Mexican manufacturing has been growing due to numerous “nearshoring” benefits to U.S. supply chains. Yet that growth is limited by several factors that this paper explores, focusing on the specific challenges and potential energy-related solutions that will help determine just how successful nearshoring in Mexico ultimately becomes.
Nearshoring is here, no longer just a possibility, but starting to have a tangible impact. Further regionalizing North America’s supply chains through nearshoring helps to reduce dependence on far-flung trade routes, minimizes delays, and achieves greater certainty and control over supply and manufacturing.
That said, Mexico faces another set of challenges as a nearshoring destination given its shortages in reliable and clean energy, infrastructure (roads, ports, water), qualified workforce, and ongoing security concerns.
Electricity has proven to be a particularly complicated challenge given the current state of electricity infrastructure, supply-demand dynamics, and the government policies currently being pursued. As such, it may not only be an additional cost, but a potential deal-breaker for potential nearshoring companies.
This paper offers opinions on how to address the limitations, informed in part by a six-question survey of 32 executives from companies with global footprints that operate in Mexico.