A study by the US consulting firm Bain & Company shows that in the last six years the country has acquired a competitive cost advantage over China, the largest nearshoring market in the world

Mexico seeks to consolidate its position as a benchmark in the nearshoring market

photo_camera PHOTO/ARCHIVO - Mexico City

The changes that are taking place in production chains have generated an outsourcing of industries, keeping the manufacturing process close to the consumer. It is in this market where Mexico could become a benchmark in nearshoring in North America, increasing exports of the Mexican manufacturing sector by up to 2%.

The consulting firm Bain & Company has prepared an analysis entitled 'Nearshoring opportunities for Mexican companies', in which it points out that this market could represent a growth of up to 8 million dollars a year for Mexican industry.

The study reports that Mexico presents an industry with a stable growth of its annual exports, especially in the transport sector, machinery and electrical devices. 

For this reason, the consultancy highlighted four main factors why it will be beneficial to relocate production centres to Mexico: time zones similar to the United States that facilitate communication between entities; more affordable delivery times due to geographical proximity; the elimination of export tariffs to the United States as a result of the T-MEC, which especially favours the automotive industry.

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And finally, the certified quality of products that "has high quality standards and a highly skilled workforce. The gross value added of the manufacturing industry in Mexico is around $221 billion and contributes 18 per cent to the national GDP," the paper noted.

 Competitiveness

According to the Bain & Company study, Mexico has gained a competitive advantage over China in the last six years. China has been considered the largest nearshoring market in the world for decades, however, in a global context where 75% of companies are experiencing supply chain disruptions due to the pandemic, a significant change in import trends of US and European companies has been observed, specifically in the automotive, machinery, furniture and plastic derivatives sectors.

There are major Mexican cities such as Monterrey, Tijuana and Querétaro where industrial activity is consolidated and attracting the interest of US, Chinese and European multinationals such as Germany, Denmark and France.

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Although global trends are favourable and local factors are quite solid, Mexico has to face some challenges for nearshoring to consolidate as a growth opportunity for the national economy, such as "the development of production ecosystems that ensure the supply of raw materials and inputs, availability of skilled labour and improvement of logistics infrastructure and security," the report said.

Americas Coordinator: José Antonio Sierra.
 

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