Nearshoring grows stronger: more than 100 projects detected in Mexico

According to Deloitte’s investment monitor, the estimated amount of these projects is $33,000 million dollars; Coahuila and Nuevo Leon are the ones that appear the most. The phenomenon of relocation of Asian companies to Mexico or nearshoring is becoming more and more robust and there are already more than 100 projects of companies that have announced that they will come to the country. According to the “Investment Monitor” of the consulting firm Deloitte, more than a hundred projects have been announced, which amount to an estimated total investment of 33 billion dollars. “Near-shoring is having an impact on the economy through manufacturing activity, fixed investment, construction, employment and wages,” highlights the report by the consulting firm that has tracked the impact of company relocation in Mexico. It points out that this total amount of companies that have announced they will expand their operations or have come to the country for the first time exclusively for nearshoring purposes from the beginning of 2021 to September 2023, 44% are in an announced-only status, 24% under construction and 33% already operating. “It appears that the largest investment outlays will occur in the next few years,” he notes. In addition, 36% of the foreign direct investment (FDI) received in the last two years may be associated with nearshoring. He details that the north of the country is the region that has benefited the most, where the states of Coahuila and Nuevo Leon have received the largest amount of projects and investment; the first represents 12% of the 33,000 million dollars and the second, 39%. Also read: Nearshoring unleashes euphoria for credit to build factories in Mexico Other entities that appear in the nearshoring investment announcements are Mexico City, Guanajuato, Jalisco, San Luis Potosi, Durango and Chihuahua. On the other hand, the industries most prone to relocation are manufacturing. In particular, electronics manufacturing companies and the automotive industry. There are mainly two types of groups that are relocating to Mexico, the first group is made up of U.S. companies that already had operations in the country and are now expanding their capacity. The second group comprises Asian companies that want the benefit of producing in North America while avoiding high labor costs and reducing the risks of supply chain disruptions. While Deloitte indicates that the nearshoring phenomenon is consolidating in Mexico – and the number of projects that have been announced is evidence of this – it is also posing challenges for state governments, as the incoming companies will demand greater services and public infrastructure than is currently in place. Moreover, although the federal government recently published an agreement to promote nearshoring investments through tax incentives, which is a good first step, “more policies will be needed to take advantage of the so-called Mexican moment,” he points out.