The International Monetary Fund lastyear ranked Mexico as the world’s 12th-largest economy. The country’s high placement is thanks in part to a combination of strong export performance and increased levels of foreign investment, which in turn contributed to the robust growth – in particular – of the construction and manufacturing industries. The IMF also took note another trend benefiting Mexico, the global surge in so-called near sourcing, the supply chain management strategy of locating production and manufacturing processes closer to their end consumers.
Near sourcing was largely prompted by the problems manufacturers experienced during the pandemic, when companies saw vital parts and components stranded thousands of miles away from their factories and plants. Thanks to Mexico’s geographic proximity to the lucrative markets of North America, the growing popularity of this business practice has particular relevance to the country.
While the pandemic may be receding into memory, the ongoing tariff war between Beijing and Washington has caused some U.S. businesses to look for other areas of the world where they can operate more cost effectively. The United States-Mexico-Canada Agreement, which increased regional value content requirements for products considered to be made in North America, has also given producers an incentive to rethink their supply chains. Along with this, the disruption of access to raw materials that followed the outbreak of war in Ukraine once again forced businesses to look for alternative suppliers.
“Companies can use Mexico to expand their production capacity and give them greater access to the E.U. and Canadian markets, as well as the U.S.,” says Luis Antonio Ramírez Pineda, general director of BANCOMEXT, the state-owned bank. As a result, foreign investment in Mexico is expected to exceed $40 billion this year, 11.7% higher than in 2023. And while the logistics sector is forecast to enjoy the highest percentage rise, this will be from a relatively low base. Some 64% of foreign investment projects are estimated to be destined for the manufacturing industry and its sales operations.
Near sourcing is a relatively new development, and Mexico’s proximity to the U.S. is just one of the reasons so many blue-chip overseas financiers and businesses take the country so seriously as an operational and investment destination. For one thing, they only have to look at companies like leading white-goods manufacturer MABE to gauge the level of ambition, commercial acume
