Industry Leaders Discuss Mexico’s Competitive Edge at Nearshoring Expo
Angela Velasquez
5 min read
Nearshoring is not a novel concept, but the supply chain disruptions triggered by the pandemic, along with rising geopolitical tensions, higher tariffs, and the growing demand for shorter lead times, have highlighted the significant advantages of manufacturing closer to home.
At the inaugural Nearshoring America Expo held at the Dallas Market Center this week, a diverse group of manufacturers, importers, shelter companies, and consultants gathered to explore the advantages and challenges of nearshoring. Panels covered topics included the importance of personal business relationships, the competitive edge that Mexico offers in customization and labor costs, and the need for transparency and long-term partnerships in cross-border operations.
“There’s such an investment and acceleration in the Mexico manufacturing economy over the past five years specifically, and so now it’s about establishing relationships in order to take advantage of that,” said Callie Parchman, head of the U.S. go to market and partnerships at Prima, an integrator in Mexico’s manufacturing and supply chain ecosystem.
Business in Mexico is relational, which can be a cultural shock to U.S. companies, especially those accustomed to working with Chinese manufacturers.
Parchman, who has experience in both Mexico and China, highlighted a key difference between the two. Whereas business is transactional in China, she said a cultural aspect of working across the border is forging partnerships where both sides of the table are building together and are transparent in their needs.
“I have a non-written rule that if I don’t have a great relationship with the owner of the business, most likely I will not be doing business with that company,” said Javier Zarazua, a manufacturing nearshoring facilitator for JL Nearshoring. “That’s how important it is to have great relationships. Business relationships in Mexico starts with personal relationships.”
Juan Francisco Collado, co-founder of Alianza Importers, a San Antonio, Texas-based firm that helps Mexican companies expand their operations in the U.S., emphasized the importance of face-to-face interactions. “Brands must meet with factories and show and tell exactly what they want. [Factories] will change their production line to make the product you want,” he said. “Mexican manufacturers will do whatever is necessary to make you happy.”
For companies navigating the complexities of nearshoring, having a support system in place—whether through an importer or a manufacturing and supply chain integrator—can help mitigate cultural and business challenges. Michael Mendoza, the managing director for Nearshoring America, likened the companies to having a buddy system. “What we’re trying to create here is opportunities for you to meet people, so you don’t have to do it alone,” he said, adding that it is good business sense to tap into the experience of someone who has already been through the process.
However, nearshoring is not a one-size-fits-all solution, and Parchman cautioned against blanket assumptions about sourcing and manufacturing. She pointed out that different countries, such as Mexico and Brazil, have competitive advantages in different sectors, and companies must carefully assess where each country excels.
Depending on the product and company, some production may have to come from China. Other parts may need to come from Mexico or the U.S. “It’s not always zero to 100 or black or white, or all in China, all in Brazil, all in Mexico, all in the U.S. There are ways to risk mitigate [your supply chain]. Smart business leaders are thinking about how they can take advantage of the benefits of each of these countries.”
Mexico, for example, excels in industries such as ceramics, glass, wood, textiles, and agricultural products. The country is also highly competitive for products that require customization or unique design, thanks to more affordable labor costs. However, Mendoza warned that capacity in Mexico is rapidly filling up. “Mexico isn’t China—it doesn’t have unlimited capacity,” he said. “If you don’t secure your production capacity in Mexico within the next 18 to 24 months, you’re out of luck. That capacity is going to be gone, the better factories will be taken.”
Jason Wolfe, president and CEO of shelter company NovaLink, noted that a major push in Mexico is to develop a textile industry, where fabrics could be made locally rather than imported from overseas. He said clients want the duty-free treatment of the United States-Mexico-Canada Agreement (USMCA).
However, Wolfe pointed out that clients want a lot of things—sustainability and transparency included—all at a low cost and instantly. “We’ve dealt with quite a few companies that spout ‘our carbon front footprint is zero’ and those same companies have moved to China,” he said. “To be able to still say that your carbon footprint is neutral or almost negative when you’re making in China is really where I think that transparency comes into question.”
Sourcing textiles in Mexico can be challenging, but Wolfe said its coming and it could come quicker if U.S. companies reverse their mindset about supporting higher wages and invest in infrastructure and technology. “I’d like to see the United States align with Mexico more on things like developing fabrics and opening up fabric mills again, so we’re not dragging those products all the way across the globe,” he said.
Parchman also highlighted the cost dynamic. Companies shifting production to Mexico must be prepared for higher unit prices compared to China, especially if they are accustomed to seeking the lowest possible price. “If you’re just looking for rock bottom, low commodity price, then China still might be your option for the short-term depending on what happens with tariffs and the U.S. administration,” she said.
For many Mexican manufacturers, cash flow remains a significant challenge. Mendoza pointed out that many of these companies, which are often family-owned and second or third-generation businesses, have operated on cash rather than credit. As a result, they often request upfront payments from importers to secure materials for production.
“They don’t have a small business administration. They can’t get bank loans very easily, and so they’re asking importers for money up front. And our importers have gotten so used to different terms—60, 90, 120 days… Mexican company can’t do that. They need your cash to buy the production materials,” he said. “You’re going to have to meet them halfway.”
