Article by Staffing Industries Analysts...
Mexico’s proximity to the US, competitive labor costs and stable trade agreements have propelled it to the forefront of the nearshoring phenomenon. If the trend continues at its recent pace, the country could benefit from the creation of millions of jobs, particularly in manufacturing, IT and business services.
During the first quarter of this year alone, the country received $20.31 million in foreign direct investment, a 9% increase compared to the same period in 2023, according to Mexico’s Ministry of Economy.
Deloitte projects that over the next five years, new investments derived from nearshoring in Mexico could create up to 1.17 million additional jobs in the manufacturing industry alone.
Yet nearshoring growth doesn’t necessarily have a straightforward growth trajectory. Challenges include infrastructure and a talent shortage. To overcome them, staffing experts in the region say it will require a team effort.
“Mexico possesses unparalleled conditions that make it highly attractive: proximity, trade agreement, demographic bonus; it is a true magnet for investments,” says Mónica Flores Barragán, president of ManpowerGroup for Latin America based in Mexico. “If we train talent at the necessary speed, demonstrate legal certainty and ensure safety, growth is limitless. Our industry can contribute significantly to this process.”
Infrastructure Inequties
While nearshoring fuels job creation, the benefits are not evenly distributed. Major cities like Mexico City, Monterrey and Guadalajara attract significant investments, while other regions grapple with infrastructure and security challenges.
The construction industry estimates a pressing need for expanded industrial parks to accommodate the surge in demand. Indeed, the Mexican Chamber of the Construction Industry estimates a need for 15 million square meters of industrial parks over the next five years.
Temporary work agencies are seen as a potential solution to provide agility.
“Nearshoring necessitates legal predictability, energy, infrastructure, security and, fundamentally, labor flexibility coupled with investment in training,” says Francisco Martinez Domene, CEO of Adecco Group in Mexico. “Fascinating developments are unfolding. The country requires the presence of temporary work agencies to provide a flexible, secure and formal solution.”
Growing the needed talent base, too, will require investment of time and money, experts say. The demand for skilled workers far exceeds the available talent pool. IT, engineering, supply chain management and English language proficiency are highly sought-after skills.
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