Relatively cheap labor and its proximity to the U.S. has made Mexico an ideal destination for industries to manufacture their products, including electric carstoys, and medical supplies.

Mexico’s manufacturing industry has been “booming” as a result of recent nearshoring initiatives, BofA’s Capistrán wrote. The sector has grown 5% so far in 2022 alone, and has already exceeded its pre-pandemic size, he added.

Capistrán noted that average labor costs in Mexico are now cheaper than in China, incentivizing more companies to move manufacturing operations to its shores.

These factors—combined with a preexisting free trade framework between Mexico, Canada, and the U.S.—could help Mexico increase its exports by 30% over the next several years, BofA analysts wrote.

Banks are already jumping on the region’s promise as a new manufacturing hub to replace China. In July, the Inter-American Development Bank, the largest developmental finance institution servicing Latin America and the Caribbean, announced it would inject between $1.75 and $2.25 billion to support nearshoring and relocation projects in Mexico over the next three years.

In a separate study in June, the IDB found that nearshoring could add $78 billion in export value in Latin America over the next few years, with Mexico seeing the biggest gains, adding $35.3 billion in annual export value.

Relatively cheap labor and its proximity to the U.S. has made Mexico an ideal destination for industries to manufacture their products, including electric carstoys, and medical supplies.

Mexico’s manufacturing industry has been “booming” as a result of recent nearshoring initiatives, BofA’s Capistrán wrote. The sector has grown 5% so far in 2022 alone, and has already exceeded its pre-pandemic size, he added.

Capistrán noted that average labor costs in Mexico are now cheaper than in China, incentivizing more companies to move manufacturing operations to its shores.

These factors—combined with a preexisting free trade framework between Mexico, Canada, and the U.S.—could help Mexico increase its exports by 30% over the next several years, BofA analysts wrote.

Banks are already jumping on the region’s promise as a new manufacturing hub to replace China. In July, the Inter-American Development Bank, the largest developmental finance institution servicing Latin America and the Caribbean, announced it would inject between $1.75 and $2.25 billion to support nearshoring and relocation projects in Mexico over the next three years.


Source: El Financiero

One of the many buzzwords to have come out of the supply chain crisis of the past few years has been “nearshoring”: companies investing in production closer to home so that they don’t have to deal with global sourcing challenges.

In the U.S., the supply chain crisis has added fuel to the country’s inflation fire, and a growing number of industries have chosen to bring production closer to home as a result. U.S.-based companies that have already reshored their operations to nearby countries in Latin America and the Caribbean include carmaker Ford and aerospace manufacturer Boeing.

The nearshoring momentum could represent a major rethink of global supply chains, and some countries could be in line for a windfall because of it. But Bank of America analysts believe that based on early signs, Mexico is poised to be the main beneficiary of the new nearshoring wave sweeping the U.S.

Nearshoring to Mexico could be a “lifetime opportunity” for those interested in investing in the country and in the companies doing business there, researchers by the bank’s head of Canada and Mexico economics Carlos Capistrán, wrote in a note last week, and believe the country is headed for massive growth in the coming years.

They added that the supply chain crisis, a breakdown in U.S.-China relations, and a free trade agreement already in place between the U.S. and Mexico have created the conditions behind the country’s “best growth opportunity for the next 10 years.”

The China conundrum
The nearshoring move to Mexico comes as more and more U.S. companies decide doing business in China is simply no longer worth the cost.

U.S. trade relations with China have been tense for years, since a series of U.S. tariffs on imported Chinese goods paved the way for a trade war between the two countries in 2018 under former President Trump. That war has survived mostly intact into the current administration.

The trade war heightened tensions between the two countries and made cooperation more difficult, but the real spark behind the supply chain crisis and the move towards nearshoring happened more recently when the COVID-19 pandemic hit.

China responded with periodic lockdowns, which threw supply chains into disarray, and are still happening now with factories in China shutting down for weeks at a time. The supply chain crisis has led to a full-blown shortage of items the U.S. once imported heavily from China, including semiconductor chips and iPhones.

In addition to China’s strict COVID-19 policies—which have widely eroded U.S. business confidence in the country—labor costs in China have been on a steady rise in recent years, pushing many international companies to look elsewhere.

In response to the shortages, the Biden administration has approved large investments in domestic production of goods including chips and solar panels, products that the U.S. has previously imported from China and other East Asian countries in large amounts.

But with companies on the hunt for more affordable workforces that are also in relative proximity to the U.S., Latin American countries have been put in the spotlight, and Mexico is poised to benefit the most from American companies relocating their operations, according to BofA.

Mexico steps up
Relatively cheap labor and its proximity to the U.S. has made Mexico an ideal destination for industries to manufacture their products, including electric cars, toys, and medical supplies.

Mexico’s manufacturing industry has been “booming” as a result of recent nearshoring initiatives, BofA’s Capistrán wrote. The sector has grown 5% so far in 2022 alone, and has already exceeded its pre-pandemic size, he added.

Capistrán noted that average labor costs in Mexico are now cheaper than in China, incentivizing more companies to move manufacturing operations to its shores.

These factors—combined with a preexisting free trade framework between Mexico, Canada, and the U.S.—could help Mexico increase its exports by 30% over the next several years, BofA analysts wrote.

Banks are already jumping on the region’s promise as a new manufacturing hub to replace China. In July, the Inter-American Development Bank, the largest developmental finance institution servicing Latin America and the Caribbean, announced it would inject between $1.75 and $2.25 billion to support nearshoring and relocation projects in Mexico over the next three years.

