Ongoing tensions between the U.S. and China have prompted many U.S. companies to undertake a massive relocation of their factories to Mexico.
This phenomenon has been dubbed "nearshoring", the inverse of offshoring. This means that companies are progressively transferring part of their production to countries close to their markets and with similar time zones, in order to minimize the effects of disruptions in supply chains. According to a recent Prosper Insights & Analytics survey, the disruption and shortages in the supply chain can take up to 6-12 months to normalize. The world is beginning to move out of China in the same way that they flocked to the Asian giant during the 1990s.
The close integration that exists between North American countries through the T-MEC, the international agreement that facilitates trade between the U.S., Canadian and Mexican markets, has facilitated the transition, and the Mexican automotive industry is already emerging as one of the big winners of this phenomenon.
Tesla is the latest in a long stream of companies to announce big plans of building factories in Mexico, following other big names, while warehouses are becoming shiny gems for multinational companies in different Mexican cities. It’s clear that the re-orientation of global supply chains is unstoppable.
Mexico is becoming the hottest market in the region, in terms of production, skilled professionals, and advanced facilities. This is going to renew the private sector in the country with long-lasting positive consequences.
Learn more about the advantages of expanding your operations to Mexico.