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Nearshoring, an opportunity of more than 7,000 million dollars for the Mexican automotive sector

Industrial real estate Mexico.

If the United States relocated to Mexico only 2% of what it buys in supplies from China , the Mexican automotive sector could capitalize up to 7,020 million dollars (mdd) in supplies, said Kenneth Smith Ramos , partner of the consulting firm Agon Economy, Law and Strategy.

The figure is part of a study prepared by the United Nations Conference on Trade and Development , which the former chief negotiator of the Treaty between Mexico, the US and Canada (T-MEC) shared in the webinar: Challenges and challenges 2022 in the supply chain of the automotive and auto parts industry in Mexico in the face of the T-MEC .

Other sectors benefiting from this nearshoring [process in which a company transfers part of its production to third parties to bring it closer to its location] would be the Mexican manufacturers of communication equipment (5,311 million dollars), the companies involved in the production of electrical machinery (4,873 million dollars), those of general machinery (9,485 million dollars), and precision instruments (4,389 million dollars), as well as those linked to rubber and plastics (1,557 million dollars), among others.

To capitalize on these opportunities, the office of which Smith Ramos is a part created the T-MEC Compliance Guide , in which they offer a series of topics that Mexican automotive companies must observe in order to comply with this treaty and benefit from it.

The priorities considered in this guide have to do with the labor aspects of the agreement, rules of origin, customs procedures, trade facilitation, digital trade and the energy factor. “The great key is knowing how to develop them,” added the specialist.

CHALLENGES

Similarly, he referred to the disruption that the value chains of the automotive industry have suffered, which have been affected by the shortage of supplies, the increase in freight costs and the pandemic.

“There are great opportunities that derive from the T-MEC , to attract investment to Mexico due to the nearshoring phenomenon , due to the global situation and the pandemic, but also due to the fact of making the rules of origin stricter for other regions of the world. , it becomes more difficult to export its components and incorporate them into the automotive sector in North America ”.

Against this background, Kenneth Smith warned , the shortage of inputs will persist this year. Added to this challenge are the positions that the Mexican and US governments have recently expressed and that could be violating the rules agreed in the T-MEC.

The first, for his alleged reforms on the energy issue; and the second, due to the “economic nationalism” that it seeks to establish, by favoring the production and supply of electric vehicles in the US , through subsidies for companies in that sector that settle in US territory, the expert said.

Source: mexicoindustry.com

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