In a separate study in June, the IDB found that nearshoring could add $78 billion in export value in Latin America over the next few years, with Mexico seeing the biggest gains, adding $35.3 billion in annual export value.

Source: Tristan Bove, Fortune.’s latest Audio Interview “Insights on Mexico Industrial Real Estate: Focus on the Bajio and Northeast Automotive Regions” 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.

In the 8-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 Fernanda Martinez and 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.

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


Consult the Interview at

Mexico’s maquiladoras, an important generator of manufacturing and employment activity along the U.S.–Mexico border, confront a changing landscape. Evolving global trade patterns, reflecting stressed supply chains and increasing electric vehicle production, will test maquiladora agility and growth prospects.

The role of Mexican maquiladoras—large, mostly foreign-owned plants engaging in labor-intensive assembly of intermediate and final goods for export—has evolved over the years, though the basics remain the same.

Most inputs are imported duty-free from the U.S. or another country. U.S. tariffs are applied only to the value that is added by assembly on products sent back across the border.

However, more than two years removed from the onset of the COVID-19 pandemic, the maquiladora operating environment has changed. Global trade, including chronic input shortages and the specter of a worldwide economic slowdown, poses tough challenges. Moreover, longstanding auto assembly and parts businesses, making up the largest portion of maquiladora output, confront a transition to electric vehicles that require new and different manufacturing processes.

Manufacturing for Export

Rules adopted in 2007 merged the maquiladora industry and a program for homegrown exporters into what is currently known as the Manufacturing, Maquila and Export Service Industry Program. The more familiar name, “maquiladora,” is used here. In 2021, maquiladoras accounted for 58 percent of Mexico’s manufacturing GDP (as well as a majority of the country’s manufacturing exports) and 48 percent of industrial employment.

For perspective, manufacturing represented 19 percent of Mexico’s overall GDP and 19 percent of employment. In the U.S., manufacturing accounts for 11 percent of GDP and 8.4 percent of employment.

Besides auto parts and automobiles, maquiladora production includes electronics, medical devices, aircraft parts and machinery. Maquiladoras also sell engineering services.

Following adoption of the North American Free Trade Agreement (NAFTA) in 1994, maquiladora activity became increasingly correlated with U.S. manufacturing production and, thus, susceptible to recessions and expansions north of the border.

When there is a pickup in U.S. consumer demand for refrigerators, televisions, washing machines or automobiles, production orders reach Mexican maquiladoras. They specialize in the relatively labor-intensive side of production, while the U.S. engages in the more capital-intensive part of the process.

By spreading production costs across borders and taking advantage of lower labor costs in Mexico, firms can produce at a lower average unit cost, which leads to greater competitiveness in both global and domestic markets and to lower prices for consumers.

International competitors, notably Chinese manufacturers, have pressured the maquiladora sector, much as they have done to U.S. manufacturing. In the early 2000s, a U.S. recession and increased competition from China following the country’s entry into the World Trade Organization forced the maquiladora industry to downsize and cut employment. The industry was again tested during the Great Recession of 2007–09 and later amid the onset of the pandemic in 2020.

After the Great Recession, maquiladora employment took more than three years to recover, while production required a year and a half to return. By comparison, U.S. manufacturing has not yet recovered. Employment remains 5.2 percent below pre-Great Recession levels, while production lags behind by 2.9 percent.

In the wake of the pandemic in 2020, supply-chain issues particularly affected the automotive sector, reducing new orders and sending the maquiladora industry into another production downturn, the recovery from which required nine months (Chart 1). Employment was virtually unaffected, reflecting the difficulty of firing and then rehiring workers in Mexico.

Chart 1

Wages and Productivity

Of the many reasons for factories to locate in Mexico, proximity to the U.S. and preferential tariffs predominate. Mexico has 13 free-trade agreements with 50 countries—including the United States–Mexico–Canada Agreement (USMCA), the 2020 successor to NAFTA. There are also preferential considerations granted to maquiladoras.

Mexico has a plentiful labor supply, with an economically active population of 58 million. Relatively low labor costs remain a primary factor prompting foreign companies—mainly from the U.S.—to locate manufacturing operations in Mexico. The country’s average hourly wage was $6.57 in purchasing-power-adjusted dollars in 2021, significantly lower than in other advanced economies such as Canada, $25.24; Germany, $27.18; and the U.S., $34.74. Mexican wages trail comparable eastern European economies such as Poland, $15.75, and the Czech Republic, $15.05 (Chart 2).

Chart 2

Such wage differences reflect much more than differences in labor costs; they also indicate more capital-intensive production and higher productivity among workers in the high-wage countries. Mexico’s low-cost labor and low-productivity growth is the product of less worker schooling and training combined with a large informal sector (relatively untaxed with little government oversight), lack of access to credit, government red tape and a poor business climate.

Mexico’s gross domestic product per worker (in constant U.S. dollars calculated at purchasing power parity to ensure an accurate comparison) increased at an annual rate of 0.3 percent from 2010 to 2021. This is well below the average for the Czech Republic (1.4 percent) and Poland (2.6 percent) over the same period. Comparable GDP-per-worker growth was 1.3 percent in the U.S and 0.9 percent in Canada.

U.S. Border Spillovers

Most maquiladora employment remains concentrated in Mexican border states (though plant proximity to the U.S. has not been a government requirement for many years). Together, the Mexican states bordering Texas (from east to west: Tamaulipas, Nuevo Leon, Coahuila and Chihuahua) plus the other border states of Sonora and Baja California represent 62 percent of total maquiladora employment.

