*Original Post by NIKKEI Asia*

WASHINGTON/BEIJING — China was likely knocked off the perch as the top exporter to U.S. for the first time since 2006 last year, outpaced by Mexico as tensions between the world’s two largest economies reshape supply chains.

American goods imports from China dropped more than 20% on the year for the January-November period, according to U.S. Commerce Department data released this week. China accounted for 13.9% of total U.S. imports, the smallest share since 2004, after peaking at more than 21% around 2017. U.S. exports to China have stayed roughly flat on the year.

Mexico is set to take the lead for the full year for the first time since 2000. U.S. imports from the country are on track to set a record high in 2023, and its share of the total topped 15% for the first 11 months of the year.

Imports from the European Union also reached an all-time high for that period. While shipments from the Association of Southeast Asian Nations dipped on the year, the tally was still the second highest on record, and the bloc’s share of the total has doubled from a decade ago.

Japan’s slice of the U.S. import pie remains below 5%, even as the dollar’s appreciation boosted the value of its shipments in yen terms last year.  Japan’s share has fallen more than half since 2000 amid a long slide as Japanese manufacturers stepped up U.S. production.

The U.S. is increasingly diversifying suppliers for products like consumer electronics for which it had relied heavily on China.

Smartphone imports from China fell around 10%, for example, while imports from India soared fivefold. Laptop computers saw a roughly 30% drop from China but quadrupled from Vietnam.

This trend has been encouraged by a push by U.S. President Joe Biden’s administration for “friendshoring” — keeping supply chains within allies and partner countries. The Biden White House has also maintained the tariffs on Chinese products worth $370 billion imposed by predecessor Donald Trump.


After China’s accession to the World Trade Organization in 2001, Washington initially opted to cooperate with Beijing on trade, in part to tap the massive Chinese consumer market. But the Trump administration, worried about China’s growing power and the impact of cheap Chinese products on American manufacturing, took a tougher stance, sparking rounds of tit-for-tat tariffs.

The Biden administration is considering further tariff hikes on electric vehicles, solar power equipment and less-advanced semiconductors, with a decision expected in the first half of this year.

The Federal Reserve has raised concerns about the impact of the decline in U.S.-China trade on inflation. Some analysts see the switch to domestic production of goods that were previously bought cheaply from China pushing up prices by tightening the labor market.

Chinese companies are responding by changing how they do business with the U.S., with some opting to invest more in Mexico. Hisense in 2022 started mass production at a $260 million factory making refrigerators and other appliances for the North American market. Automaker JAC Motors has set up an assembly plant in Mexico, and SAIC Motor plans to build a factory there as well.

Some of the “surging U.S. imports from a range of countries like Mexico and Vietnam are ‘transshipments'” rather than the new local manufacturing that Washington hopes to see with friendshoring, said Niels Graham at the Atlantic Council, an American think tank. “Chinese [foreign direct investment] into Mexico is growing, signifying Chinese manufacturers setting up shop there to help with final assembly.”

The Chinese government is rushing to reduce its reliance on the U.S. for exports.

It looks to boost the yuan’s role in international payments, using its own currency instead of the dollar in transactions with Russia, the Middle East and South America. Chinese exports to Russia jumped by more than half on the year in January-November 2023, setting a record even in full-year terms.

China’s auto exports grew about 60% on the year during that period, according to Chinese customs data. Most of these are gasoline-fueled vehicles facing weak domestic demand, which are being sold at low prices in the Middle East and Africa, a logistics industry source said.

*All information presented here, was first published on January 11, 2024 by on NIKKEI Asia

Original Source: https://asia.nikkei.com/Economy/Trade/China-set-to-lose-crown-as-top-U.S.-exporter-after-17-years

*Original Post by Brian Straight, Supply Chain Management Review*

The interest in sustained engagement with China is evolving among North American companies, with nearly 75% of firms surveyed by AlixPartners indicating a current reduction in their exposure. Over half of these companies plan to further diminish their exposure by more than 10% in the coming year.

AlixPartners conducted a global survey, focusing on supply chain professionals and segmented the results by region. In North America, 100 executives from five industries participated, with 60% representing companies boasting at least $5 billion in sales.

The survey uncovered a widespread objective among companies to achieve a 40% reduction in their reliance on China for sourcing, with the U.S. (at 30% increase) and Mexico (at 10% increase) anticipated to experience the most significant gains. In early stages, companies are actively deciding on “make vs. buy” strategies and investing in supplier development, logistics, distribution, and global procurement costs.

These findings align with other recent reports. An August report from AlixPartners highlighted support nearshoring received from new U.S. regulations and legislation. Which included the CHIPS Act, Infrastructure Investment and Jobs Act, Inflation Reduction Act, and the Build America, Buy America Act. Tariffs imposed from 2018 to 2020 on Chinese imports to the U.S. also contributed to this shift.

Accenture’s conducted a survey in the first quarter of 2023 which involved 1,230 senior executives across 14 countries (350 from the U.S.) and 11 industries. Which revealed that 85% of companies plan to manufacture and sell most of their products in the same region by 2026, compared to the current 43%. In the U.S., 91% of companies expressed this intention, up from 52% today.

