Nearshoring in Mexico
In today’s rapidly evolving business landscape, nearshoring has emerged as a pivotal strategy, reshaping the global supply chain and manufacturing dynamics. Particularly in Mexico, this trend is gaining momentum, offering substantial benefits to companies seeking efficiency and proximity to the U.S. market.
With a favorable business environment, skilled labor, and robust industrial infrastructure, nearshoring in Mexico is becoming an increasingly attractive option for businesses looking to optimize their operations and reduce costs.
Moreover, the presence of modern industrial parks, such as Central Business Park in Mérida, Yucatán, enhances the country’s appeal as a nearshoring destination. CBPark offers state-of-the-art facilities, comprehensive services, and a secure environment, making it an ideal location for companies to establish and grow their operations.
Top 10 benefits of choosing nearshoring in Mexico
No trade tariffs
USMCA (NAFTA update) ensures tariff-free trade for a wide range of goods, reducing costs.
Access to global markets
Mexico’s 12 trade agreements connect it to over 48 countries, giving businesses access to more than 1.3 billion consumers and over 60% of global GDP.
Competitive labor costs
Since 2008, rising labor costs in China have shifted production back to North America. Despite wage increases and salary adjustments under the USMCA, Mexico remains affordable compared to China, making it a highly competitive option for manufacturing, especially for industries with small margins.
Skilled workforce
Collaboration between universities and industries provides a skilled labor pool, with over 110,000 engineering and technical students graduating each year.
Proximity and time zones
Mexico’s proximity to the U.S. minimizes time zone differences, facilitating smooth operations.
Optimized supply chain
Mexico’s prime location, coupled with efficient logistics and rapid shipping options, allows businesses to streamline their supply chains.
Logistical advantages
With over 50 entry ports between the U.S. and Mexico, shipping costs are significantly reduced compared to routes from China, enhancing your logistics strategy.
Ease of doing business
Mexico ranks highly in competitiveness due to low input costs, quality infrastructure, and reliable services, making it an attractive place for business operations.
Diversified industrial sector
Mexico is a world leader in sectors like automotive (4th largest exporter globally), aerospace (6th largest supplier to the U.S.), and medical devices (8th largest exporter worldwide).
Industrial real estate market
Mexico’s industrial real estate market is the largest in Latin America, with over 23 million sq. ft. available as of Q2 2024. The demand is driven by the manufacturing sector, and vacancy rates remain at a low 1.8%, with an average asking price of USD 4.94 per sq. ft.
NearShoring in Mexico is convenient
Mexico, an increasingly attractive destination for nearshoring
The data proves it
The data speaks clearly: Mexico is establishing itself as one of the most interesting destinations for nearshoring. Its proximity to the United States, the USMCA trade agreement and the presence of a skilled and cost-competitive workforce make it a strategic hub for companies looking to relocate their supply chains.
Description of the graph below.
Source: AmCham Shanghai 2021 China Business Report, released on September 22, 2021. Based on a survey of 338 foreign companies operating in China. Of these, 63 said they would redirect investments from China to other locations, such as Southeast Asia, Mexico, India and the United States.
Description of the graph below. Labor cost.
The chart shows that Mexico has maintained the lowest and most stable labor costs from 2008 to 2022, unlike countries like China, where costs have risen sharply. This makes Mexico a strategic choice for nearshoring, offering cost efficiency and proximity to North American markets.
Nearshoring in Mexico brings production closer to U.S. consumers
Nearshoring, the practice of relocating business processes to nearby countries, has become a cornerstone strategy for U.S. companies aiming to enhance supply chain efficiency. The geographical proximity of Mexico offers a strategic advantage, significantly reducing transit times and logistical complexities compared to offshoring to distant countries like China.
This closer location means that goods can be delivered more rapidly, enabling companies to respond swiftly to market demands and reducing the risks associated with long supply chains.
One of the most compelling reasons for nearshoring to Mexico is the cost advantage. Mexico’s labor costs are competitive, providing substantial savings for manufacturers. As labor costs in China have increased, many businesses have shifted their production closer to home. The implementation of the United States-Mexico-Canada Agreement (USMCA) further enhances this advantage by ensuring tariff-free trade and fostering deeper economic integration among the three countries.
The logistical benefits of nearshoring to Mexico are significant, with over 50 entry ports between the U.S. and Mexico facilitating efficient shipping. This reduces the time products spend in transit by up to 75%, which is crucial for companies relying on just-in-time manufacturing processes.
Mexico also boasts a highly skilled workforce, particularly in engineering and technical fields, supported by robust educational partnerships and vocational training programs. This talent pool enhances communication and collaboration between U.S. companies and their Mexican counterparts.
Mérida, Yucatán, exemplifies the benefits of nearshoring in Mexico. The city has become a burgeoning industrial hub, with modern infrastructure and logistical facilities that attract numerous companies.
Industrial parks like Central Business Park provide state-of-the-art facilities, comprehensive services, and a secure environment, making them ideal locations for businesses looking to establish a strong presence in the region. CBPark’s strategic location, along with its advanced infrastructure and service offerings, positions it as a premier choice for companies aiming to capitalize on the nearshoring trend.
Key benefits of nearshoring to Mexico for manufacturers
Nearshoring to Mexico offers distinct advantages that make it an attractive option for manufacturers:
- Proximity and time zone alignment Mexico’s close geographical location to the U.S. reduces shipping times and costs, facilitating faster turnaround and efficient supply chain management
- Trade agreements and market access.
Mexico’s extensive network of free trade agreements, including the USMCA, provides tariff-free access to major global markets, making exports easier and more cost-effective.
- Favorable business environment
Mexico offers a stable economic and regulatory environment that supports foreign investment, encouraging businesses to establish and expand their operations with confidence.
- Economic stability and growth
Mexico’s growing economy and strategic location continue to attract significant foreign investment, fostering a favorable environment for manufacturing operations.
Central Business Park: a prime nearshoring hub
Central Business Park in Mérida, Yucatán, stands out as a premier destination for companies embracing the nearshoring trend. Located in the Hunucmá industrial corridor, CBPark offers state-of-the-art infrastructure, including reliable utilities, advanced security systems, and comprehensive maintenance services.
Businesses benefit from the park’s strategic location, which provides easy access to major transportation routes and ports, facilitating efficient logistics and distribution. Additionally, CBPark supports companies with a range of services such as 24/7 security, commercial areas, and business centers.
The park’s commitment to sustainability and environmental standards ensures that operations are both efficient and responsible. For manufacturers looking to optimize their nearshoring strategy, CBPark provides an ideal environment to establish and grow their procedures successfully.
Discover how CBPark can support your nearshoring strategy and help you achieve your business goals. Contact us to learn more about our offerings and how we can help your business thrive in Mexico.
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