Four of the top five maquiladora states border Texas. Historically, the economic benefits of these large industrial complexes have spilled over into neighboring Texas cities, creating jobs in manufacturing, warehousing, transportation, logistics, real estate and services.

States adjacent to Texas tend to produce automobile-related parts and components, while those near California and Arizona specialize in consumer and business electronics.

The industry concentration in northern Mexico has created an economic development divide that generally separates the northern and southern regions. In the north, where 30 percent of the population lives in poverty, the informal sector accounts for 40 percent of jobs. In the hardscrabble south, 57 percent of the population lives in poverty, the highest concentration in Mexico, and about 70 percent of the labor force works in the informal sector.

Seeking New Opportunities

Maquiladoras have slowly shifted from low-skill, low-wage production toward high-wage, high-productivity operations. China’s entry into the World Trade Organization in 2001 hastened this evolution as lower-end production moved overseas.

The shift to higher productivity over the past several decades provides insight into where the industry is headed. The top five fastest-growing sectors—absent the period of pandemic disruption—are transportation equipment, paper, plastics and rubber products, fabricated metal products and primary metals manufacturing. This manufacturing activity generally boasts higher wages and higher labor productivity than the national average (Table 1).

Table 1: Maquiladora Selected Statistics by Sector

 Share of total
employment (%)
Change in
Average labor
wage, 2021
2021 ppp
NAICS Total nation 2,791,909 40.8 2.2 4.8 9.6
336 Transportation equipment 932,093 33.4 96.9 2.4 4.9 10.0
322 Paper 44,916 1.6 89.0 3.0 4.5 9.1
326 Plastics & rubber products 191,702 6.9 66.7 2.1 4.3 8.7
332 Fabricated metal products 148,898 5.3 53.1 2.8 4.9 10.0
331 Primary metal mfg 89,060 3.2 47.9 4.3 6.6 13.4
333 Machinery, except electrical 110,811 4.0 46.7 1.6 5.4 10.9
339 Miscellaneous manufactured
215,179 7.7 46.4 1.2 5.1 10.3
323 Printed matter and related
16,440 0.6 38.1 1.8 4.0 8.04
316 Leather & allied products 24,169 0.9 35.7 3.6 3.8 7.7
337 Furniture & fixtures 40,563 1.5 31.6 -0.2 4.2 8.4
325 Chemicals 64,496 2.3 26.2 2.4 4.9 9.9
312 Beverages & tobacco
38,524 1.4 14.5 0.7 5.9 11.9
334 Computer & electronic
366,471 13.1 12.6 -1.7 4.9 9.8
311 Food & kindred products 125,261 4.5 10.1 3.2 4.0 8.0
327 Nonmetallic mineral
55,712 2.0 9.2 3.0 4.3 8.6
335 Electrical equipment,
appliances & components
190,712 6.8 6.0 2.0 4.6 9.2
321 Wood products 9,531 0.3 0.6 2.6 3.6 7.21
314 Textile mill products 14,137 0.5 -7.0 -0.2 3.8 7.65
313 Textiles & fabrics 32,518 1.2 -13.1 0.9 3.0 6.1
315 Apparel & accessories 80,716 2.9 -34.4 0.9 2.4 4.9
NOTE: The table refers to IMMEX statistics (Mexico’s Manufacturing, Maquila and Export Service Industry Program); ppp stands for purchasing-power-parity-adjusted dollars.
SOURCES: National Institute of Statistics, Geography and Informatics (Instituto Nacional de Estadística Geografía e Informática); author’s calculations.

Rubber and metal products manufacturers bend, form and weld metal and plastic parts used in the production of components and finished products for U.S. automakers. Paper manufacturing represents just 1.6 percent of total employment but has grown rapidly with the booming U.S. e-commerce business that boosted demand for boxes and other packaging.

By comparison, low-wage employment has declined, affecting sectors such as textiles and fabrics and apparel and accessories manufacturing.

Autos’ Leading Role

Maquiladoras’ future will likely include their biggest industry—auto parts manufacturing and auto assembly. U.S. and Mexico have a long history of motor vehicle production that preceded the maquiladora program.

Ford became the first entrant in Mexico when it began assembling Model Ts in Mexico City in 1925. General Motors and Chrysler built their initial Mexican assembly plants in the 1930s. Although the maquiladora program set the stage for U.S.–Mexico market integration, the auto industry did not take full advantage until the 1980s.

During the decade, Mexico shifted its auto industry policy toward export promotion. Vehicle manufacturers responded by opening modern and competitive plants, representing the beginning of the process of integrating Mexico into North America’s auto industry. Broader North American vehicle production consolidation came with NAFTA in 1994.

Transportation equipment manufacturing represents one-third of maquiladora employment and production and 3.6 percent of Mexico’s GDP. Besides cars, SUVs, buses and trucks, the sector includes all related manufacturing—engines and engine parts, electronics, steering and suspension components, brake systems, transmission and power-train components, seating and interior trim.

Transportation production employment growth averaged 9 percent per year from 2008 to 2021, while output as a percentage of total manufacturing increased from 9 percent in 2008 to 12 percent in 2021.

This expansion contributed to Mexico becoming a global leader in internal combustion engine vehicle manufacturing—No. 7 in total world vehicle production and No. 1 in Latin America. Additionally, Mexico is No. 4 in automotive parts exports worldwide and the top supplier of autos and auto parts to the U.S. (Chart 3).