Furthermore, global expectations foresee nearly doubling regional sourcing to reach 65% by 2026 from the current 38%. with an anticipated increase in the U.S. from 50% to 82% by 2026. U.S. companies are currently investing an average of $65 million in reshoring and production facility relocation, with an expected acceleration to $188 million by 2026.

The most recent AlixPartners’ survey highlighted that total costs are steering this trend, as China is no longer the leader in total landed cost, especially when considering risk.

The report said, “Nearshoring comes with its own unique list of challenges, with labor availability, CapEx, and location selection topping the list. The past few years, however, have taught us that the priority list can change due to unforeseen events that sometimes crop up seemingly overnight.” It also mentione that Special attention needs to be paid to developing a better understanding of U.S. incentives. While there is familiarity with federal and local incentives (including the Inflation Reduction Act (IRA) or the CHIPS and Science Act (CHIPS) programs) and planning to utilize them, this is still where companies feel the least ready.”

Despite awareness, the survey revealed that only 42% of companies plan to utilize these U.S. federal incentives.

*This report by Brian Straight was first published on December 27, 2023.* All Information presented here, was redacted by NAI Mexico’s Corporate Communications Team, based on the original article published by “Supply Chain Management Review”.


Trade Gowth of Mexico
*Original Post by Paweł Rudnik, Warsaw Institute*

Trade and investment activities between Washington and Mexico have increased in the last year. This is a result of the recent disputes concerning economic matters between the United States of America (U.S.) and China due to geopolitical tensions.

This shift has seen the country step in as America’s leading trade partner, replacing China and Canada. This transition has had a significant impact on China, which has long-established trade relationships with the world’s largest economy.

Mexico’s Dominance in U.S. Trade Statistics

Pawel’s research reveals that China exported goods to the U.S. valued at $239.06 billion. During the same period, Mexico has remained the top U.S. trading partner, with a $274.95 billion trade total. It’s important to note that this information only covers the first 7 months of 2023.


During July, 15% of the total export and import goods of the U.S. that originate from Mexico. On the other hand, only 14.6% of such goods come from China. As a matter of fact, in July, Mexico surpassed China in trade with the U.S.

Mexico has now assumed a dominant position as a primary export market, surpassing China. From January to July, Mexico and the U.S. traded $186.96 billion in goods and shipped $83.25 billion worth to China.

Expanding Presence of Mexico in Global Supply Chains

trade Mexico-China

The significance of shifting supply sources to Mexico becomes particularly important in the fifth year of the ongoing U.S.-China trade conflict, which continues to escalate. The United States has imposed retaliatory tariffs ranging from 7% to 25% on $350 billion worth of imports from China. 

Additionally, the U.S. administration mandates that 75% of a vehicle’s components must originate from North America. Notably, the transit time for shipping a container from China to the United States is a minimum of three weeks, whereas it takes just three days from Mexico.

This shift to Mexico could lead to improved production management and reduced labor costs. The manufacturing wage cost in Mexico averages $480. This amount is comparatively lower than China’s $840.

Mexico’s Contribution to the Growth of North American Trade

The role of Mexico in trade relations with the United States is set to expand. During a July meeting of the USMCA Free Trade Commission, Mexico, the United States, and Canada made a commitment to increase North American production to account for 25% of their current imports from Asia. This initiative aims to foster regional economic integration. It is expected to contribute approximately two percentage points to Mexico’s gross domestic product.

Financial analysts project that, in the next decade, an inflow of between $60 billion and $150 billion could be directed toward Mexico as part of efforts to relocate production closer to consumer markets. As a result, China’s portion of the worldwide manufacturing sector could encounter a period of slower growth. 

Trade usa-mexico

Nonetheless, given its comparatively smaller economy and a population approximately one-tenth the size of China’s, Mexico is not in a position to assume China’s role as a primary supplier.

Trade Outlook Amidst U.S.-China Diplomacy

In recent months, President Joe Biden has actively worked to mend the strained relationship between the United States and China, which had deteriorated in recent years, with notable events such as the shooting down of a Chinese spy balloon in February.

In June, Secretary of State Antony Blinken gathered with China’s leader Xi Jinping. Additionally, Treasury Secretary Janet Yellen recently had a four-day trip to China. Ms. Yellen expresses her concerns about various issues. Her concerns include China’s “unfair economic practices.” She emphasizes her belief that “the world is large enough for both countries to thrive.”

*This report by Paweł Rudnik was first published on September 25, 2023.* All Information presented here, was redacted by NAI Mexico’s Corporate Communications Team, based on the original article published by “Warsaw Institute”.
Nearshoring and logistics

The Evolving Global Political-Economic Landscape with Nearshoring Opportunities.

In a rapidly evolving global landscape, manufacturing industries face a multitude of challenges and opportunities. “Geopolitical shifts, supply chain dynamics, and economic uncertainties have prompted companies to rethink how they approach production, competitiveness, and nearshoring. In this article, we delve into the insights provided by Boston Consulting Group (BCG) to navigate this complex terrain successfully.

