I start most days by reading the Wall Street Journal (WSJ). The WSJ has been my favorite newspaper to read for nearly 30 years. Its regular reporting is well-written and informative. Its op-eds are often provocative but also well-worth reading. But a week ago, I read an opinion piece from a long time WSJ opinion columnist titled “How Mexico Missed the Nearshoring Boom,” and I almost fell out of my chair.
The columnist is one whose work I have read diligently for over a decade, and who I respect for her opinions and perspectives on Latin America. But this particular column’s thesis of a “missed opportunity” was, to me, totally incorrect.
A review of key nearshoring and export data would make it hard to conclude that the opportunity has been missed:
- As of September, Mexico has received US $35.7 billion in foreign direct investment (FDI) in 2024, representing 8.5% growth over the same period of 2023.
- Janurary through September 2024, private companies have announced plans to invest a total of US $64.7 billion in Mexico.
- From October 2022 to July 2024, Mexico has seen 118 foreign investment announcements totaling US $122.7 billion.
- Of the above mentioned $122.7 billion, so far only $13.2 billion of these projects have been completed — meaning 89% or $109 billion remains unrealized.
- There are 93 new industrial parks currently being built in Mexico, which will bring the country’s total to 460.
- As of the close of Q3 2024, Mexico’s exports to the United States had increased 6.5% over the same period last year.
- Just last year, Mexico became the leading exporter to the United States for the first time in 20 years.
- At the close of Q3 2024, Mexico continues to consolidate its lead, now representing 15.9% of total imports to the U.S., versus 14.4% for Canada and 10.8% for China.
These numbers present the real story, show a clear trend, and provide no evidence of a “missed opportunity.” In fact, if the next U.S. administration enacts a 60% tariff on China as has been suggested, then Mexico could become even more attractive and further increase its leading position in exports to the United States.
As Mexico News Daily has frequently reported, business leaders on the ground in Mexico insist that the nearshoring boom is real, that it is in fact happening, and that there is much more impact yet to come.
More importantly, the results of many companies show just how real the trends are. Sales of many export-oriented companies are growing double digits, profits are increasing, and many of those companies are making significant investments in plants, equipment and people to continue driving growth in the years to come. Industrial parks are at record low levels of occupancy and new ones are being built throughout the country. That is precisely why it’s so important to listen to business leaders on issues like these, hear firsthand what they are doing, and look beyond the political rhetoric. Business leaders make decisions that involve money and often long-term investments, so observing their actions matters.
There is, of course, much uncertainty on the horizon for global trade flows and manufacturing plans given the promises of significant tariffs coming soon from the Trump administration — and Mexico will most certainly be impacted. But it’s hard to not see this uncertainty having an even more significant impact on China, which should only make Mexico even more attractive as a nearshoring destination. Mexico has and always will have geography in its favor, and its cost of labor, workforce skills and productivity levels are globally competitive.
The nearshoring boom has not had as large an impact as quickly as had been hoped for Mexico, but I think it’s important to recognize that such significant changes in supply chain strategy often take time. Many companies spent the last several decades moving manufacturing to Asian countries, so it is reasonable to expect that changes in a company’s manufacturing footprint do not happen overnight.
It is also likely that many companies were waiting for more clarity on the Mexican elections, the U.S. elections and potential trade policy changes. With some of those big questions resolved, it seems reasonable to expect that things will now begin to move faster.
Mexico, despite its imperfections, has shown to be a consistent and reliable destination for investment for many years. I personally think that we are still in the early innings of what will be a significant nearshoring opportunity for both Mexico and North America as a whole for years to come. Declaring that it was a missed opportunity is neither correct nor constructive.
The real missed opportunity was chance to present an accurate picture of nearshoring in Mexico. What was presented in the article is far from the reality that I see and hear on the ground, or from what the data shows. It was yet another example of what I have seen as the consistent trend of international media to often only focus on the negative side of the story when it comes to Mexico. That was, of course, a significant motivator of ours in buying Mexico News Daily: to present a more complete and comprehensive perspective on the country that is sorely lacking in most international media today.
