Mexico attracts international investment in the face of the supply chain crisis in North America

In the last two years, there has been a great disruption in supply chains that is negatively impacting all manufacturing industries, mainly the automotive industry, cell phones, household appliances, electronics, etc., since most of the companies depended on other countries for their components or finished products.

Mexico City, June 15 2022 – In this context, multinational companies with operations in Asia are turning to Mexico to produce locally and meet the growing demand for products in the United States and Canada. This trend is described as nearshoring, the practice of moving manufacturing processes from one country to relocate them to a nearby one that has similar cost advantages. According to CBRE research reports, the presence of multinational companies seeking to serve the US and Canadian markets from Mexico is consistently increasing, which explains the 26% increase in the occupancy of spaces in Mexican industrial parks during 2021 compared to the previous year. In some cities in the north of the country, such as Monterrey and Tijuana, the space available in industrial parks is very limited.

According to SGS, a world leader in testing, inspection and certification, companies that are installing in Mexico in the context of nearshoring must take into account that their products must comply with the regulations of each market. Therefore, laboratory tests and product certifications are crucial to comply with regulations and export to the North American market.

“It is important to mention that the global markets and specifically the North American ones expect that all those products that are marketed in their territory comply with quality regulations such as ASTM standards, Consumer Product Safety Act (CPSA), Consumer Product Safety Commission, FDA, USDA in the case of the United States”, comments Julian Molina, leader of the Connectivity & Products sector of SGS Mexico.

How much will nearshoring increase in Mexico?

With nearshoring in Mexico, multinationals reduce their delivery times and costs in supply chains, taking into account the renegotiation of the Free Trade Agreement between Mexico, the US and Canada (TMEC), which grants tariff preferences to products manufactured in Mexico. Producing and exporting from Mexico vs. Asia allows to reduce the time to market from 1 month to 48 hours and helps to reduce the average transportation cost per container by 90%.

According to CBRE research reports, the vehicle and auto parts sector was the main driver of nearshoring transactions. The share of these contracts went from 12% to 50% in 2021 and this trend will continue for the next 2 years. The Mexican automotive industry is expected to continue to be one of the most active in driving this trend due to the diversity of countries involved in the production chain and thus be able to maintain sufficient supplies to meet the demand for all types of items.

“At SGS Mexico we want to help companies in the sector to meet their export objectives to international markets. We have certified and specialized laboratories throughout the Mexican territory with highly trained professionals to perform a wide range of tests, in addition to accredited laboratories around the world”, concludes Julian Molina, leader of the Connectivity & Products sector of SGS Mexico.

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