Mexico, the brand new manufacturing unit of the United States: from 'made in China' to 'made in Mexico' | EUROtoday

Sharing greater than 3,000 kilometers of border with the world's main financial energy may be a possibility or a condemnation. The former Mexican president Porfirio Daz He summarized his opinion in a phrase that has remained in historical past and that summarizes the ambivalent relationship, typically of affection and typically of hate, that the 2 neighboring international locations preserve: “Poor Mexico, so far from God and so close to the United States.” Almost a century later, the truth is that Mexico continues to be simply as removed from heaven, however its closeness to its 'gringo' neighbors is now not lamented in the identical approach. Taking benefit of the worldwide development of firms to carry their manufacturing processes nearer to closing consumers, a phenomenon often called nearshoring, the Aztec nation has consolidated itself because the United States' first buying and selling companion for the primary time in 20 years, displacing China, of which Washington seeks to 'disconnect'.
It was in all probability by no means his intention, however Donald Trump He was the primary particular person liable for precipitating this new relationship of codependency between the 2 neighboring international locations. Despite his hostile perspective in direction of Mexico, whom he threatened to make pay for the development of a 'nice wall' on the border or to lift tariffs if they didn’t comprise the migratory waves, the sanctions that the Republican chief imposed on China and the signing The renewed North American Free Trade Agreement (T-MEC) created the proper ecosystem for the Aztec nation to place itself as the principle focus of nearshoring attraction worldwide. Despite the challenges it poses by way of violence, infrastructure, authorized safety, corruption or migration, the United States has understood that its greatest ally on this globalized, tense and altering world just isn’t on the opposite facet of the Pacific, however south of the Rio Bravo. .
Its privileged geographical location, low-cost labor and the absence of regional tariffs have made Mexico the nice winner of the commerce conflict between China and the United States. The shock was consolidated final 12 months. According to the newest figures launched by the Census Bureau, In 2023, the United States will import extra items and providers from Mexico than from every other nation on the planet for the primary time in 21 years. In complete, Mexican exports to its northern neighbor amounted to 475,606 million {dollars}, 4.6% greater than in 2022, whereas the import of Chinese merchandise remained at 427,229 million {dollars}, which represents a drastic drop of 20% in comparison with the earlier 12 months. Among the Mexican merchandise that the US imports probably the most are auto elements, which symbolize 27% of complete exports, adopted by digital merchandise, with 18%, and equipment, with 17%.

“This inertia that is being generated is the golden opportunity for our country to aspire to be first world. Mexico has everything, if we are intelligent,” he not too long ago said. Samuel Garca, governor of Nuevo León, throughout his speech at a enterprise discussion board. This northern state, bordering the US, is the Mexican territory that’s benefiting probably the most from nearshoring, acquiring 72.2% of investments of this sort nationally and 45% in Latin America. Not even the richest man on the planet has been in a position to withstand the chance to speculate. He a 12 months in the past, Elon Musk introduced the development of its new gigafactory Tesla in a municipality positioned on the outskirts of Monterrey, able to producing a million models per 12 months, a determine that goals to rise to twenty million by 2030, producing greater than 7,000 direct jobs and near 30,000 oblique jobs.
This funding is a real reflection of the advantages that nearshoring entails: low-cost labor, exemption from tariffs and near the buyer. The curiosity in shifting their factories to Mexico comes not solely from American firms, but additionally from many different overseas firms that promote to the North American market. Just between January and March of this 12 months, greater than 50 investments linked to nearshoring have been introduced within the state of Nuevo León with a worth of 13,000 million {dollars}, in line with what was not too long ago revealed. Hctor Tijerina, director of Invest Monterrey. For his half, the Inter-American Development Bank (IDB) estimates that the influence of this industrial growth may attain 35.3 billion {dollars} a 12 months within the quick time period.

