NEARSHORING REPORT November 2024 by LFT Group
The November 2024 Nearshoring Report describes Mexico’s recent initiatives to boost foreign investment and strengthen key sectors through nearshoring. The creation of a business council within the Ministry of Economy, announced by Marcelo Ebrard, aims to coordinate investment attraction in each state and enable better project management. This council, supported by President Claudia Sheinbaum, will allow for strategic decision-making to balance the distribution of Foreign Direct Investment (FDI), which currently favors the northern region with 60% of the total, while the southern-southeastern region receives only 8%. To correct this disparity, maps will be developed to identify key resources such as water, facilitating more efficient project planning.
Mexico’s automotive sector has seen growth in 2024, with a 6.13% increase in light vehicle production and a 4.77% increase in exports from January to September compared to 2023. Mexico is capitalizing on the global transition to electric vehicles and is solidifying its position as a leading supplier of automotive goods in North America. Electric vehicle production in the country reached 145,825 units, reinforcing its role in the electric vehicle supply chain.
Mexico’s aerospace industry has also expanded significantly, generating nearly $12 billion in exports in 2023 and creating more than 65,000 specialized jobs. This growth has been driven by the establishment of specialized production plants and collaboration with international agencies. Mexico has achieved advances in space exploration, developing the Colmena satellite in partnership with India’s space agency. Additionally, Monterrey produces key components for SpaceX engines, such as combustion chambers for Raptor engines, and work is underway on a high-efficiency ion thruster, positioning the country as a global leader in space technology.
During the first half of 2024, the private sector made 143 public investment announcements, with an expectation of $45.5 billion in foreign direct investment, adding to the $110.7 billion from 2023. These investments are expected to generate approximately 62,940 jobs. Among the countries interested in investing in Mexico are China and France, with a focus on the automotive and natural gas industries.
The National Infrastructure Plan, presented by President Claudia Sheinbaum, includes the rehabilitation and modernization of up to 18,000 kilometers of railway lines to improve regional connectivity. One of the key projects is the Mexico-Pachuca train, which aims to expand the passenger rail network. This line will connect Mexico City with Nuevo Laredo, passing through cities such as Pachuca, Monterrey, San Luis Potosí, and Querétaro, covering a distance of approximately 1,143 kilometers. Preliminary work has already begun, and the project is expected to generate about 40,000 direct and indirect jobs with an investment of 50 billion pesos. The infrastructure is expected to be completed by 2026, with operations beginning in the first quarter of 2027. This electrified double-track railway will significantly reduce travel times between cities.
In summary, Mexico is making strides in its effort to leverage nearshoring, attracting foreign direct investment in strategic sectors and enhancing the infrastructure needed to capitalize on economic growth. With the creation of the business council and investment diversification, the country is poised to balance regional economic development and strengthen emerging industries such as automotive and aerospace.
By LFT Grop