This article explores a strategic framework comprising five pivotal steps that empower businesses to adapt to these transformative forces. We offer actionable strategies for thriving amid change, including clear strategy, visibility, cost assessment, informed nearshoring, and governance. Join us on this journey as we unveil the keys to staying agile and competitive in today’s dynamic manufacturing environment.

Trade Wars, the Pandemic, and Geopolitical Tensions.

The international political-economic system has been prominently featured over the past five years due to various tensions that have arisen within it, such as trade wars, the pandemic, and even geopolitical tensions, all of which impact nearshoring decisions. Collectively, these factors have exacerbated supply chain issues, creating logistical bottlenecks. This, in turn, has necessitated a global-level reconfiguration of where companies manufacture and source their products.

The Rise of New Manufacturing Powers and Nearshoring Opportunities.

A report published on September 21, 2023, by Boston Consulting Group (BCG) titled “Harnessing the Tectonic Shifts in Global Manufacturing” helps shed light on the magnitude of this issue and the resulting changes.

BCG released information estimating that over 90% of manufacturing companies in North America have successfully relocated or are in the process of relocating their production facilities to various countries. It’s worth noting that this 90% encompasses only the companies surveyed by BCG.

Potential for Development as Emerging Powers and Nearshoring Choices.

According to BCG, the primary factors driving these changes in the production processes of North American companies can be attributed to three key phenomena in the international system, one of which is the nearshoring option.

  1. The uncertainty in the international geopolitical system: This phenomenon is primarily driven by tariff costs imposed by the United States of America (USA). These tariffs have undermined confidence in China as the primary export platform for several American industries.
Emptry Congres
  1. The rise of Mexico, Southeast Asia, and India: This triad has garnered attention for its competitive production costs, abundant labor availability, and substantial development potential across various industries. Thanks to these attributes, they are widely regarded as the next manufacturing powerhouses.
  1. Morocco and Turkey: The aforementioned duo had a substantial expansion capacity in their manufacturing processes due to their proximity to the European Union (EU). However, their advantages don’t stop with the EU; their geographical positions also grant them excellent access to other markets. This advantage translates into competitive production costs when compared to the Chinese market. Crucially, these changes are being driven by the United States in response to a growing demand for local production.

Impact of Wage Inflation on Global Competitiveness and Nearshoring Considerations.

As previously noted, recent changes have influenced the global market and manufacturing companies into a trade-off to maintain competitiveness. It’s important to emphasize that these considerations are specifically tied to nearshoring. In this context, wage inflation has become a direct negative factor for manufacturing companies. While this may benefit the average worker, who has no concerns about this phenomenon as it increases their purchasing power, on a global scale, it translates into overall inflation. This is because the cost of living and purchasing power show significant disparities due to the increase in costs for the end consumer.

The BCG report indicates that wage inflation has outpaced production gains in most regions. This is evident in a 21% increase in labor costs in the USA between 2018 and 2021, and a 24% increase in China during the same period. Similarly, Mexico experienced a 22% increase, while India saw an 18% increase. However, these increases do not rule them out as highly competitive manufacturing markets at present. Therefore, these two markets are solid options when it comes to discussing Nearshoring.

Market-Back Approach and Integrated Marketing Communication (IMC).

In order to achieve better outcomes, BCG recommends in its report that North American companies adopt a “market-back” approach. In other words, companies should seek their own mechanisms to establish and design a coordinated marketing process to increase their chances of success, considering that Integrated Marketing Communication (IMC) programs play a crucial role in this endeavor.

BCG’s Recommendations for Addressing Changes with Nearshoring in Mind.

To be effective, this process should commence with structuring it based on the end market. Subsequently, design a comprehensive manufacturing process, manufacturing footprints, and supply networks. This may allow to include of nearshoring options. In fact, this report makes it clear that there is a complete 5-step process to reach such an approach.

Step 1: “Establish a Clear Strategy for Nearshoring Success.”

The first step involves creating a manufacturing footprint. This involves considering the company’s starting point and the challenges faced by project leaders, including those related to nearshoring. Recognizing that this challenge arises naturally due to no market having all necessary factors to fully meet production demands is crucial. Thus, making early-stage adjustments to the production footprint can mitigate and resolve issues, while also optimizing available supply networks.

Step 2: “Creating End-to-End Visibility.”

The first step is to establish “end-to-end visibility,” including visibility into nearshoring decisions. This capability involves tracking and monitoring products and components throughout the supply chain, from acquisition to customer delivery. Indeed, meticulous tracking of each process stage, capturing all relevant data, and centralizing it in a data management system are essential.

This enables continuous review, analysis, and extraction of valuable insights to enhance business processes, support long-term financial planning, and inform strategic decision-making, including nearshoring choices.

Additionally, this visibility leads to improvements in six key supply chain areas:

  1. Procurement and Inventory Management.
  2. Finance.
  3. Logistics.
  4. Operations.
  5. Quality Control.
  6. Sales and Customer Service.

