"Mexico Facing Nearshoring: Untapped Potential and Urgent Challenges to Address"

In a global context where nearshoring has become a fundamental strategy for many economies, Mexico's situation is concerning. A recent study by Bain & Company reveals that, despite its geographical proximity to the United States, the country has managed to capitalize very little on this trend of supply chain relocation. From 2019 to 2023, while Mexico's exports to its northern neighbor increased by 34%, developing Asian countries such as Vietnam, Malaysia, India, and Indonesia experienced a growth of 54%. This phenomenon raises a series of questions about Mexico's ability to compete in an increasingly agile and demanding global market. Jordi Ciuró, a partner in Bain & Company's industrial and operations practice, emphasizes that Mexico, due to its strategic location and production capacity in various goods, should be a key player in this phenomenon. However, the figures indicate that other countries have been better able to capitalize on the opportunities. According to the analysis, more than half of the export growth from these countries to the United States corresponds to products in which Mexico is also a leader, suggesting that there is unexplored potential that the country has not been able to materialize. The sectors that could significantly benefit from nearshoring include electrical equipment, machinery, mechanical components, and metals, with a value exceeding $50 billion. This data highlights that, if the right strategies are implemented to improve the conditions of the productive environment, Mexico could not only recover lost ground but also exponentially increase the value of its exports. The Bain & Company study also presents a more optimistic forecast: if Mexico manages to resolve the challenges it faces, the value of its exports could increase by up to $500 billion by 2030. In contrast, if the current trend continues and only follows patterns of inertial growth, an increase of $310 billion is estimated. This substantial difference underscores the importance of adopting a proactive stance toward the challenges facing the country. However, not all is optimism. Armando Flores, senior manager at Bain & Company, identifies a series of obstacles that have limited Mexico's potential in the realm of nearshoring. Among these are the lack of development in production ecosystems and clusters, deficiencies in logistical infrastructure, restricted supply of energy and water, and a shortage of human talent with the necessary skills to meet the demands of the current market. These factors create a non-competitive environment, exacerbated by high financing costs and insecurity affecting various regions of the country. The situation becomes even more complicated in a scenario where other countries are heavily investing in improving their productive and logistical capacities. Competition in the manufacturing sector does not stop, and every day that Mexico loses in this race could result in a greater disadvantage against its competitors. The urgency of taking action becomes evident when observing how exports from Asian countries continue to grow at an accelerated pace. The implication of these figures is clear: Mexico has the opportunity to double its exports to the United States, provided that the necessary actions are taken to capitalize on nearshoring. However, this requires a commitment from both the government and the private sector to address the structural deficiencies that have prevented the country from reaching its full potential. In this regard, it is imperative to foster a dialogue among the different sectors involved to create a conducive environment for investment and capacity development. Collaboration between educational institutions and businesses can play a crucial role in training a skilled workforce that meets market demands. Finally, the current situation presents a dilemma for Mexico: will it be able to transform its challenges into opportunities? The answer to this question will depend on a comprehensive strategy that prioritizes the modernization of infrastructure, the development of human talent, and the creation of a safe and competitive environment that attracts investments. Only then can the country aspire to be a leader in the dynamics of nearshoring, rather than a laggard in the global race for supply chain relocation.