The Chinese 'entice' to keep away from sanctions

Due to the size and class of the manufacturing course of, China maintains its standing because the world's manufacturing unit, however the advantages are now not as worthwhile. The enchancment within the dwelling circumstances of the Chinese inhabitants and the rise in staff' salaries have multiplied manufacturing prices, which has pushed many firms, together with some nationwide ones, to maneuver their factories to 3rd international locations reminiscent of Vietnam or Indonesia. , or additionally to Mexico, from the place they provide the native market and may also circumvent the USMCA prohibitions, which require {that a} excessive proportion of the ultimate merchandise have been produced within the area. The Aztec nation additionally gives them one of many most cost-effective labor on the planet. According to a research not too long ago revealed by The Boston Consulting Group, Mexican firms spend a median of 372 {dollars} monthly for labor, whereas Chinese firms spend 379.

That similar report factors out that in Mexico individuals work round 46 hours per week, 12% greater than within the Asian large. And within the occasion of dismissal, although there are unions within the Aztec nation, the settlement is 44% decrease than that of China. Another research that confirms the arrival of Asian funding in Mexico, ready by the National Association of the Components Industry, factors out that final 12 months the worth of exports of Chinese elements manufactured in Mexico to the US was 1,000 million {dollars}, 15% greater than the earlier 12 months. “It is clear that their first interest is to circumvent the rules of origin to sell to the US,” he factors out. Economic News Jos Ignacio Martínez, coordinator of the Laboratory of Analysis in Commerce, Economy and Business of the National Autonomous University of Mexico, “But they are also very interested in supplying the national market, for example, seven out of every 10 electric cars sold in Mexico are Chinese.”
An 850-hectare vacant lot positioned 40 kilometers north of the town of Monterrey has grow to be the epicenter of the Chinese touchdown in Mexico. For a number of months, heavy equipment has been working across the clock to rework the lawyer's outdated household ranch Cesar Santos in Hofusan, one of many principal industrial parks within the nation, the place Asian firms will have the ability to produce with the Made in Mexico label, avoiding US sanctions and the restrictions of the T-MEC. So far, 28 Chinese firms have invested on this undertaking, a determine that the homeowners estimate will rise to 35 within the subsequent two years, with the capability to generate 15,000 jobs within the space. Among these which are already working from Hofusan are: the technological Hisense, the vehicles JAC Motors o SAIC Motor, or the furnishings shops Sunon Furniture o Man Wah Holdings.

Threats

Insecurity, corruption, pure disasters, migration, authorized insecurity, lack of water and the upcoming electoral processes on each side of the Rio Bravo emerge as threats to Mexico within the midst of the growth course of. The authorities of Andrs Manuel López Obrador (AMLO) has capitalized on the nearshoring alternative, however has didn’t pacify the nation. With three months left till the presidential elections are held, during which every little thing signifies that his anointed successor would be the winner, Claudia Sheinbaum, His six-year time period has already been confirmed as probably the most violent in historical past, with greater than 180,000 homicides till final February. The deployment of the Army, camouflaged beneath the flag of the National Guard, has triggered complaints of violation of human rights within the nation though, in Martínez's opinion, by way of combating corruption and customs management, militarization has been a hit: “the dispatch of merchandise has been streamlined, there has been greater tax collection and corruption has been reduced.”

To forestall all of the financial advantages of nearshoring from being concentrated alongside the border with the United States, the place there may be already an absence of water, the Mexican authorities has additionally proposed to spice up the economic system of the south of the nation, providing debt forgiveness to buyers who settle there or constructing massive infrastructure works, such because the Mayan Train, which can journey by means of the vacationer Yucatan, or the Interoceanic Train, which goals to unite the Atlantic and the Pacific and which, in Martínez's opinion, “will cause greater dynamism in the movement of goods of products imported from Asia”. The financial future appears optimistic: increasingly overseas firms wish to make investments and fewer residents wish to to migrate, with the bottom determine since 1990. n