Nearshoring in Mexico: Mirage or the real deal?
- Moving production and services closer to their destination markets, i.e., "nearshoring" can help enhance supply chain resilience and reduce costs
- Mexico’s proximity to the US, along with its large manufacturing base and free trade agreements, make it an attractive nearshoring destination
- Macro indicators offer no conclusive proof of nearshoring expansion in Mexico but there are subtle signs at the micro- level, such as growth in the industrial real estate sector
- To attract nearshoring, Mexico must address its structural challenges, particularly in education and governance. Currently, certain Asian countries excel in these areas and have benefited from the relocation of supply chains
- Investors should pay heed to 2024 Presidential election in Mexico. A new administration could potentially implement reforms to attract greater levels of nearshoring