Mexico: Country with the Greatest Nearshoring Potential in the Americas
Mexico’s strategic location, excellent connectivity, and long history of openness to trade have made it the top choice in North America for international companies looking to expand their operations to areas with competitive costs and market access. Now, with the entering into force of the new USMCA and companies looking to diversify their supply chains, Mexico is prepared for a boom in nearshore and offshore manufacturing for exporters from North American and around the world.
Its strategic location is one of the main reasons it offers some of the world’s most competitive costs for companies looking to start up manufacturing services in Mexico. This, added to the additional certainty for investors provided by the new and updated trade agreement that went into effect in July aimed at strengthening the North American supply chain, makes it is the obvious choice for manufacturers in a range of industries.
Another important factor making it attractive for companies looking at setting up nearshore or offshore manufacturing in Mexico is the country’s excellent connectivity. The transport of manufactured goods from Mexico to any point in the USA takes about 24 hours, equating to shorter delivery times, less risks and lower costs than other low-cost countries. Its geographic location and little or no difference in time zones also make it easy to closely monitor manufacturing processes. Besides being neighbor to one of the largest markets in the world, with which it has 54 border crossings to the United States, it also has direct access to central and south America and both the Atlantic and Pacific Oceans.
Internally, Mexico boasts over 80,000 miles of highways and trade routes, further facilitating the movement of goods to any place in the world by air or sea. It is also the 3rd country with the most airports globally and 3rd most railroads in Latin America.
All these factors, combined with its long history of openness to trade as a way to expand and diversify its economy, give Mexico preferential access to around 50 markets. This policy of openness to trade is reflected in its 13 free trade agreements (FTAs) and nine economic complementation agreements and partial scope agreements, in addition to 32 agreements for the promotion and reciprocal protection of investments (APPRIs) with 33 countries.
As a result, Mexico is one of the world’s top 15 exporters, exporting a total of US$387 billion annually. Over the last six years, foreign direct investment in Mexico has remained stable, between US$30 and 35 billion. More than 47% of the country’s inward FDI has been channeled towards advancing manufacturing industries and manufacturing 4.0, making it one of the most attractive countries for FDI.
Geographic location, connectivity, and a culture of openness to trade are three of the most important factors making it the perfect place to set up operations. If your company is interested in manufacturing in Mexico, find out more about if the move is right for your company by contacting a provider of shelter services in Mexico.
(This article was written using information taken from a report by the Mexican Association of Industrial Parks)
By Alejandro Lara Cruz | Board Member | American Industries Group®
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