Chart 3 vehicles poses a challenge to Mexico’s transportation equipment manufacturing leadership. Almost 1.8 million electric vehicles were registered in the U.S. in 2020, more than three times as many as in 2016. Detroit’s Big Three automakers have announced plans for electric vehicles to represent 40 to 50 percent of new vehicle sales by 2030.

Manufacturing internal combustion and electric vehicles is fundamentally different. Electric vehicles are mechanically simpler, with many fewer parts than a traditional internal combustion unit. For example, a typical electric motor used to power an electric vehicle has three parts. By comparison, a typical four-cylinder internal combustion engine has 113 moving parts. A gearbox for an internal combustion engine vehicle has 27 moving parts; its electric vehicle counterpart has 12. Overall, an electric vehicle powertrain has 79 percent fewer moving and “wear” parts—meaning fewer parts to manufacture.

Industry experts anticipate that from 2020 to 2025, a large share of automotive component demand will shift toward electric powertrains, batteries, advanced driver assistance systems, sensors, infotainment and communication at the expense of conventional components such as transmissions, brakes, axles, exhaust systems, steering and fuel systems (Chart 4).

Chart 4

Still other vehicle technology changes, such as more computer software and advances in autonomous driving, have accelerated a convergence of automotive manufacturing and technology, transferring significant supplier value from parts and components to software.

As a result, technology and consumer electronic companies are entering the automotive value chain. Japan’s Sony and China’s Baidu—neither traditional automakers—have announced plans to manufacture electric vehicles.

Studies undertaken of these developments’ impact on the European Union predict net automotive manufacturing job losses should a complete transition to electric vehicles occur. The European Association of Automotive Suppliers, for example, estimates a net job loss of 275,000 positions (about 8 percent of the total) because the 226,000 new jobs generated by growth in electric vehicle components will be insufficient to offset the roughly 500,000 jobs lost among automotive suppliers. However, official reports by the European Commission show a much less severe impact on aggregate employment.

Electric Vehicle Pivot

The U.S.–Mexico manufacturing relationship reflects decades of production integration, with large, specialized industries spreading costs across borders. As U.S. automakers plan their conversion to electric vehicle production, they are instituting changes in their Mexican subsidiaries.

General Motors announced in 2021 that it will invest $1 billion in its factory in Ramos Arizpe, Coahuila, to produce two electric Chevrolet SUVs in 2023. GM plans to offer 30 all-electric vehicles by 2025. Ford recently began producing the Mustang Mach-E in Cuautitlan in the state of Mexico and announced two additional midsize electric crossovers will be built in the same plant.

Additionally, several electric vehicle parts manufacturers are believed to be looking at Mexican operations to support production for the U.S. market. China’s Contemporary Amperex Technology, the world’s biggest maker of batteries for electric vehicles, is considering plant sites in Ciudad Juárez, Chihuahua, and in Saltillo, Coahuila, to potentially supply Tesla and Ford—a possible $5 billion investment.

While the maquiladora industry has quickly adapted to changes in technology and those arising from business cycles, the shift to electric vehicles is different, creating demand for new types of auto parts with possible competition from new market entrants.

Post-COVID Opportunity

Maquiladoras may benefit from the much-discussed reshoring or near-shoring of manufacturing arising from pandemic supply disruptions and simmering trade disputes with China.

Aggregate data don’t yet show clear evidence of a shift in U.S. imports from Asia and Europe to Canada and Mexico. Average import shares are about the same now as before the pandemic. Near-shoring won’t happen overnight, but Mexico could potentially capitalize from such an opportunity in the medium to long term.

The USMCA has applied new pressure to maquiladoras. It is more restrictive in some respects than NAFTA, particularly involving the automotive sector. It imposes restrictions on the origin of steel, aluminum and vehicle parts and new requirements governing labor and wages.

The new rules-of-origin and higher-wage requirements will increase production costs that, in turn, imply higher prices, reduced output and a decrease in consumer surplus in North America. Projections indicate the USMCA negatively affects all countries in North America, though Mexico stands to sustain the biggest loss to auto production and GDP.

Mexican government policies pose another challenge for maquiladoras. For example, recent changes in electricity generation rules favoring the state-run utility over cheaper power sources could raise costs for businesses. Labor market regulations are also changing, pushing up labor costs.

Additionally, challenges to private sector and foreign investment in Mexico are increasing, something that is especially problematic given the country’s weak public investment.

These and other changes could signal a departure from what has been an investment-friendly environment since NAFTA, dimming Mexico’s prospects in what has become an increasingly volatile global business environment.


Source: Jesus Cañas, Federal Reserve Bank of Dallas

A large skills gap plagues the modern business world: the skills possessed by prospective employees versus those required to perform the job effectively. One of the best examples of this is in the manufacturing industry. Currently, there are a number of positions available in manufacturing, and employers are scrambling to fill them, but they are unable to locate qualified candidates with the proper skill set. By 2030, the National Association of Manufacturers anticipates 2.1 million unfilled manufacturing jobs in the United States due to a shortage of qualified manufacturing workers.

There is good news, however, for manufacturing companies who may be concerned they will not be able to find the right type of workers to produce their products: manufacturing in Mexico is a viable option. Despite its large, skilled, and educated workforce, Mexico is largely underutilized as a source of manufacturing workers.

How can leveraging the labor pool in Mexico help address the manufacturing skills gap in the U.S.?

Finding The Right Workers

It is becoming increasingly difficult to find skilled workers for manufacturing jobs in the United States. Compared to 20 years ago, the number of Americans employed in manufacturing has decreased by approximately 5 million.  In spite of a near record number of job openings in the manufacturing sector, 63% of the jobs lost during the pandemic have not been recovered by the end of 2020.

