PARTNERS LEAD THE WAY IN MEXICO C ompanies that sell into the U.S. market and establish operations in Mexico— either in addition to or instead of their locations
Driving the Nearshoring Trend
companies had established manufacturing operations in Mexico long before the term “nearshoring” gained prominence. “ Maquiladoras (manufacturing export operations) have operated in Mexico for more than 60 years,” says Juan Carlos Rodríguez, managing director of Cushman & Wake eld’s Tijuana region. While the earliest maquiladoras were primarily tied to simple, labor- intensive processes that integrated little or no technology, the current ones provide the backbone of the North American supply chain for several key sectors, including automotive, aerospace, medical devices, and high- end consumer electronics, Rodríguez says. Today, companies such as Boeing, Medtronic, Honeywell, Bombardier, Samsung, Sony, and Toyota have established operations in Baja California.
Several factors have been driving this shift. The enactment of the United States-Mexico-Canada Agreement (USMCA) helped boost the rapid growth of nearshoring in the Mexican industrial market, according to the Nearshoring Q4 2023 report from CBRE, a global commercial real estate services and investment rm. The pandemic hammered home the potential for disruptions to supply chains that stretch across the globe and require multiple modes of transportation to reach their nal markets, says Ted Stank, professor of supply chain management at the University of Tennessee. This has prompted companies to look for sources of supply closer to major demand markets. In previous Kearney surveys of chief executive of cers, more were evaluating moving their supply chain closer to home, says Shay Luo, partner in the strategic operations practice and co-author of Made in America . “More of them took actions on implementing this idea in the past two to three years,” Luo says. Offering Shorter Lead Times When North America is one of a company’s major markets, locating operations in Mexico, rather than in other regions of the world, simpli es and shortens lead times. That, in turn, enables companies to respond more quickly to market changes. For many U.S. companies, the average cycle time between order placement and receipt is likely less than a month for a Mexican supplier, versus three to six months for a supplier in Asia, Stank says. “Being able to respond to demand with shorter cycle times and less uncertainty is a huge bene t,” he says. Shorter lead times also allow greater exibility in production, says Brad Colvin, director of business development and logistics with Tri-National, a premier USMCA transportation and logistics provider.
in other parts of the world—often gain shorter, more exible supply chains and access to a talented labor pool. As a result, they’re able to provide their customers with timely, reliable service. In 2023, for the rst time in a decade, Mexico surpassed China as the largest exporter to the United States, according to “Made in America: Here to Stay?” a report from Kearney, a global management consultancy. Between 2019 and 2023, U.S. imports of Mexican manufactured goods jumped by nearly one-third, to $422 billion. Imports from Canada have also steadily increased since the pandemic, Kearney found. To be sure, numerous global
With 52,000 employees in around 60 countries, Cushman & Wakefield can help organizations anywhere optimize their supply chains.
70 Inbound Logistics • May 2024
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