Step 3: “Assessing Landed Costs.”

This calculation encompasses all costs related to shipping each item, including the initial product price, shipping or transportation expenses, taxes, tariffs, customs clearance, insurance, packaging fees, handling fees, and even currency exchange rates.

Step 4: “Consideration of Trade-offs and Compromises in Location Decisions.”

Equally important is considering “trade-offs” and the risks linked to location choices when setting up operations in a specific region or market. Considering production and delivery capacity, as well as evaluating the necessary capital investment and staff training to meet the demand, becomes essential when choosing a specific location.

Step 5: “The Importance of a Clear Governance Structure.”

Finally, it is crucial to have a clear governance structure. The governance structure refers to how an organization is designed and organized to make decisions and exercise control. Then include a well-structured operating model, taking into account nearshoring considerations.

Success heavily relies on the governance structure in use, allowing the leadership team to maintain a comprehensive perspective and framework for long-term success. When executed correctly, nearshoring initiatives can indeed thrive.

Final Thoughts on Navigating the Dynamic Manufacturing Landscape with Nearshoring Strategies.

In the ever-changing global manufacturing landscape, these strategic insights offer a valuable roadmap for businesses, including those considering nearshoring. This article covers strategy, nearshoring decisions, and governance structures, explaining key factors and providing actionable steps for successful navigation.

Furthermore, to stay at the forefront of industrial real estate market trends, make sure you don’t miss the quarterly research reports that NAI Mexico generates. These reports are a valuable resource for staying informed and maintaining a competitive edge in this evolving industry. Stay agile and continue to embrace transformation within the manufacturing sector.

*This article is based on a report published on September 21, 2023, by Boston Consulting Group (BCG). * All Information presented here, was redacted by NAI Mexico’s Corporate Communications Team, based on the report “Harnessing the Tectonic Shifts in Global Manufacturing.”


Original post by The Canadian Press.

WASHINGTON – In a bid to counter China’s growing geopolitical influence, a bipartisan team of U.S. senators is spearheading efforts to broaden the scope of the acclaimed U.S.-Mexico-Canada Agreement (USMCA) to include select Latin American nations.

Expanding the USMCA: A Bipartisan Effort.

U.S.A. Senators: Bill Cassidy & Michael Bennet

Earlier this year, Senator Bill Cassidy of Louisiana enlisted the support of his Democratic counterpart, Senator Michael Bennet of Colorado, to jointly introduce the Americas Trade and Investment Act.

This legislation aims to expand the USMCA, often referred to as CUSMA in Canada, to forge a more robust economic alliance.

Benefits of Investing in Neighbors.

“From a U.S. perspective, investing in our neighbors provides a higher return on foreign expenditure compared to overseas investments,” Senator Cassidy emphasized during a USMCA panel discussion. “As Mexico prospers, so does the United States, and vice versa. That’s the beauty of capitalism – it’s a win-win for everyone. That’s precisely what I’m striving for – a victory for all.”

The Council of the Americas Report.

The recent launch of a new report by the Council of the Americas, which delves into the concept of “accession” to the USMCA, underscores the importance of reinforcing economic strength throughout the Western Hemisphere.

White House’s Commitment to Hemispheric Trade.

This notion of hemispheric trade has not escaped the notice of the White House. During last year’s Summit of the Americas, President Joe Biden introduced the Americas Partnership for Economic Prosperity, one of several trade “frameworks” designed to enhance economic and geopolitical bonds among key U.S. allies.

Joe Biden

A Pragmatic Approach: “Docking” Partners into USMCA.

The report advocates for “docking” current or future U.S. trading partners into the USMCA as a more pragmatic and effective approach to bolstering regional integration.


The success of the USMCA.

Juan Carlos Baker

Juan Carlos Baker, one of the report’s co-authors and a lead negotiator for Mexico during the NAFTA talks that led to the USMCA’s creation in 2018, hailed the agreement as a resounding success for all three countries.

He stated, “Canada and Mexico are now the preferred partners of the United States, and vice versa. Given the high levels of uncertainty and volatility globally, aligning potential allies around shared values and objectives is a sensible approach for North American countries.”

Challenges of Reopening the Agreement.

However, former diplomat Louise Blais, an advisor for the Business Council of Canada, cautioned that reopening this hard-won agreement may face resistance due to political uncertainties and volatility.

Louise Blais

She noted, “There is no consensus in the U.S. government on this issue. I would not even qualify this discussion as having hit Main Street, despite Sen. Cassidy’s efforts.”

Mandated Review in 2026.

The USMCA mandates a review involving all three parties in 2026, with a requirement to maintain the agreement. Most Canadian advocates prioritize successfully navigating this process.

Canada’s Stance.

While the Council of the Americas champions trade and investment across the Americas, Blais emphasized that the immediate priority should be renewal, not amendment.

Canada’s International Trade Minister, Mary Ng, has been actively advocating for prompt trilateral endorsement, reiterating that the current agreement lacks mechanisms to allow new countries to join.