What are the reasons that so many people are choosing not to pursue jobs in the manufacturing industry? There are actually several reasons for this:

  • People Are Retiring: In the manufacturing sector, the average employee is 44 years old, and older employees are retiring at a faster rate than they are being replaced. In the United States, a baby boomer retires every eight seconds, according to Carolyn Lee, the National Association of Manufacturers’ director of workforce development.
  • New Skills for Manufacturing Are Not Being Taught: There are no sufficient training programs for workers to bring their skills to the open positions in the manufacturing sector, which is increasingly characterized by high-tech and high-skill jobs. In order to meet the needs of manufacturers, multi-functional engineering technicians possessing both traditional manufacturing skills as well as engineering skills are required. Developing strong, localized talent pipelines with education partners in the community is imperative for manufacturers in order to locate workers with the necessary specialized skills.
  • Outdated Perception of Manufacturing Careers: Employers also point to another problem contributing to the industry’s labor shortage: an outdated perception of what manufacturing jobs entail. “Many people, they still think it’s like dark, dirty, dingy,” says Diana Peters, executive director of Symbol Training Institute. Paul Wellener, Deloitte vice chairman and U.S. industrial products and construction leader, adds: “Attracting and retaining diverse talent presents both a challenge and a solution to bridging the talent gap. To attract a new generation of workers, the industry should work together to change the perception of work in manufacturing and expand and diversify its talent pipeline.”
  • People Are Quitting: According to the Washington Post, an increase of nearly 60 percent in worker resignations has been reported in manufacturing since the outbreak of the pandemic. People cited lack of control over their schedules, meager raises and pay scales, and having to work during the pandemic as reasons for leaving.

What Happens When There Is A Shortage Of Skilled Workers?

As a result of a shortage of skilled manufacturing workers, manufacturing businesses have been unable to grow and the economy has not recovered fully from the 2020 pandemic. The National Association of Manufacturers states: “Manufacturers surveyed reported that finding the right talent is now 36% harder than it was in 2018, even though the unemployment rate has nearly doubled the supply of available workers.”

As a result of the shortage of workers in the labor pool, companies are also experiencing other related issues. A number of factors undermine manufacturers’ ability to compete, including hiring ill-suited candidates, forgone production opportunities, reduced business investment, and fewer product development opportunities.

Due to fierce competition for skilled workers and the possibility that they might demand a high price for their services, companies might take shortcuts elsewhere in their operations in order to save money and increase profits. According to Alibaba:

“However, cutting costs during production is often easier said than done. You want to ensure you’re not compromising the quality of your products on your cost-cutting mission, while finding ways to sustainably reduce your production costs. How do you navigate the complexities of this situation?”

Last but not least, employees with insufficient skills can affect the quality of their work. As a result, manufacturing companies will incur higher costs when redoing faulty work or having to compensate third parties as a result of negligence on the part of employees that are not properly trained or skilled.

As stated by DB&T: “Ongoing labor challenges could also impede U.S. manufacturing companies’ ability to expand or invest in emerging technologies that improve productivity rates and workplace safety—exacerbating the cycle.”

Mexico Can Help Fill The Skills Gap Void

Beyond the southern border of the United States may be a solution to the problem of finding workers for manufacturing companies. The skilled labor pool in Mexico, a longstanding trading and manufacturing partner of the US, can assist American manufacturing companies in filling the gaps in their current production processes.As a key component of economic growth and development, international labor has historically been a valuable resource for employers in need of labor. Workers in other companies, such as Mexico, can be used by manufacturers to supplement their existing workforce and fill the skills gap, both for high-level professionals and skilled workers.  In addition, the USMCA treaty makes it even easier for US companies to access this source of skilled labor in Mexico.

According to Baker/Tilley:

“Mexico enjoys a low unemployment rate, a highly educated workforce with multiple generations of manufacturing experience, and an economically active demographic with a median age of 30 years. Today, Mexico is second only behind Canada among countries with the largest percentage of employment per capita in creative industries. Mexico also graduates more engineers per capita on an annual basis than the United States. In the manufacturing sector, the average wage is about $2 an hour in Mexico, vs. about $20 per hour in the U.S. This pool of skilled workers in Mexico is a benefit for foreign companies looking to reduce labor costs but keep a high level of quality standards for their products.”

There is no doubt that the manufacturing jobs of today are radically different from those of 20 years ago. Nowadays, they are more and more high-tech. There is a great need for workers who are capable of designing and manufacturing products using computer-controlled machinery and simultaneously finding ways to increase efficiency.

Indeed reports that these sought-after skills are most commonly found in the automotive, aerospace, and defense sectors, which are heavily reliant on electronics and require a detailed understanding of the final product. Furthermore, they are often associated with very complex assembly procedures.

Manufacturing workers in Mexico possess these skills in abundance, particularly in the automotive industry. In 2020, Mexico’s automotive industry accounted for 41.6% of total manufactured exports ($139.8 billion), the highest share among all industrial sectors. With the variety of industries related to automobiles, the Mexican Automotive Industry Association estimates that Mexico will become the fifth-largest worldwide vehicle producer of all types, not just passenger vehicles, by 2025. Manufacturing of automotive wiring harnesses, distributors, and ignition systems is the primary activity of the automotive electronics manufacturing industry in Mexico.

