Nearshoring: Mexico Making Pivotal Move in Supply Chain Dynamics

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Amidst the turbulence of international trade wars, pandemic-induced supply chain disruptions, and the escalating demands for rapid delivery cycles, businesses are increasingly looking to relocate manufacturing and production operations to countries geographically closer to their core consumer markets. Nearshoring’s potential promise is not only to mitigate the vulnerabilities of extended supply lines but also to offer agility in responding to consumer needs, fostering a more adaptable and resilient business model.

In the intricate web of North American commerce, Mexico has emerged as a pivotal node of manufacturing and production, harnessing a burgeoning tide of investments and business engagements from industries in the United States and Canada. This intensifying trend is underscored by the noticeable decline in China's dominance as the leading exporter to the U.S. market—a position it has seen erode from over 21% of U.S. imports in 2017 to a mere 13% this year. In stark contrast, Mexico's contribution to U.S. imports has experienced an upward trajectory, now accounting for more than 15%, overtaking China for the first time in two decades. Mexico solidified its place as the United States’ top trading partner in 2023, surpassing China and Canada in two-way trade.

The upward trajectory of foreign direct investment (FDI) into Mexico is poised to maintain its momentum, reflecting a robust and growing interest in the country's economic landscape. Mexico attracted over $106 billion in FDI announcements during the first nine months of 2023.

To read the rest of this article, which appeared in the Winter 2024 issue of IPC Community, click here.