Nearshoring and Security: Priority Issues Raised by the IP to Candidates

The private sector in Mexico has highlighted two primary issues to the presidential candidates: the relocation of companies as a result of the changes in global supply chains brought about by the COVID-19 pandemic, and the widespread insecurity in the country. These concerns have been brought to the fore as the country ramps up for the upcoming electoral campaign, slated to begin on Friday. Since the middle of 2023, various private sector organizations have been engaging in discussions with the leading presidential candidates, who are set to assume office on October 1.

Organizations such as the Business Coordinating Council (CCE) and the Confederation of Industrial Chambers (Concamin) have been particularly focused on the phenomenon of ‘nearshoring’. This is a term coined to describe the disruption of global supply chains due to the pandemic, which has led to an increased emphasis on local sourcing of goods and services.

In a meeting held in late January, representatives from the industrial sector had a chance to discuss these matters with Altagracia Gómez, the coordinator of the Regional Economic Development and Relocation table for Claudia Sheinbaum Pardo, the candidate representing the Let’s Keep Making History coalition. The meeting was attended by presidents and general directors of entities affiliated with Concamin, and discussions centered around the issue of relocation and the need for adequate infrastructure to capitalize on the opportunities presented by nearshoring.

During the meeting, Gómez emphasized that Sheinbaum is keen on close collaboration with the industry. As a result, they expressed a willingness to work towards the development of the Mexican economy. According to Concamin, one of the key ways to stimulate economic growth in Mexico and to leverage the benefits of relocation is by promoting industrial policy.

Under the leadership of José Abugaber Andonie, Concamin has made it clear that it seeks to foster economic and social development in Mexico by bolstering the national industry, which they see as one of the main drivers of economic recovery and growth. They have submitted a document to Sheinbaum Pardo’s team and the opposition candidate, Xóchitl Gálvez Ruiz, outlining ‘Concamin’s Strategic Vision of Industrial Policy 2024-2050’. This document proposes cross-cutting goals and strategic actions designed to spur the development of the sector.

The proposal includes specific policies, or concrete actions and proposals, that address a variety of areas. These range from support for small and medium-sized businesses, intellectual property rights, sustainability and climate change, to labor issues and more.

The cornerstones of the proposed industrial policy include investment in infrastructure, technology, innovation, and training. These elements are seen as critical in creating an environment that fosters increased production, job creation, and improved productivity.

The implementation of suitable policies, the document suggests, can contribute to the creation of formal, high-quality jobs, thus enhancing the living standards of the population and reducing poverty. Concamin believes that the growth of secondary activities is constrained by factors such as public and private investment in infrastructure, the marginalization of construction companies in public works, lack of trust and certainty for private investment, and issues related to customs processes, smuggling, and undervaluation of goods, among others.

The Mexican Wind Energy Association (AMDEE) has also expressed to the candidate teams the need to establish transmission networks in industrial clusters. Given that this is an activity that falls within the purview of the state, they have proposed building these networks and then transferring them to the government. This would address the issue of interconnecting power plants and would boost the generation of clean energy in the context of relocation.

The private sector, in its proposals to advance an industrial policy that leverages nearshoring, also believes that it is essential to enhance the transmission and distribution networks for electrical energy to ensure a reliable supply. This includes promoting the use of renewable energy and clean fuels.

While the private sector has urged the candidates to seize the current economic opportunities in Mexico, it has also emphasized the need to bolster security. They have proposed increasing security on the roads, citing the 84,963 truck thefts reported so far during the current six-year term. Almost two-thirds of companies indicate that one of their major challenges is the theft of goods in transit on the country’s roads.

Business leaders also argue for the construction of adequate public safety facilities in states and municipalities.