Outside of the automotive industry, electronics manufacturing and assembly is also a major industry in Mexico. Because of the expertise of Maquiladoras, electronic component manufacturing, such as circuit boards, wire harnesses, computers, and consumer electronics, is one of Mexico’s fastest growing industries. Those seeking alternatives to their manufacturing operations in China are finding that Mexico’s contract manufacturing partners are able to provide electronic components that are as good, if not better, than those produced in China.

If you do not want to send your manufacturing to Mexico, there is still a way to utilize the labor pool in Mexico in the U.S., even if you do not want to send your production abroad. Using a “TN Visa” you may bring skilled workers from Mexico to the U.S. to fill in your shortage of skilled workers.  As part of the North American Free Trade Agreement (NAFTA), the TN visa was established to allow certain Canadians and Mexicans to work temporarily in the United States. Former President Donald Trump implemented the United States-Mexico-Canada Agreement (USMCA), while keeping the provisions of NAFTA regarding work visas intact.

The TN visa is available to professionals in manufacturing fields, such as industrial engineers, industrial designers, and other consulting roles, provided they meet the appropriate criteria for entry into the United States.


Source: Ivannovation’s latest Audio Interview “Differences Among Top Automotive Manufacturing Regions in Mexico: How do Suppliers Select Best Locations?” features Gary Swedback. Mr. Swedback is CEO of NAI Mexico and NAI PanAmericas, part of the NAI Global network, a leading industrial and commercial real estate firm. NAIMexico operates 25 offices across Mexico and Latin America, and works with many global customers, including those in the auto industry. Gary is a sought-after speaker on Mexico & Latin America industry and business issues.

Visit Global Auto Industry and consult the complete interview.

Dhirtek Business Research and Consulting most recent study on the advanced automated guided vehicle (agv) market provides a comprehensive view of the entire market. The research report delves deeply into the global advanced automated guided vehicle (agv) market’s drivers and restraints. Analysts have extensively researched the global advanced automated guided vehicle (agv) market’s milestones and the current trends that are expected to determine its future. Primary and secondary research methods were used to create an in-depth report on the topic. Analysts have provided clients with unbiased perspectives on the global advanced automated guided vehicle (agv) industry to assist them in making well-informed business decisions.

The comprehensive research study employs Porter’s five forces analysis and SWOT analysis to provide readers with a clear picture of the global advanced automated guided vehicle (agv) market’s expected direction. The SWOT analysis focuses on defining the global advanced automated guided vehicle (agv) market’s strengths, weaknesses, opportunities, and threats, whereas Porter’s five forces analysis emphasizes competitive competition. The research report goes into great detail about the trends and consumer behavior patterns expected to shape the global advanced automated guided vehicle (agv) market’s evolution.

Highlights of Global Advanced Automated Guided Vehicle (AGV) Market Report

  • Examines the advanced automated guided vehicle (agv) industry’s prospects and quickly compares historical, current, and projected market figures.
  • This report examines growth constraints, market drivers and challenges, and current and prospective development prospects.
  • Key market participants are evaluated based on various factors, including revenue share, price, regional growth, and product portfolio, to demonstrate how market shares have changed in the past and are expected to change in the future.
  • Describes the expansion of the global advanced automated guided vehicle (agv) market across various industries and geographies. This allows players to concentrate their efforts on regional markets with the potential for rapid growth shortly.
  • Discuss the global, regional, and national ramifications of COVID-19.

Scope of the Report

The global advanced automated guided vehicle (agv) market research study’s type, application, and region components are divided into three parts. Each segmentation is divided into chapters that go over the various details. The chapters include graphs that show year-over-year growth and segment-specific drivers and constraints. Furthermore, the study provides government forecasts for regional markets that affect the global advanced automated guided vehicle (agv) sector.

Advanced Automated Guided Vehicle (AGV) Market Segments

  • The market by type is segmented into unit load type, automated forklift type, tugger type, others.
  • The market by application is segmented into warehouse, production line.

Regions Covered in the Global Advanced Automated Guided Vehicle (AGV) Market:

  • North America (the United States and Canada)
  • Europe (Germany, U.K., France, Italy, Spain, Russia, and Rest of Europe)
  • Asia-Pacific (China, India, Japan, Korea, Australia, and Rest of Asia Pacific)
  • The Middle East and Africa (GCC Countries, South Africa and Rest of the Middle East & Africa)
  • Latin America (Brazil, Mexico, Argentina, and Rest of Latin America)

In the report on the advanced automated guided vehicle (agv) market, a detailed chapter on company profiles is included. The leading players in the global advanced automated guided vehicle (agv) market are examined in this chapter. It contains a synopsis of the company’s strategic goals and a description of its primary goods and services. An overall analysis of the organizations’ strategic initiatives reveals the trends that they are expected to pursue and their R&D statuses and financial outlooks. This research aims to provide readers with a thorough understanding of the global advanced automated guided vehicle (agv) market’s anticipated trajectory.

The following Companies as the Key Players in the Global Advanced Automated Guided Vehicle (AGV) Market Research Report:

AGVE Group, Aichikikai, Atab, CSG, DS Automotion, Daifuku, Dematic, Ek Automation, JBT, KSEC, Meidensha, Seegrid, Siasun, Toyota, Yonegy


Source: Mr. Singh, Manufacture Link.

Are the US and Mexico winning globalization?

The era of globalization could be slowing as companies continue to battle supply chain challenges and reshoring continues to be a trend discussed in all sorts of industries.

Moving production closer to end users in the United States — reshoring and nearshoring initiatives — could make supply chains more resilient by eliminating long shipping routes while also bringing more manufacturing jobs back to North America, said Tasneem Manjra, CEO and co-founder of Caravan.

