Situation such as the Covid-19 pandemic, geopolitical context, as well as the trade war between the United States and China, which have jeopardized supply chains, have led phenomena like reshoring (bringing operations back to the home country) and nearshoring (relocation) to increase.
According to Kearney’s 2024 Reshoring Index, more than 90% of surveyed companies are considering or have already implemented reshoring or nearshoring initiatives.
Omar Troncoso, managing director of Kearney Mexico, pointed out that 28% of the executives interviewed have already relocated all or part of their manufacturing operations to the United States, while 11% of them have done so to other countries.
Currently, 79% of the respondents have relocated their operations to the United States, 27% to Mexico, 24% to Canada, and 20% to Central America and the Caribbean.
This, according to the study, benefits Mexico, as more than 85% of respondents intend to source materials and parts locally, suggesting a movement to bring the entire ecosystem closer.
“Every time a company is looking to relocate to the United States, a significant portion of its value chain has to come to Mexico because not everything can be automated, not everything can be done with low-cost labor, and at least initially to make it competitive,” said Omar Troncoso.
In this regard, 25% of companies have asked their Asian suppliers to relocate or open branches near the new locations of their manufacturing operations, and 53% of companies are evaluating asking their Asian suppliers to relocate or open branches near the new locations.
“A lot of the intellectual property was handed over to Asian suppliers and it’s very difficult to recover it. Many times companies bring in their Chinese suppliers because of the ease or because they already have their intellectual property,” the executive said.
In this context, he indicated that as long as entrepreneurs are seeking relocation to the United States, Mexico will benefit, as a new investment can also mean that “the supplier that already exists in Mexico may receive a call to start supplying a factory that is in the United States.”
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