Potential Latin American Candidates.

The report does not delve into the specific Latin American countries that should be invited to join the USMCA, but there are evident candidates with robust trade connections to the U.S. These candidates include Barbados, the Dominican Republic, Chile, Colombia, Panama, Peru, Uruguay, Ecuador, and Costa Rica, which has outgrown its existing Central American trade agreement with the U.S.

Costa Rica’s Aspiration.

Manuel Tovar Rivera

Costa Rica’s Minister of Foreign Trade, Manuel Tovar Rivera, highlighted the nation’s burgeoning medical devices and semiconductor industries, as well as growth in aerospace and automotive sectors, areas of particular interest to North America.

He stressed that Costa Rica is a different country with different challenges and aspirations.

A Strong Message on Labor and Environmental Standards.

Furthermore, accession to the USMCA would signal the importance of strengthening labor and environmental standards, offering a potential reward to countries seeking reform.

However, these proposals come at a politically sensitive moment in the U.S., with former President Donald Trump leading the race for the Republican nomination in 2024. Additionally, Mexicans are preparing for upcoming elections, while Canada faces a federal election within the following year.

Considering Domestic Politics

The report acknowledged these political complexities, stating, “Expanding the USMCA will demand an articulated strategy that considers the domestic political situation in Mexico, the United States, and Canada, since the three countries will have general elections in 2024 and 2025.”


*This article by The Canadian Press was first published on September 14, 2023.* All Information presented here, was redacted by NAI Mexico’s Corporate Communications Team, based on the original article published by “The Canadian Press”.

MEXICO – Mexico remained in 11th position among the main recipients of Foreign Direct Investment (FDI) in the world in 2022, with US$35 billion, an annual increase of 12%, informed the United Nations Conference on Trade and Development (UNCTAD).

In its World Investment Report 2023, UNCTAD indicated that this classification was led by the United States, with US$285 billion, followed by China, with US$189 billion.

With these results, flows to the United States fell by 26.5% and those to China increased by 4.4%.

This was followed by Singapore ( US$141 billion), Hong Kong (US$118 billion) and Brazil (US$86 billion).

Globally, FDI declined 12% in 2022 to US$1.3 trillion, after a strong rebound in 2021 following the sharp Covid-19 pandemic-induced drop in 2020.

The decline was mainly due to lower financial flows and transactions in developed countries. The slowdown was driven by overlapping crises: the war in Ukraine, high food and energy prices, and debt pressures.

The fall in FDI flows was mainly due to financial transactions by multinational companies in developed economies, where FDI fell by 37% to US$378 billion.

The Report, subtitled Investing in Sustainable Energy for All, shows that much of the growth in international investment in renewable energy, which has nearly tripled since the adoption of the Paris Agreement in 2015, has been concentrated in developed countries.

Among developing countries, Mexico ranked 8th in attracting FDI in renewable energy from 2015 to 2022, with close to US$40 billion, a ranking in which Brazil was at the top, with more than US$110 billion.

México puede ser el principal aliado de Estados Unidos en el reforzamiento de las cadenas productivas, planteó la Cámara de Comercio de Estados Unidos (AmCham México).

México puede ser el principal aliado de Estados Unidos en el reforzamiento de las cadenas productivas, planteó la Cámara de Comercio de Estados Unidos (AmCham México).

Este punto forma parte del documento Ruta 2024-2030, difundido este miércoles y en el que la AmCham México recopila 22 propuestas divididas en seis capítulos que se basan en su propia Agenda Estratégica sobre México y Norteamérica.

Trabajar en la relocalización (nearshoring) y en las cadenas productivas regionales representa una “oportunidad histórica” para México, coincidieron Daniel Baima, presidente de AmCham México, y Pedro Casas Alatriste, director general y vicepresidente ejecutivo de la Cámara.

México tiene importantes ventajas competitivas para consolidarse como el principal aliado de Estados Unidos y reforzar las cadenas de proveeduría regionales de Norteamérica”, indica el documento.

La Cámara identifica tres sectores estratégicos en donde se pueden atraer eslabones de la cadena de suministro, generando alto valor agregado para la economía del país: electromovilidad, insumos para la salud y semiconductores. Las siguientes son sus puntualizaciones al respecto.

En primer término, en electromovilidad, propone la creación de un marco regulatorio holístico que tome en consideración las regulaciones en materia de economía circular, estándares de calidad y seguridad mínimos.

Asimismo, sugiere la creación de un esquema de incentivos, fortalecer y fomentar la integración de las cadenas de valor, así como mejorar la logística de comercio, reforzar las redes de transmisión y actualizar la currícula para carreras técnicas y de ingeniería.

También sería necesario promover y generar incentivos que permitan acelerar el uso de opciones de movilidad híbridas y eléctricas de transporte público, privado y de plataformas digitales.

Por otro lado, a fin de atraer inversiones en el sector de insumos para la salud, se requiere promover la aceleración regulatoria y reducción promedio de tiempo de aprobación a través de la implementación efectiva de fiabilidad en línea con los acuerdos de equivalencia regulatoria con socios comerciales.

