logistics of manufacturing in North America and the development of financing mechanisms such as fibers.

If what is wanted is also to develop new activities, such as the production of machinery for the technological industry, it will be necessary to build, with companies and governments, new productive environments to make them possible.

It is estimated that the rapprochement could increase manufacturing exports by 10% and 0.4 points of GDP in the coming years, but it could be more or less, depending on the industrial policy we have. By the way, a nearshoring film phenomenon happens in Mexico City, a good number of professionals, many of them from North America have chosen the capital as their place of work, some of them had to leave today’s complicated Taiwan. This generates economic benefits and opportunities that we have not taken advantage of.

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