Nearshoring Trends 🚀 - Part 2

Nearshoring has become a major trend (read my previous article on Nearshoring here) in supply chain strategy in recent years, especially for companies in the US and Europe looking to bring manufacturing and services closer to home. With global supply chains disrupted by the pandemic, trade wars, and geopolitical tensions, many companies are taking a closer look at nearshoring to key adjacent regions for greater stability, speed, and cost savings.

Europe’s nearshoring focus leans towards reshoring

Think textiles returning to Italy, and semiconductors finding a home in Germany. This reflects a desire to bolster resilience and regain control over critical production. In contrast, the US is all about diversifying away from Asia, with Mexico and Central America emerging as hotbeds for electronics and automotive manufacturing.

Nearshoring Destinations for American Companies

Lithium Rush in South America’s ‘Lithium Triangle’ ⚡🔋

The lithium triangle, spanning parts of Chile, Argentina, and Bolivia, holds over half the world’s lithium reserves - a key material for EV batteries. Major investments by auto companies like Tesla and LG Energy Solutions aim to tap into this lithium close to US markets.

US Companies Seek Tech Talent Next Door in Canada 💻

With a deep talent pool in cutting-edge fields like AI, US tech giants are expanding offices and R&D centers in Canada’s Toronto, Montreal, and Vancouver. Google, Microsoft, Facebook, Intel, and Uber have all made major Canadian investments in the last 5 years.

Challenges in Latin America: Political Risks in Mexico, Brazil

Despite the proximity, political populism, corruption, and instability in countries like Mexico and Brazil give pause to some companies. Policy shifts, like Mexico’s changes in clean energy policies, demonstrate regulatory risks.

Rising Costs in Mexico 💰

While Mexico remains a top nearshoring destination, wages and other costs have been rising, eroding some of the cost advantages over Asia. Skills gaps also persist.

My prediction?

Nearshoring is here to stay! While not a silver bullet, it’s a critical trend reshaping global supply chains, with significant implications for economic development, trade, and geopolitical dynamics.

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