General

Mexico’s industrial parks benefit from nearshoring

Mexico‘s industrial parks have increased their occupancy levels as a result of nearshoring, according to the Ministry of Finance.

According to the Mexican government, the unprecedented business climate will boost private investment in Mexico due to the phenomenon of relocation of operations to regions close to the target market (nearshoring).

The Inter-American Development Bank (IDB) estimates that Mexico’s short and medium-term potential gain from nearshoring is US$35 billion, equivalent to 2.6% of GDP derived from new merchandise exports.

In line with the above, for 2022, the IDB announced a credit line of 200 million dollars and 3 million dollars in non-reimbursable resources to be channeled through development banks, with the objective of financing the relocation of companies, especially in the southeast of the country.

For its part, IDB Invest will grant between 1.8 and 2.8 billion dollars in additional private financing to companies that want to relocate to the Isthmus of Tehuantepec.

Industrial Parks

In view of this scenario, the Ministry of Finance believes that Mexico will be able to consolidate its position as a leading exporter, strengthening employment in the country’s manufacturing and logistics sectors.

The opportunities of nearshoring are already being reflected in 2022 through the increase of demand in industrial parks by 42% compared to last year and the construction of 4.7 million square meters of industrial space, double the amount of a year ago.

In addition, the share of some Mexican manufactures in U.S. imports has increased from 2019 to 2022, such as cars and trucks (2.8 percentage points), bodies and trailers (11.3 percentage points), metal structures and ironwork products (4.6 percentage points), among others.

Outlook

Among external factors, by 2023, industrial production in the United States is expected to continue to benefit from lower distortions in global value chains that have limited its performance since 2020, which would support the replenishment of inventory levels and the increased supply of inputs and products to the rest of the world.

Also, the phenomenon of the return of production processes to the United States from other parts of the world, such as Asia (reshoring), will continue to generate sources of employment and production in entities commercially linked to Mexico.

In the case of Texas, the main trading partner, it generated 34,100 new manufacturing jobs between January and July 2022, around triple the number of jobs created in the same period of the previous year, reaching its highest level in July 2022 since November 2008.

 

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