Seven Benefits of Nearshoring in 2022: Capability
Nearshoring has become an increasingly popular strategy for businesses looking to expand their manufacturing operations and gain a competitive advantage. In fact, Mexico has spent the last decade flexing its innovation muscles to ensure its capabilities are considered world-class by American manufacturers looking to locate operations in the country.
Mexico is home to a large pool of skilled workers who are well-versed in manufacturing processes, making it an attractive destination for companies that are looking to expand their capabilities in areas such as product assembly, quality control, and logistics.
In addition, Mexico has a strong focus on research and development, ranking third among the 18 economies in LATAM and the Caribbean on the 2022 Global Innovation Index. In fact, Mexico has risen 25 spots in the Index in the past decade, in part due to the growing number of universities and research institutions that have focused on innovation in fields such as engineering, electronics, and information technology.
Additionally, companies such as General Electric and KIA have located their R&D centers in Northern Mexico, a fact that the World Trade Market Review cites as “increasing the attractiveness of the country’s R&D landscape.”
This focus on innovation has led to several advancements in areas such as automation, robotics, and artificial intelligence, which can help companies to streamline their operations and improve efficiency.
Another feather in Mexico’s capabilities cap is its proximity to the United States. By nearshoring in Mexico, companies can reduce their transportation and logistics costs and gain quicker access to the U.S. market, which can help to increase their competitiveness and profitability.
Other factors that have placed Mexico at the top of the “capability” charts for many companies seeking to locate operations in the country include:
- Lower Labor Costs: Mexico offers pricing advantages over many other countries in the region, helping companies reduce their operating costs and improve their profitability.
- Reduced Shipping and Logistics Costs: By nearshoring to Mexico, companies can reduce their shipping and logistics costs, as well as their lead times, which can help to improve their overall supply chain efficiency.
- Improved Quality Control: Companies like The Nearshore Company work with Mexico-based manufacturers to ensure a strong focus on quality control, which can help companies to improve the quality of their products while reducing the risk of defects or recalls.
- Cultural Similarities: Mexico has a strong cultural similarity to the United States, which can help to facilitate communication and collaboration between businesses in both countries, making it easier for companies to establish relationships and work together effectively.
- Government Incentives: The Mexican government offers a range of incentives to companies that choose to invest in the country, such as tax breaks and other financial incentives, which can help to reduce the overall cost of doing business in Mexico.
In short, nearshoring in Mexico offers a range of benefits for companies that are looking to expand their capabilities and gain a competitive advantage. With a strong focus on manufacturing, research and development, and innovation, as well as a range of benefits such as lower labor costs, reduced shipping and logistics costs, improved quality control, and cultural similarities, Mexico is an ideal location for companies that are looking to expand their operations and establish a presence in the region.
In our next blog, we’ll talk in more detail about how political and proximity factors increase the certainty of Mexico as a reliable place to do business. In the meantime, if we at the Nearshore Company can help enlighten you about nearshoring for manufacturing, please reach out.