En especial, con Estados Unidos se necesita impulsar la convergencia regulatoria entre agencias a través de mesas de diálogo a fin de homologar o, en su caso, simplificar y/o eliminar procesos.

La Cámara propone la facilitación regulatoria para la conformación y entrada de nuevas empresas a México a través de una ventanilla única para trámites, así como habilitar procesos expeditos para la aprobación de protocolos clínicos que permitan incrementar de forma importante la inversión en investigación clínica en la región.

Finalmente, para apuntalar el desarrollo de la industria de semiconductores, la AmCham México considera que se debe promover carreras especializadas y cualificar el talento en el sector de la alta tecnología.

Además, se necesita mapear los minerales y químicos críticos para conocer las capacidades de la industria en el país.

Hay que trabajar en generar un ecosistema para incentivar a las empresas que inviertan o expandan sus operaciones en México y a los proveedores de segundo nivel a que formen parte de la cadena de suministro. Es fundamental promover acciones de facilitación comercial y logística en los aeropuertos y aduanas.


Source: El Economista

In this GlobalAutoIndustry.com Audio Interview “Insights on Mexico Industrial Real Estate: Focus on the Bajio and Northeast Automotive Regions – June 2023” Ron Hesse Interviews Fernanda Martinez and Edgardo Hernandez, Regional Directors with NAI Mexico.

GlobalAutoIndustry.com’s latest Audio Interview “Insights on Mexico Industrial Real Estate: Focus on the Bajio and Northeast Automotive Regions – June 2023” features Fernanda Martinez and Edgardo Hernandez, both with NAI Mexico. Ms. Martinez is Regional Director serving the Bajio Region, and Edgardo Hernandez is Regional Director serving the Northeast Region. NAI Mexico, part of the NAI Global network, is a leading industrial and commercial real estate firm, and operates 25 offices across Mexico and works with global customers, including many in the automotive industry.

Audio Interview Guest
Ms. Fernanda Martinez, Regional Director – Bajio Region
Mr. Edgardo Hernandez, Regional Director – Northeast Region
NAI Mexico

To download transcript of this Interview, please click here.

In the 9-minute Audio Interview, Ms. Martinez and Mr. Hernandez discusses these questions:

• Fernanda, what is the latest news, or what are recent trends regarding industrial & commercial real estate in the Bajio Region, including Queretaro and Guanajuato?
• Fernanda, how do you see the automotive industry’s impact on the local industrial real estate market?
• Edgardo, what is the latest news, or what are recent trends regarding industrial & commercial real estate in the Northeast Region, including Monterrey and Saltillo?
• Edgardo, how do you see the automotive industry’s impact on the local industrial real estate market?

About Ms. Fernanda Martinez and Mr. Edgardo Hernandez:
Regional Directors, NAIMexico

Ms. Martinez is the Regional Manager for the Bajio Region offices; she oversees projects in Queretaro, San Luis Potosi and Guanajuato. She specializes in Industrial Real Estate planning, acquisition and sales. The planning includes comparing existing operations in Mexico vs. other global locations. She is experienced in all facets of tenant/buyer and owner representation. As a commercial real estate broker in Mexico, she has completed land sales, facility lease and build to suit transactions in North and Central Mexico.

Mr. Hernandez is based in Monterrey/Saltillo, North East Mexico region. Through his 11 years representing global firms in Mexico, Mr. Hernandez offers senior transaction, advisory, investment and project management experience to support every client requirement. Edgardo co-leads a senior 5 member team, with an average experience level of 12 years per person. The team delivers integrated planning and implementation for industrial, retail, and office services. Edgardo’s real estate practice includes fully integrated industrial real estate solutions, including: Tenant Representation, Agency Representation, Build-To- Suit transactions, Project Bid Management, Financial Analysis and Valuation Services. His experience includes aerospace, automotive, medical device, electronics and all industrial sectors, often with Fortune 100 firms.

Navy Minister José Rafael Ojeda Durán asserted Thursday that Mexico will become a “world shipping power” thanks to the construction of a trade corridor between the Pacific Ocean and the Gulf of Mexico.

In an address in Ciudad Madero, Tamaulipas, on Mexico’s National Navy Day, Ojeda noted that the government is building a “new route for global trade” between Salina Cruz, Oaxaca, on the Pacific side and Coatzacoalcos, Veracruz, on the Gulf coast.

“In the near future we will become a world power in the field of shipping,” he said.

The Isthmus of Tehuantepec Interoceanic Corridor will have a modernized railroad and upgraded highways between the port cities of Salina Cruz and Coatzacoalcos as well as 10 new industrial parks.

The government is touting the corridor as an alternative to the Panama Canal given that it will connect the Pacific and Atlantic oceans across a relatively narrow strip of land.

Once the new railroad is operational, freight shipped from Asia, for example, could be unloaded in Salina Cruz and put on a train for a journey of approximately 300 kilometers to Coatzacoalcos. It could then be reloaded onto another ship before continuing on to the Gulf or Atlantic coasts of the United States.

