2024: The Nearshoring Revolution Unfolds in Mexico

Over the past nine years, Mexico has emerged as a global powerhouse, solidifying its position as one of the most attractive destinations for business and investment. This ascent is attributed to a combination of factors ranging from its political stability to its strategic geographic location. However, a key element driving its growth is the phenomenon of nearshoring.

Nearshoring, a trend on the rise in the last decade, has led companies to relocate their operations or production to countries close to their target markets. Mexico has capitalized on this trend thanks to its legal and economic stability, as well as its favorable trade agreements that facilitate the entry of foreign companies. With over 50 trade agreements in place, including the recently renegotiated United States-Mexico-Canada Agreement (USMCA), Mexico has become a magnet for foreign investment.

In addition to its favorable business environment, Mexico boasts a highly skilled workforce, especially in key areas such as technology, engineering, and manufacturing. Investment in education has borne fruit, with institutions producing specialized and trained talent to meet the demands of the global market.

2024 promises to be an exciting year for nearshoring in Mexico. It is expected that hundreds of new companies will enter the country’s industrial parks, with an estimated 20% originating from China. This influx of foreign direct investment could reach record figures, surpassing $40-50 billion annually, according to Barclays projections.

The sectors that have attracted the most foreign investment in recent years include the automotive, manufacturing, energy, and financial services industries. Major players such as Ford, General Motors, Samsung, and HSBC have already established a strong presence in the country, leveraging its skilled workforce and stable infrastructure.

What is Nearshoring?

Nearshoring is a business strategy that involves relocating production processes or services to countries that are geographically close, rather than keeping them in distant locations or outside the continent. This trend has gained popularity in recent years due to a number of factors, including growing pressure to reduce costs, the need for greater agility in the supply chain, and increased demand for customized, high-quality products and services.

For Mexican SMEs, this nearshoring boom represents a unique opportunity to expand their operations and strengthen their position in the global supply chain. These companies are encouraged to prepare for increased demand by improving their production capacity, adopting innovative technology, and seeking strategic partnerships.

In summary, Mexico is at the epicenter of a global economic revolution driven by nearshoring. With the right conditions and strategic vision, the country is poised to capitalize on this opportunity and consolidate its position as a leader in the global business landscape.