“NEARSHORING”: THE TREND “MADE IN MEXICO”
Global companies, especially from Asia, are looking for a door to enter the world’s largest market: the United States. However, despite being considered the land of opportunities and business, the USA has made importing products, especially from China, more difficult, since in 2018 the trade fees were increased.
To face this situation new strategies come into play,one of them is"Nearshoring”– that is, taking production closer to the markets the products will be exported to, thus reducing the time with logistics and, consequently, the fees applied.
Countless companies have started moving their production lines to Mexico to diversify their production out of Asia. Since it is also about geographic localization, as declared by Sean Seo, executive from DY Power, in a conversation with The New York Times: “Globalization has ended. It’s localization now.”
The automobile market is one of the segments leading the nearshoring. Francisco Gonzalez, president of the National Industry of Auto Parts, states that in 2022 approximately 70 new plants from this segment are in Mexico; this directly impacts how much SAMOT will contribute to delivering materials to these automakers, where the demand tends to further increase.
Some places, like Mexico City and Nuevo León, host major companies and are the strategic focus for others. While Mexico City is the largest destination, according to the Ministry of Economy from Mexico, Nuevo León is second on the list, being considered the “geopolitical planetary alignment” by governor Samuel Garcia, where they are aiming at facilitating the access to the frontier passages.
Companies like SAMOT had already felt the growing trend even before “nearshoring”, setting up in 2008 at the city of Silao, Guanajuato, to meet the clients’ demands. The plant has a 13,000 square meter building and installed capacity of 1,500 tons/year of parts in a modern industrial facility.
Other automakers that have also joined this trend are:
- Tesla: the plant will be located in Nuevo León, where it will make electric cars;
- Ford Motor Co.: the plant is located in Cuautitlán, targeted at assembly lines;
- Lizhong: Chinese automobile wheel manufacturer, was pressured by its clients to open a plant in Mexico, becoming the first one outside Asia;
- DY Power, a Korean company that manufactures components for construction equipment, is analyzing the possibility of opening a facility near Texas.
Relocating plants and manufacturers from different segments to Mexico is a trend that will continue growing in 2023. SAMOT Mexico is already part of this and serves the automobile, agricultural and other markets, easily exporting parts internationally to a considerable part of the American continent.