Ojeda described the multi-billion-dollar trade corridor undertaking, which also includes the modernization of the Salina Cruz and Coatzacoalcos ports, as “one of the projects of the century” and asserted that it will stimulate economic development in the region and the entire country.

President López Obrador, who also spoke at the Ciudad Madero National Navy Day ceremony, announced in 2021 that the navy would be given control of the trade corridor once it is completed. He said Thursday morning that freight trains will begin running on the new railroad in August and that passenger services will begin at a later date.

To facilitate the rail project, López Obrador published a decree on May 19 that ordered the “immediate temporary occupation” of three sections of railroad in Veracruz operated by Ferrosur, a rail subsidiary of the mining and infrastructure conglomerate Grupo México.

The president announced Thursday that the government had reached an agreement with Grupo México under which the conglomerate will permanently cede control of the sections, which were taken over by the navy the day the decree was published.

SOURCE: Mexico News Daily

Nearshoring, in which manufacturing is relocating from Asia—mostly China—to North America—mostly Mexico—is one of the key drivers behind creation of CPKC (Canadian Pacific Kansas City), the first and only transnational, single-line railroad linking Canada, the United States and Mexico. CPKC, the merger of the Canadian Pacific and Kansas City Southern, was originally announced on March 21, 2021, roughly one year after USMCA (United States-Mexico-Canada Agreement) was ratified, replacing NAFTA (North American Free Trade Agreement), which had been in place since the mid-1990s and helped drive privatization of Mexico’s national railroad system.

Some background: On June 19, 2019, the U.S. Senate passed the Protocol to replace NAFTA with USMCA, described by former U.S. Trade Representative Robert Lighthizer as “the gold standard by which all future agreements will be judged, and citizens of all three countries will benefit for years to come.” U.S. The House of Representatives passed the agreement on Dec. 19, 2019; the Senate passed it on Jan. 16, 2020. The Canadian House of Commons and Senate passed the USMCA Implementation Act on March 13, 2020.

Three years later—March 14, 2023, one day before the Surface Transportation Board approved the CPKC merger—KCS President and CEO Pat Ottensmeyer gave a presentation, “Nearshoring in Mexico: A Lifetime Opportunity,” at Railway Age’s Next-Generation Freight Rail Conference in Chicago. As Railway Age’s 2020 Railroader of the Year and 2022 Co-Railroader of the Year with CP President and CEO Keith Creel, he has talked extensively about nearshoring, and his role as chair of the U.S. Chamber of Commerce U.S.-Mexico Economic Council, in which he worked to ensure that the rail industry has a voice by working with public- and private-sector leaders to strengthen bilateral commercial ties. Ottensmeyer retired as KCS chief executive on April 14, 2023, when CPKC’s Final Spike ceremony took place, and is now a special advisor on Mexican affairs to CPKC chief executive Creel.

“The thesis for investing in Mexico remains strong,” Ottensmeyer said as he began his NGTC talk. “Mexico has maintained Investment Grade ratings throughout the pandemic. With exception of early in the pandemic, the Peso exchange rate has remained stable for the past five years. Through August 2022, Mexico’s manufacturing sector has grown at three times the rate of GDP growth. The country’s manufacturing base is large and is well integrated into existing North American supply chains. Most trade disputes have been resolved in Mexico’s judicial system, and the Mexican Supreme Court has ruled in favor of investors in proposed changes in Electricity Law.”

Ottensmeyer referred to the ongoing U.S.-China trade war, in which the U.S. imposed trade tariffs on China in the first half of 2018. Since, then China has lost more than four percentage points of its share of U.S. imports.

Reshoring/Nearshoring Push Factors

The pandemic and the Russia-Ukraine conflict are the two main “push factors” behind nearshoring and “reshoring,” the practice of bringing manufacturing and services back to the U.S. from overseas. “The pandemic caused significant and widespread disruptions to global supply chains,” Ottensmeyer noted. “Companies exposed to global trade are trying to mitigate the risks from supply chain disruptions by moving supply chains closer to home. Time zones are also more relevant than before as video-conferencing for meetings, management, etc., are more widely utilized.”

On the Russia-Ukraine conflict, security is a major concern. “Sanctions on Russia by the West make companies want to relocate resources to countries that have lower risk of sanctions—’friend-shoring,’” Ottensmeyer said. “An energy crisis is impacting many countries, but Europe especially. Firms are looking for locations with more energy availability and reliability, and North America has plenty of energy, including Mexico’s resource potential for renewable energy.”

Reshoring/Nearshoring Pull Factors

There are also “pull factors” for nearshoring/reshoring. “The goal of the USMCA is to reduce tariff costs and boost the integration of regional supply chains among its members,” said Ottensmeyer. “Since the original NAFTA, merchandise trade in North America has increased steadily. The three countries in the region not only trade, but also co-produce. Mexico is not only one of the top three exporters to the U.S., but also one of the top three importers. Many intermediate goods go back and forth several times across the border. Mexico already has a large manufacturing base that is highly integrated with the U.S. Its macrostability means the real exchange rate has remained stable in recent years. The country has political stability when compared to other emerging markets. Institutional checks and balances have been working. One recent example is that Congress rejected a constitutional change proposed by the President on energy, as the bill was perceived as discouraging private investment in the sector.

