Mexico’s Exports Skyrocket as Nearshoring Increases
Mexico’s exports to the United States are on the upswing, highlighting the increasing popularity of nearshoring. According to Bloomberg.com: “Total Mexican exports rose 5.8% from a year earlier in May to $52.9 billion, the second-highest reading on record.”
Many companies are strategically adopted nearshoring, believing that locating products closer to end markets can fortify their supply chains. In addition to the streamlined communication that can result from proximity to suppliers, nearshoring can also provide potential cost savings. The practice can reduce both transportation and inventory holding costs.
Turning Away from China
This recent turn toward Mexico also illustrates an intentional move away from China. As SupplyChainBrain states: “The U.S.-China trade war and COVID-19 pandemic highlighted the risk of relying too heavily on a single country or region for production and supply.” To minimize these risks, many large companies like Apple and Mazda are starting to shift their supply chains out of China.
Even Chinese companies are trying to cash in on this Mexican manufacturing boom. As the Bloomberg article states, some are setting up production in Mexico to circumvent American tariffs.
What about Canada?
Given the advantages of relocating supply chains closer to home, shouldn’t our neighbor to the North also be experiencing a boom? Although Ontario did recently snag a new Volkswagen battery plan, FreightWaves reports that reshoring is progressing slower in Canada. This can partially be attributed to the labor market. Central Mexico has a very inexpensive cost of labor, making it difficult for Canada to win over companies.
