Offshoring: A Thing of the Past
Ryan James Solis
The hassle of managing factories across the world and decreasing supply-chain stability has made offshoring to nations like China much less lucrative and productive.
So what is the future?
For companies eying improvements in productivity, profits, and growth, the choice is clear: nearshore to Mexico and the Borderplex region (which includes C.d. Juarez, MX, El Paso, TX, and Las Cruces, NM). Here are just some of the reasons to nearshore to the Borderplex:
1. Political Challenges
Tensions are high in U.S.-China relations with the recent history of trade-wars and military escalations in the South China Sea. Near-shoring to Mexico substantially reduces risk and susceptibility to tariffs, delays, and sanctions. With the USMCA trade deal signed and implemented, secure and low-cost trade with Mexico is guaranteed.
2. Efficient Supply-Chain
7,249 miles: the distance from Long Beach, CA to Hong Kong. 9 miles: the distance from downtown El Paso, TX to Downtown C.d. Juarez, Mexico. The COVID-19 pandemic revealed the vulnerability and hidden high-risk of long-distance and expansive supply chains. Reinstituting stability into Chinese supply chains was difficult, time-consuming, and costly. Production lines in Mexico are adjacent to the U.S. and provide high-stability and accessible quality control. Trading with a neighbor reduces shipping times from 4 weeks via China to a couple of days via Mexico.
3. Proven Skilled Labor Pipeline
In China, the median age is 38. In Mexico, the median age is 29, almost a whole decade younger. China is currently experiencing an aging population, leading to a decrease of 25 million working-age citizens since 2000. In comparison, Mexico has a young, vibrant, and competitive job market. In Mexico, connecting companies to skilled and talented labor from vocational and higher education institutions is a proven success plan, such as with our CONREDES program.
4. Favorable Business Climate
With its favorable tax system and cost-competitive environment, nearshoring to Mexico leads to a decrease in total landed costs. In addition, with Chinese manufacturing labor costs increasing rapidly by 16% per year1, nearshoring to Mexico is the best choice for the present and the future.
5. IP Protection
Every year, $225 billion is lost to IP violations in China2. Yet, Mexico’s Intellectual Property and copyright laws, which are similar to the U.S., are strictly enforced. A move to nearshore to Mexico assures companies that their hard work and innovation will be safeguarded--increasing profits, growth, and productivity.
Nearshoring to the Borderplex region is the gateway to future efficient, secure, and profitable growth. With six international ports of entry and over $108 billion in trade flowing through the region per year, the Borderplex is the new de-facto hub for growth and innovation.
1 Manufacturing labor costs per hour for China
2 The Commission on the Theft of American Intellectual Property