“Mexico has more than 25 years as a manufacturing powerhouse and has developed human capital at the production and managerial levels. For example, it’s usually among the top ten countries in the number of engineering graduates per year. Wages have remained stable, but wages in China have increased substantially: Despite recent increases in minimum wages, Mexico continues to have one of the lowest minimum wages compared to other EM or Latin America countries—US$4.80 per hour compared with US$6.50 per hour in China.”

The Path Forward

To leverage this “opportunity of a lifetime,” close dialogue must be elevated “at every possible level,” Ottensmeyer noted. This includes the North American Leaders’ Summit and North American Competitiveness Committee, high-level economic dialogue among the three countries, and encouraging private-sector engagement. “We need to improve cross-border mobility of goods and people, establish tri-national protocols to reduce supply chain disruptions during any future crisis, strengthen the regional digital economy via expansion of connectivity and optimization of cybersecurity, and promote sustainable economic and social development in the lesser prosperous regions through workforce development and financial inclusion,” he said.

“We’ve always been taught that the three most important factors in success were location, location, location,” Ottensmeyer stressed. “The same can be said for where to establish a business. In a post-pandemic environment, now is a great time to review what nearshoring could mean for a company’s supply chain. The benefits of USMCA complemented by the impacts of the COVID-19 global pandemic and international trade tensions have created the perfect opportunity for companies to explore the benefits of shifting manufacturing to Mexico to take advantage of the many benefits nearshoring has to offer. For companies that understand the concept of the cost of doing business and the importance of a comprehensive cost benefit analysis and want to offer quality products and services produced in the most economical manner possible, Mexico offers several cost benefits that make it an attractive manufacturing and distribution hub, such as a stable corporate tax rate and an incentive program combined with low labor rates and low costs of inbound freight—especially when compared with China.

“Mexico’s composite tariffs with the U.S. of 0.04%) compare very favorably with China’s composite tariff rate of 19.2%. Mexico’s current tax rate of 30% has not changed since 2010., and the amount a company pays in overall taxes might be even lower if it takes advantage of Mexico’s Maquiladora Program or the country’s Special Economic Zones. In addition Mexico has 14 free trade agreements with more than 50 countries representing more than 60% of world GDP.

“U.S. proximity to Mexico is a major advantage to businesses due to quicker transit times. Transporting goods from Mexico to New York can take about 6-12 days while going from Shanghai to New York can take about 35 days. Mexico to Los Angeles is 4 days, where Shanghai to Los Angeles is 22-26 days. Additionally, components can be sourced from the U.S., assembled in Mexico, and shipped back to the U.S. in a short amount of time. With Mexico located in the same time zones as the U.S. (Pacific, Mountain and Central), companies will benefit from greater efficiency and productivity. As more Americans speak Spanish and more Mexicans are speaking English, the language communication barrier is less of an issue in today’s marketplace.

“Mexico’s transportation and communications infrastructure have been upgraded, promoting the flow of freight over the border, reducing bottlenecks and improving logistics for U.S.-Mexico cross-border trade. Mexico has 16 major maritime hubs offering Pacific Ocean and Atlantic Ocean. access. Critical investments include CPKC’s (KCSM) Veracruz rail corridor connection to Oaxaca connecting the Atlantic and Pacific coasts, and an expansion of the Lázaro Cárdenas Specialized Automotive Terminal. Finally because of Mexico’s geographic proximity and figurative closeness with the U.S., corporate social responsibility practices and trends are on the rise in Mexico.”

BOA on Nearshoring

According to a recent Bank of America (BOA) analysis, Mexico “can increase exports by 9% of GDP. Nearshoring represents Mexico’s best growth opportunity for the next 10 years and it is already occurring. The country is a natural candidate for firms to relocate production to serve the U.S. market, following the fragmentation of global supply chains and the ongoing reversal of the China trade shock of the early 2000s. U.S. imports are close to $3 trillion (220% of Mexico’s GDP). Mexico’s share of imports is 14%, while China’s share recently fell by 4% to 18%.”

BOA believes the positives should offset the negatives: “Nearshoring has started and led to a Mexican manufacturing boom. The sector has grown more than 5% year-to-date in real terms—one of the few sectors that is already above pre-pandemic levels (+6%) and that is growing as a percentage of GDP. Manufacturing exports are up 17% in year-to-date dollars, and Mexico increased its share in U.S. imports in some manufacturing products by 50% in the past three years. According to a recent survey by Mexico’s central bank, 16% of large firms in Mexico already report benefits from nearshoring. Reshoring is positive for Mexico as it would entail a positive productivity shock for the country at the expense of China.”


Source: Railway Age