Spotlight: Mexico’s top 10 nearshoring investments

Published 08/10/2023

Mexico’s top 10 nearshoring investments, planned or underway, involve seven international firms focusing mainly on the automobile industry and lithium batteries.

At least five of the investments are anchored in northern Nuevo León state, where the location presents an opportunity for replacing supply chains to the US market.

Others are in Coahuila, San Luis Potosí, Jalisco and Querétaro states, according to a list BNamericas compiled with information from company announcements and two studies carried out this year by Deloitte and Mexican bank Banorte.

While Deloitte’s study only takes into consideration investments disclosed in 2021-22, Banorte’s research includes those made up until the end of March this year.

The data coincides with government announcements.

Finance undersecretary Gabriel Yorio said last month, for example, that the government had on its radar more than 60 nearshoring investment announcements made just this year, adding that the expectation is to reach a combined US$40bn by year-end.

In June, finance minister Rogelio Ramírez de la O said 20 companies had announced nearshoring investments of around US$13bn, with 54% of the capex linked to the car industry.

Expectations for this year remain high in segments such as electromobility and semiconductors, and the idea is to replace much of North America’s supply chains within five years.

Mexico’s economy ministry identified 198 announcements of foreign direct investments from the private sector, totaling more than US$68bn, in the year through July.

Mexico’s Top 10 Nearshoring Investments

CompanyEstimated investmentOriginDestinationSector
TeslaUS$5bnUSNuevo LeónElectromobility
TerniumUS$3.2bnLuxembourgNuevo LeónMetals
Solarever GroupUS$1bnChinaJaliscoEV batteries
BMWUS$870mnGermanySan Luis PotosíElectromobility
NidecUS$715mnJapanN/AAuto parts
Citic DicastalUS$550mnChinaCoahuilaAuto parts
Man WahUS$300mnHong KongNuevo LeónFurniture
ZF GroupUS$255mnGermanyQuerétaroAutomobiles
Cenntro AutomotiveUS$200mnUSNuevo LeónLithium batteries
Noah ItechUS$100mnChinaNuevo LeónAutomatization

Sources: Grupo Financiero Banorte, Deloitte and public company announcements.

At the top of the list is electric vehicle (EV) manufacturer Tesla, which in March confirmed the construction of a US$5bn gigafactory in Santa Catarina municipality in Nuevo León to produce for the first time its next-generation cars in Latin America. The announcement was confirmed after President Andrés Manuel López Obrador attempted but failed to persuade CEO Elon Musk to build the plant anywhere except Nuevo León. Construction is expected to take 12-18 months but progress is subject to permitting.

The second largest amount concerns steel producer Ternium, which said in a statement in June that it would build and integrate a plant into its existing downstream facility in the Pesquería municipality of Nuevo León. The company expects construction to begin in December, with the start of operations anticipated for the first half of 2026.

Next on the list is Chinese solar-panel giant Solarever Group, which in September revealed plans to install an EV battery plant in the Zacoalco de Torres municipality of Jalisco with investment of US$1bn over the next four years.

The fourth spot is taken by the BMW group, which in February announced an 800mn-euro (US$875mn) investment in its San Luis Potosí plant to produce its Neue Klasse line of electric vehicles starting in 2027. The investment includes 500mn euros to build a battery factory, which will use lithium from Argentina and Australia, and could one day be supplied with the metal produced in Mexico.

Japanese electric-motor maker Nidec is fifth on the list after its CEO Shigenobu Nagamori told Asian newspaper Nikkei in November that construction of a new plant in Mexico would start in April. He added that the investment was focused "on manufacturing products in a region to sell in that region," but did not confirm the exact location.

The remaining investments include Chinese aluminum-rim manufacturer Citic Dicastal, which opened its first plant in Coahuila in June; Chinese investment holding Man Wah, which in August vowed to invest in the expansion of its Salinas Victoria plant in Nuevo León; and German automotive-solution firm ZF group, which in February announced the construction of its third plant in Querétaro.

Lastly, investments are confirmed for Nuevo León by US lithium-battery maker Cenntro Automotive, which at the beginning of the year said it would begin its first stage of production in the country, and Chinese tech firm Noah Itech, which in January started building its new plant in Santa Catarina to offer automatization services.

Learn more about why will manufacturing in Mexico be a competitive advantage for you.

Source: Bnamericas

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