This is how they took 44 factories and distribution centers out of Asia to take them to Mexico

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Several factory expansions and the arrival of Asian capital to Mexico are on the waiting list, according to Market Analysis.

Lured by nearshoring in 2022, a group of investors from China Taiwan, Japan and South Korea pulled 44 factories, production lines and distribution centers from Asia to relocate and install them in Monterrey, Saltillo, Mexico City, Tijuana, Ciudad Juárez and Guadalajara.

“Up to December 2022, 44 transactions had been registered in the 16 industrial markets, such as Monterrey, Saltillo, Mexico City, Tijuana, Ciudad Juárez and Guadalajara,” reveals Marcos Álvarez, CEO of Market Analysis.

Chinese, Taiwanese, Japanese and South Korean investors left Asia to move their new factories, production and distribution centers to Mexico to mitigate the effects of the US-China trade war, as well as disruptions to supply chains caused by the Covid-19 pandemic and the global economic recession, comments the company manager.

“Due to the low vacancy in the main border markets, several plant expansions and the arrival of new Asian capital to Mexico are currently on the waiting list for the redesign of production chains,” he told Forbes Mexico.

 Mexico has become more attractive to install manufacturing that moves from Asia attracted by nearshoring , thanks to the fact that it has competitiveness factors such as human capital, trade agreements and the proximity of the United States,” he says.

The popularity of nearshoring has gained in the last year and it is well known that this trend arose from the trade war between the United States and China, the disruptions in global supply chains due to the Covid-19 pandemic and also due to the war that began at the beginning of the year between Russia and Ukraine.

Companies in North America, Asia and Europe see nearshoring as a facilitator, since it allows them to transfer their factories and production processes located in distant destinations to reduce maquila costs in their place of origin or in a nearby place, says Mario A. Hernández, leading partner of the IMMEX segment of KPMG in Mexico.

Each of the Asian and European companies take advantage of the lower cost of labor, the infrastructure located in the destination country and proximity to the markets to which the products will be destined.

“This scheme could generate significant economic growth in the country’s competitiveness and economic development,” details the KPMG partner in Mexico.

The trade war between China and the United States, the increase in product prices and the adjustments in supply chains make nearshoring an increasingly viable alternative to set up factories in Mexico, says Agustín Barrios Gómez, CEO of International Capital Partners (ICP) and partner of the Association of Mexican Entrepreneurs (AEM-USA).

Nearshoring allows companies to reduce costs, guarantees the availability of supplies and facilitates their distribution in the market, says the consultant for transnational companies.

Barrios Gómez indicates that a growth of nearshoring in North America will help meet the level of pending demand and reduce the pressure for the supply of goods and products. 

“With this panorama of economic uncertainty, it is essential to have suppliers closer to home, which can also help to recover the levels of economic activity that were prior to the pandemic and strengthen the TMEC,” he asserts. 

Nearshoring, a reality in Mexico

At the end of 2022, the new companies in the Mexican territory generated a gross absorption of 8.55 million square feet, being the industrial market of Monterrey the one that registered the arrival of more companies in the last year; followed by the industrial markets of Saltillo, Mexico City, Tijuana, Ciudad Juárez and Guadalajara, according to the study “Nearshoring in Mexico”, prepared by Market Analysis.

The consultant explains that 91% of the absorption of the industrial parks was concentrated in factories and production lines of the manufacturing industry, with the automotive sector being the one that has led the demand in Mexico.

“The automotive and auto parts industry monopolized 44% of the total square feet absorbed by the arrival of new companies, a not surprising issue considering that it was the sector most affected by disruptions in global supply chains,” says Marcos Álvarez. .

Others that demand industrial parks were the metal-mechanic industry, with 14%; plastics, with 7%; electronic commerce, with 6%; furniture, with 5.7%; construction, with 4%, and consumer products, with 3.9%.

“Chinese companies have absorbed 79.5% of industrial spaces nationwide under the concept of nearshoring ; followed by companies from the United States (11.7%), Taiwan (3.4%), Japan (2.5%), Dubai (1.8%) and South Korea (1.1%)”, adds Market Analysis.

These 10 companies were the ones that absorbed the most spaces in the industrial parks :

Companies with factories and distribution centers in MexicoSquare feet absorbed in industrial parksIndustryMarketCountry of origin
hengl i731,400 metalworkingMontereyChina
lizhong699,600automotiveMontereyChina
Daye549,900electricalMontereyChina
lingong538,200automotiveMontereyChina
Citic Dicastal349,000automotiveMontereyChina
Yinlun325,000automotivesaltillo China
Zoy Living305,000FurnitureMontereyChina
That N 290,100plasticsMontereytaiwan
Alibaba277,100Consumer productsMexico CityChina
CF Moto268,000automotiveMontereyChina

Source: Market Analysis and Ministry of Economy.

“Six months ago, the phenomenon of relocation of companies sounded like an abstract idea for many economic actors, despite the fact that there was evidence of depression in rental prices and demand for industrial parks in the industrial, manufacturing and logistics enclaves of Mexico” , stated yesterday Gabriel Yorio González, Undersecretary of Finance and Public Credit (SHCP), during the plenary meeting of Morena deputies.

Currently, the relocation of companies in Mexico is already a reality, as well as it is increasing significantly and it is expected that the North American bloc will become one of the most integrated regions in its commercial exchange, said the Undersecretary of Finance.

The manufacturing chains will generate greater value for the manufacturing industry and employment in the North American region and in Mexico, added the official, who reveals that there is a list of 400 companies interested in investing in Mexico in the coming years.

Source: forbes.com.mx

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