I will say that the nearshoring boom has not come as quickly as hoped and has not yet had nearly the impact expected. Yet hardly a day goes by without critical improvements in the country’s security, energy, water, education and infrastructure. Mexico (both the public and private sectors) have much work to do to fully realize the benefits of the nearshoring opportunity, but it is moving in the right direction.
Travis Bembenek is the CEO of Mexico News Daily and has been living, working or playing in Mexico for nearly 30 years.
I read the same opinion in the WSJ and wondered at the time if the read wasn’t a little uninformed, and thus, uncharacteristic of the near shoring positives and benefits Mexico has experienced. Indeed, the future brings uncertainty but, I think, more gain is to be realized.
Thank you again for your intelligent and well-supported thoughts. I especially appreciate knowing that 90% of promised news shoring opportunity is on the horizon. Yes, that’s a lot of unrealized promises but I agree with you that the CSuite folks will decide to follow through for many reasons including proximity to the US market, cost structure, and the fact that they can export to many places from Mexico, not just the US. Also, China is currently not as favored as it once was. Probably Vietnam has similar opportunities as Mexico for the Asian market
I believe the most concerning fact is that only 11% of announced investments have been completed in a nearly 2 year time frame. Mexico should seriously consider privatizing it’s energy sector. The current situation has created nothing more than a money grab for corrupt politicians and the cartel and created an overpriced and inefficient environment for the population. Industry relies on access to reliable and affordable energy which is clearly a struggle for Mexico. It has so much potential yet continues to struggle with missed opportunities as the 11% suggests.
Amen
The boom is real and naysayers are dunderheads, your article couldn’t make the point clearer! Just watch the numbers!
Hi,
I actually agree with the WSJ’s opinion piece as I see it on the ground.
The so called $ 36 billion USD is Not new investment money. It is mainly from companies already established ihere.
Mexico has so far missed the deluge in FDI for several reasons,
Poor and inadequate infrastructure. Energy, water and roads are insufficient to accommodate an influx of serious new investments.
AMLO did a superb job at scaring foreign business people with his demagoguery and populism.
The very serious issues of crime and insecurity surely are taken into consideration by any sane business people.
The new presidenta Claudia was left a government in shambles. Broke and up to the neck in debt.
She is desperately trying to salvage a cadaver called Pemex. Putting out fires in Sinaloa, Guerrero, Tabasco, even here is Guanajuato.
So please, take off the rosy glasses and look around. Read the local paper AM. A section devoted to the Daily murder count that now includes once safe San Miguel Allende.
My humble opinion.
Thank you Diego Valdez , that it’s the reality of the finances in Mexico , the government might sugarcoat it any way they want but Manuel Lopez squandered that opportunity, big time , I feel sorry for the working class , they are the ones who will pay the price !!
I’ve been in Mexico for 14 months living in Queretaro. In that time, I’ve had my phone stolen out of my jacket pocket, the catalytic converter stolen, numerous fraudulent credit card transactions and just a few weeks ago 10 people murdered 1/4 mile from my home. I love Mexico but the crime is intense and this is supposedly in “safe” Queretaro. Mexico’s future is limited as long as there is a lawless society.
I see your point but had my phone yanked out of my hand on the street in London and no discernable police response. Same worries about crime in major cities of Rome & Paris. Steps back. Bigger perspective
In the end, you seem to agree that the nearshoring has not come quickly and had the expected impact, but think that the window is still open. Further, you think Mexico can exploit that still open window because of almost daily “critical improvements in the country’s security, energy, water, education and infrastructure”. Granted, the new administration has finally admitted these shortcomings, but from that admission to viable solutions and there implementation is quite a leap of faith.
I cannot call up the article itself. Only the comments.
What do I have to do to be able to read the article ??
Marina Fanning
[email protected]
Thanks Travis for another balanced article. Eventhough, this is all that I needed to know, “Declaring that it was a missed opportunity is neither correct nor constructive.”
I wouldn’t say the near shoring has been missed. My point is that amlo left such a mess that the new administration has an almost impossible mountain to climb. Particularly when Claudia is still in his pocket and amlo continues to have a great influence over the country.
Sadly, as much as I despise trump, his threats and insults have done more to get the Mexican authorities off their a…., and get serious about fighting crime and violence.
Mexico deserves better.