“Reshoring is huge, and I’m hearing this trend a lot as we talk to potential clients,” Manjra told FreightWaves. “[Companies] want to make decisions about reshoring for a number of reasons — for political reasons, to make sure that the countries that they work with are politically sound. They also don’t want to have the labor crisis that China has, for example, or they want to make sure that they are closer to home for environmental purposes, creating a smaller footprint.”

San Francisco-based Caravan is a vendor relationship platform that aims to streamline and optimize the way manufacturers and retailers engage with their vendors.

Nearshoring often explains when a company moves work to another organization that’s in a nearby region or country. Reshoring is the process of returning domestic product manufacturing from a foreign country back to the home country where the business products are sold.

A recent example of nearshoring is California-based toymaker Mattel, which announced in March it was consolidating all North American manufacturing to its plant in Monterrey, Mexico.

Mattel said it was also investing $47 million to expand the Monterrey plant, where it employs nearly 3,500 workers, becoming the company’s largest manufacturing site. Mattel closed two of its factories in Asia in 2019, as well as plants in Montreal, Canada, and another in Tijuana, Mexico, in 2021, ahead of expansion of its Monterrey factory.

“We believe that Mexico, given its geographical position, has a unique opportunity to position itself as a toy hub in the world. To contribute to the development of this industry in Mexico, we have supported local suppliers and motivated international suppliers to establish themselves in [Mexico],” said Ynon Kreiz, CEO of Mattel, according to El Financiero.

California-based semiconductor manufacturer Intel Corp.’s announcement in January that it was investing $20 billion to build two chip factories near Columbus, Ohio, was a big recent win for the U.S. manufacturing sector.

Construction of the plants is expected to begin later this year, with production coming online at the end of 2025. The two Ohio plants are expected to create 3,000 direct jobs.

Intel, which has a global workforce of 116,000, has more than a dozen research and manufacturing facilities around the world, including the U.S., France, Germany, Italy, Ireland, Poland, Israel, India, Malaysia and Vietnam.

While North America has had recent wins in regard to attracting manufacturing back, U.S. imports of manufacturing goods from low-cost Asian countries (LCCs) actually increased in 2021, according to Kearney’s ninth-annual Reshoring Index.

Kearney’s Reshoring Index tracks trends in manufacturing returning to the U.S. from 14 LCCs and regions where sourcing, production and assembly have been offshored.

Manufacturing from LCCs totaled 14.49% of U.S. domestic gross manufacturing output, up from 12.95% in 2020, according to Chicago-based global management consulting firm Kearney.

However, Kearney officials said that “there are strong indications that attitudes and strategies are changing, thanks to the pandemic, trade wars and tariffs, and ongoing resulting supply chain disruptions.

“American companies are getting more serious about adopting expanded versions of reshoring. Large portions of offshored manufacturing may soon be returning thanks to companies combining their nearshoring production to Mexico, Central America and even Canada, with manufacturing and assembly in the U.S.,” Kearney said.

Manjra said she’s hearing from many clients that the tide may be turning, with companies looking to create a closer-to-home — rather than a lowest-cost — supply chain.

“I just think about that for the last 20 or 30 years, companies were almost rewarded for basically shipping American jobs overseas,” Manjra said. “It was quite harmful for the domestic economy because we have less skilled workers today than we ever had domestically.

“I’m really encouraged when I see manufacturers say, ‘No, we want more jobs here, we want to keep the jobs here, we want to bring back our operations to … America or to Canada.’ I think that’s super encouraging.”

Fleetmaster Express receives first Volvo VNR electric trucks in Texas

Fleetmaster Express recently received two Volvo VNR Electric Class 8 trucks in Texas as part of the company’s plan to transition from a diesel fleet to an electric one.

The Roanoke, Virginia-based carrier said the two electric trucks will be based at the company’s terminal in Fort Worth. Eight additional Volvo VNR electric trucks are scheduled to be delivered by early 2023.

The two Volvo VNR Electrics are the first battery-electric Class 8 trucks in its fleet, and “deploying zero-tailpipe emission Volvo VNR Electrics is the next big step in our effort to create the most sustainable, energy-efficient fleet possible,” said Travis Smith, COO of Fleetmaster Express, in a statement.

Fleetmaster operates more than 300 trucks with 1,000 trailers from 13 terminals across the country. The company offers dedicated hauling, as well as freight brokerage, warehousing and spotting services.

Texas seaport announces new ro-ro service from Asia

Marine shipper Nippon Yusen Kabushiki Kaisha (NYK Line) made its initial call at Port Freeport, Texas, on May 16 to begin a regular service.

Headquartered in Tokyo, NYK Line is a provider of roll-on/roll-off (ro-ro) services, including shipping and vehicle logistics, managing the distribution of cars, trucks, rolling equipment and breakbulk cargo.

“Port Freeport’s proximity and efficiency to regional and global markets combined with room for expansion makes the port a strategic hub for vehicle imports and exports,” Phyllis Saathoff, Port Freeport’s executive director and CEO, said in a release.

NYK Lines’ Opal Leader discharged OEM vehicle units and heavy cargo at Port Freeport. The service will also call ports in Mexico, Panama, Colombia and Brazil and will call Port Freeport monthly.

Port Freeport is located about 60 miles southeast of Houston along the Gulf of Mexico.

Houston multimodal park signs 2 tenants

The Greens Port Industrial Park along the Houston Ship Channel has two new tenants: JD Fields & Co. and ZL Chemicals.

