Nearshoring, Once in a Lifetime Chance

It is very likely that a large number of executives and company directors in the world are familiar with the term nearshoring. The topic has aroused greater interest post-pandemic due to certain conditions that have affected globalized companies. One of them is the problems they faced in being able to supply raw materials and assembly products, from the simplest to sophisticated microchips and semiconductors, where manufacturers due to contagion problems closed lines and plants that affected companies in the automotive sector. which caused serious supply problems of finished units in all markets. The traffic jam on transport lines caused by the closure of airports, ports and railway terminals, which also caused the rise in the costs of freight services around the world; remember 2021 Suez Canal blockage.

Given these and other factors that in some ways have recently and seriously stumbled, the 20+ year process of globalization begins a trend of regionalization and bringing supplier companies closer to their target markets. This process is known as nearshoring.

Other advantages attributed to nearshoring or bestshoring as it is also called, is that the supplier companies are in a time zone similar or closer to that of their target customers.

On the other hand, the formation of blocks of countries that share borders, trade agreements, currency and where, for economic reasons, the supplier companies are located in the countries whose labor costs are more competitive, or, because of the technological characteristics of each country. Products or services require talent with a high level of preparation and more specialized, these are reasons why the nearshoring phenomenon is expanding around the world.

North America is in an accelerated nearshoring process, where the main market is located in the United States of America, the supplier companies are located in certain cases in the same United States territory, in other cases in Canada, and for certain conditions also in Mexico. These three countries are united by the USMCA trilateral trade agreement that facilitates commercial transactions between the three countries and which in recent years has been strengthened by the arrival of companies from the European Union, Asia Pacific and South America.

Sectors such as automotive and auto parts (electric mobility), electronics (chipsets), medical equipment (from the most basic to the latest generation equipment), agriculture and food (fresh & processed), are somewhere companies have found niches. to enhance these competitiveness networks to offer quality products and services at more competitive prices.

Technology transfer has become a true highway with several directions and destinations, and requires talent for its perfect execution and this is where CFR Group offers its knowledge and experience in the North American region with the support of local partners to offer partners’ clients in different countries around the world to make a safe landing with experienced executives and directors who are knowledgeable about the needs of the present and the future.

Article written by Jorge Segovia, CFR Global Executive Search Mexico

Photo source: Freepik

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