New nearshoring investments coming to Mexico, says govt

The Mexican government is expecting more big announcements this year to increase its list of nearshoring investments, which currently stands at about US$13bn and could rise to over US$30bn by year-end. 

While foreign companies are mostly interested in setting up operations in Mexico's northern states, President Andrés Manuel López Obrador's administration is making major efforts to promote the southeast as a destination. 

After large investments were confirmed by vehicle manufacturers Tesla and BMW Group, a major new investment will be announced in the coming weeks, finance minister Rogelio Ramírez de la O said on Wednesday during an event organized by JP Morgan. 

"We've seen some early manifestations of nearshoring as a reality and we've had announcements this year of different investments ... in different areas. For example, from BMW and Tesla. We have another one coming in the next few weeks. There are other sectors where we still have some announcements for the electronic manufacturing area,” he added. 

US electric vehicle (EV) manufacturer Tesla confirmed in February that it would build a new US$5bn gigafactory in Nuevo León state, BMW also revealed that month that it would spend 800mn euros to begin producing EVs at its San Luis Potosí plant. 

In early June, Ramírez said that some US$13bn in investments in nearshoring had been announced by 20 companies so far, and that 54% of those were from the automotive sector. Both public authorities and the private sector have agreed that nearshoring investments should rise above US$30bn this year. 

Semiconductor investments coming to Mexico?

The economy ministry said Wednesday that the tour of three states it organized with members of Taiwan’s electrical, microchips and printed circuit board (PCB) industries ended with the Asians providing positive feedback on the Tehuantepec isthmus rail corridor project – a 300km rail line between Oaxaca and Veracruz states where the government is seeking to tender 10 industrial parks for nearshoring. 

Although no investments on chip manufacturing in Mexico have yet been announced, economy minister Raquel Buenrostro said during the JP Morgan event that the next stage of the government’s attempts to attract investments in this sector would involve meetings with specific groups “to match supply and demand.”

The group of 20 Taiwanese companies, three associations and one research center arrived in Mexico on Sunday and were given a tour of Hidalgo, Puebla and Veracruz states, the ministry said in a statement. Among the visitors were giants in the microchip and PCB industry such as Foxconn, Unimicron, Invetec and Pegatron.

The idea behind attracting nearshoring investments in semiconductors is meant to reduce North America’s dependence on offshoring and Asian imports, a vision that was publicly backed by Mexico, Canada and the US during January’s North American Leaders' Summit. 

Taiwan produces over 60% of the world’s semiconductors and more than 90% of the most advanced ones, according to The Economist. 

Interest growing in Tehuantepec Isthmus 

Buenrostro’s ministry is working hard to promote the dry corridor megaproject, which would create the country’s first interoceanic link by connecting Salina Cruz port on the Pacific coast with Coatzacoalcos port on the Gulf coast. 

While no nearshoring investments have so far been confirmed in this region of Mexico, the government claims it has received 52 project proposals from national and international firms involving investments of US$4.5bn.  

"Today we have 52 projects with a letter of intent [to invest in the corridor]. Ten are interested in the industrial parks as developers and the other 42 have specific projects that they want to set up there," Carlos Sedano Rodríguez, in charge of promoting investments for the Tehuantepec isthmus project, was quoted as saying by Forbes México. 

Tenders for the industrial parks are expected to be issued this month. To make them more attractive to investors, the finance ministry announced three major tax incentives for the contract winners.