Houston-based JD Fields & Co. is a global supplier of steel products. ZL Chemicals is a Houston-based manufacturer of chemicals used in the oil and gas industry.

The 735-acre, multimodal industrial park is owned by Watco, a transportation and supply chain services company with locations throughout North America and Australia.

Steve Pastor, NAI’s vice president of global supply chain and ports/rail logistics, said operators are looking for locations that help with efficiency. Pastor was part of the team that represented Watco in the transaction.

“Over the past 18 months, logistics tasks as simple as offloading cargo from ship to shore have become increasingly time-consuming and expensive at many ports,” Pastor said in a statement. “For this reason, Greens Port Industrial Park stands out as it offers direct access to [Port Houston], one of the nation’s most important ports.”


Source: Noi Mahoney, Freight Waves.

The Texas and Mexico border is indisputably one of the most important for trade in North American, and the recent cancellation of a railway between the two stemming from political issues seems to be the least favorable economic option.

The TMEC Corridor is a project proposed by Mexico that would start in the port of Mazatlán, Sinaloa and go through various states in Mexico. It would then travel across the border into the United States and go north until reaching Canada.

Bloomberg previously confirmed that Texas would be losing a major railway project worth billions that was set to travel through Laredo due to Mexico moving the project in retaliation for Texas Gov. Greg Abbott’s enhanced truck inspections that led to standstills in traffic and billions of dollars lost for both countries.

One local academic shared his thoughts on the canceled plans, stating that the evidence was clear the rail line should remain through Texas, as it is the most efficient and effective thing to do for a project of this magnitude.

“I understand the political discourse going on between both parts, Texas and Mexico, but I always tell everybody let’s look at the data and for the data to show us what is going on,” said Daniel Covarrubias, Director of the Texas Center for Border Economic and Enterprise Development at Texas A&M International. “It is a project that I know will benefit the North American trade zone, but you have to understand that it is a project 100% financed by private investments.

“In the end, I do understand that Mexico, as a country, will be involved in permits, promoting and things like that. But I think that this project is going to be dictated by market forces and where logistic corridors are more efficient and by where logistic infrastructure is already in place.”

Covarrubias said one of the main reasons Mexico wants this corridor is to alleviate the transportation of goods from Asia to North America. At the moment, almost all of this trade goes through the port of Los Angeles and Long Beach.

However, Covarrubias finds it interesting Mexico is looking forward at this port when it has two others operating for such tasks including the ports of Manzanillo, Colima and the port of Lazaro Cardenas, Michoacan. He says these two compared to the one in Mazatlan have no comparison at all, as the one in Sinaloa is still in its early stages.

“If you compare Mazatlan to those ports, there is no comparison,” Covarrubias said. “Especially with what Manzanillo does as the port of Manzanillo in (Twenty-foot Equivalent Units), which is what the shipping industry uses to measure ports. There is little comparison.”

According to Covarrubias, the 2021 data on the ports indicates the port of Manzanillo does about 3.2 million TEUs a year while Lazaro Cardenas does 1.6 million, Ensenada, Baja California does 394,000 and Mazatlan does about 41,000.

“Just compare the 41,000 to the 3.2 million and 1.6 million, so that tells you the size of Mazatlan,” Covarrubias said. “Now is it a good project to make Mazatlan bigger, as the TMEC Corridor proposes a new port for the port of Mazatlan? Then yes it is good, and it can make it more viable. Will it compete with Manzanillo or Lazaro Cardenas? It is going to take years.”

Covarrubias says although the project has some good points, he sees it difficult to be done from Mazatlan and then crossing somewhere else other than into Texas to reach Canada, because the data shows Texas is the best route to take.

He said the last potential framework he saw of the project was to create an industrial complex in Mazatlan, then for the railway to pass through the state of Durango, which he says would be a task taking years to make, as it would mean the train tracks crossing through the Sierra Madre Mountains. From there, the railway would go to Frontera, Coahuila, then to Nava, Coahuila and then to the border with Texas, which would be entering in the Piedras Negras-Eagle Pass area.

According to Covarrubias, the Eagle Pass area has much train traffic. This is because the Corona brewery is located in Nava, Coahuila, just a few miles from the border and they ship all of their products mainly through railway.

Covarrubias questioned whether Laredo would have ever been the ultimate location of the railway, although it had been reported that it was. Based on his observations from a February 2022 report by the group CAXXOR — an international conglomerate with the strength to drive infrastructure projects and other real assets — he suspected it could have been ultimately heading elsewhere.

“As of February, I am still thinking that they were going to pass it through Eagle Pass,” Covarrubias said.

Even if Mexico continues with its position to move the cancelled railway to New Mexico, Covarrubias says it is going to be hard because the shortest and efficient route is through the state of Texas.

Whatever the case, Covarrubias says the project entails the rehabilitation of 167 kilometers of Mexican railways and the construction of 180 new kilometers of tracks. He estimates that would take about 15 to 20 years to complete.

He says doing it in New Mexico might even require new infrastructure on the American side, which continues to support why Texas is the best option.

“The data will show where this corridor will ultimately end up,” Covarrubias said. “If you just see right now, two of the top five railroad crossings in the United States are in the Texas border. Laredo is No. 1 and Eagle Pass is No. 4. The data just shows what the Texas-Mexico border is and what it could be, so I think that our efforts should be made to do it through this border.”

He says even among the top 10, the city of El Paso is also found while Brownsville is around No. 13. New Mexico does not have a railroad ranked until the mid-20s.


Source: Jorge A. Vela, LMT Online.