The pandemic impacted every single industrial sector; however, not all of them suffered financial losses. For some, like nearshoring, the changes improved companies’ economic growth. The logistics and industrial real estate sectors, particularly Build-to-Suit projects, benefited the most.
As previously discussed, nearshoring is relocating operations to a neighboring country instead of in an industrial park halfway around the world. It has encouraged several companies to run their operations out of Mexico.
Mexico is proposed as this strategic location due to its legislative and logistical model favoring productive and export operations.
Nearshoring growth
After the health crisis, commercialization and leasing industrial facilities and Build-to-Suit projects have significantly increased because many foreign companies –primarily Asian ones– relocated. But, according to AMPIP’s1 data, local demand surge also contributed.
Between 2021 and 2022, this association assisted 36% of national companies2, 33% of companies from the United States, and 20% of companies from Europe with their requirements to install or invest in an industrial park in Mexico.
Monterrey, Ciudad Juarez, Saltillo, and Mexico City were the cities with the highest investment in the last few years. The key factors were their strategic location, infrastructure and logistics advantages, and other features related to the consolidated industrial ecosystem in these cities. Moreover, in some of them, the investment is focused on both manufacturing operations and logistics as well as data centers.
To truly understand how far a nearshoring approach can grow in Mexico, in 2020, the country registered a 14.9% share of imports3 from United States.
Reasons why to relocate to Mexico
Currently, foreign companies are looking to guarantee supply through resilient logistic chains to cut costs. However, these benefits are only some of the incentives behind relocation.
The China Initiative, where several companies left or curtailed their presence in China, emphasized the risks associated with intellectual property, tariff war with the United States, and labor exploitation speculation in the Asian country. Additionally, supply delays caused by natural disasters such as tropical storms and tsunamis factored into this decision.
This resulted in Mexico becoming the main trading partner of the United States from 2019 until 2020, with production valued at 386 billion dollars, according to data from the U.S. Department of Commerce.
Kenneth Smith4, a former chief negotiator of the USMCA for the Ministry of Economy explained in 2020 how the Offshore era was coming to its end as companies naturally began bringing value chains closer to home to prevent business collapse when situations like the pandemic arise.
As stated by the expert, even when Mexico has faced a similar crisises in the last years, they’ve made the right domestic policy and international trade decisions to continue the country’s trajectory to meet the World Bank and International Monetary Fund projections: becoming part of the G7 by 2050.
Industrial facilities’ availability for relocating operations, which until now were only in remote countries, are critical to reaching that goal.
At Advance Real Estate, we provide Mexican and foreign companies spaces customized to their needs (industrial buildings leasing) strategically located to boost their operations through nearshoring. Contact us, and we will help guarantee your company’s operational and logistical efficiency.
Information source
- https://www.ampip.org.mx/
- t21.com.mx/logistica/…/inversiones-locales-nearshoring-detonan-crecimiento-parques-industriales
- www.eleconomista.com.mx/empresas/El-nearshoring-se-intensificara-en-Mexico-Maersk-20210627-0098.html
- thelogisticsworld.com/manufactura/nearshoring-y-t-mec-claves-para-parques-industriales
- mundi.io/exportacion/que-es-nearshoring
