Mexico Nearshoring Summit 2025 - Impact Report by Mexico Business Publishing

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312 participants

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56 speakers

3rd Edition

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29,814 visitors to the conference website

intentions

• ABU Logistics

• Advantage Austria

• Agmen Private Security

• AKYA

• Albaa

• Alfred Pay

• alianza 4.0

• Altea Desarollos

• Alvarez & Marsal

• AMAfA

• AMIVE

• AML - Mexico Logistico

• AMSOC

• ANPACT

• AOLM

• Area Industrial

• Arena Holdings

• Arrive Logistics

• Asociación Mexicana de ferrocarriles

• A ssekuransa

• Audi Mexico

• Automotive Partes Electricas

• Aux

• Aviación 21

• A XA Seguros

• BAIC Trucks

• Bajío Industrial Park

• B anco Monex

• Banorte

• Basi Logistics

• BBVA

• Becerril, Coca & Becerril

• Betterware de Mexico

• BI Worldwide

• Biometría Aplicada

• Bitso Business

• Bizagi

• BJX Aerospace

• Blip

• Bocar

• Bombardier

• BOVIS

• B ridgestone

• British Embassy in Mexico

• B rOPrO

• Bterra Desarrolllos

• Burns & McDonnell Mexico

• BYD

• Caliza

• CAMEXA

• Camtom

• Canadian National railway

• Ceva Logistics Mexico

• C H robinson

• China Chamber Mexico

• China Council for the Promotion of International Trade

• CIIT - Corredor Interoceanico

• Citi

• Citius AG

• Clara

• Click Makers

• Clúster de Logística de Querétaro CILQ rO

• Cluster Espacial Mexico

• CM Global Trade

• CMIC - Mexican Chamber of the Construction Industry

• COMCE

• COMCE SU r

• COMENEr

• ConaLog

• CONCAMIN

• Consejo Nacional de Biogás

• Consejos Agroalimentarios de las Americas y el Caribe

• Continental Mexico

• Control risks

• COPACEA

• COPAr MEX

• Corporativo de seguridad privada y logística romero

• Creel, Garcia-Cuellar, Aiza y Enriquez

• Crowley Maritime

• CYUSA Edificando el Presente

• D B Schenker

• Delegación General of Québec in México

• Desarollos rod

• DHL

• Distributed Power Solutions

• D raexlmaier

• DSV

• Durango State Government

• Edelman

• EL G r AN BAJÍO

• Elite Last Mile Industrial Park

• EMA

• Embajada Británica México

• Emerging Markets Political risk Analysis (EMPr A)

• Equity Link

• Eventike

• Evonik Industries de México SA de CV

• federal Government of Mexico - Ministry of Economy

• fibra Uno

• fO rVIA

• foundtech

• framecrete

• freeman

• ftech

• fueltrax

• fUMEC

• Gaea Global Technologies

• Gasoducto de Morelos

• GCI

• General Soles

• Global Logistics Consulting

• G NP Seguros

• GO GLOBAL

• Goodyear

• Green Trade Company

• G r I Club

• Growth

• Grupo Andrade

• G rUPO BASI

• Grupo BASI

• Grupo GL

• Grupo Indi

• Grupo México Infraestructura

• Grupo México Servicios de Ingeniera

• Grupo Zeit

• GS Power

• H apag Lloyd

• Hasbro

• Helmut fischer México

• Hermes Infraestructura

• Hikvision

• Holland House Mexico

• Honeywell

• HSBC

• Human Quality

• IBM

• ICA

• ICA fLUO r

• ICBC

• IDB Invest

• imss

• INA

• Infrastructure Group B r ITCHAM

• InnoCentro

• Intercam Nearshoring Bank

• International SOS México Emergency Services

• Invest Hong Kong

• Invest Monterrey

• Italian German Exhibition Company

• Kerry Logistics Mexico

• KIT Global

• Kompas Global

• KPMG

• Kramer Business

• La frutología México

• La Portada Canada

• Legand

• LLYC

• Marsh Mexico

• Mastercard

• Mazmobi

• Mercedes B enz México

• Metron

• Mexamerik

• Ministry of Economy

• Motive

• MSC Mediterranean Shipping Company

• Multiplica

• Naviomar

• Nefab

• Netherlands Embassy

• NewMark

• Newmont

• NG renta

• Nord Drivesystems

• Oca Global

• Onest Logistics

• Ontario Trade & Investment Office in Mexico

• Orión Capital Energy

• PC r International

• Pegasus Logistics

• Pf American Solutions

• PIC

• Pinit TMS

• Port NOLA

• PosiTrace

• Poweer Electronics

• Prima.ai

• ProChile

• Prodensa

• Quartux

• ramboll

• rassini

• reversso - Growlat

• roca Desarrollos

• Safie Consultores

• Santos & Becker

• Scoops XI

• Sepsisa

• Siemens

• Sika Mexicana

• Sillion

• Solfium

• Soy Logístico

• SPG

• Stantec Consulting

• State Government of Aguascalientes

• State Government of Chiapas

• State Government of Chiapas - Ministry of Economic Development

• State Government of Chihuahua

• State Government of Chihuahua - Ministry of Economic Development

• State Government of Coahuila - Ministry of Economic Development

• State Government of Durango

• State Government of Estado de Mexico - Ministry of Economic Development

• State Government of Oaxaca

• State Government of Oaxaca - Ministry of Economic Development

• State Government of Yucatan

• Swatch Group

• Swiss Business Hub

• Texas-European Chamber of Commerce

• Tractian

• Traffix

• Transportes Etola

• Traxion

• Tsol

• Turner & Townsend

• Tuto Power

• U.S. Commercial Service

• Uber freight

• Ultimate Solar Advanced Technology

• UNAM

• Universidad Aeronáutica en Querétaro

• UPS

• US Embassy Mexico

• Utility Trailers de México

• Viwala

• VOLTWAY

• Vynmsa

• WAVE

• WellWo Technologic

• Winbridge Business Group

• WOMEX VIP

• Wotian Business Group

• Zacua

• Zf

WEDNESDAY , MARCH 26

09:00 MEXICO’S STRATEGIES AND TOOLS TO ATTRACT INVESTMENT IN THE NEARSHORING ERA

Speaker: Ismael Ortiz, Ministry of Economy

09:30 MEXICO’S INVESTMENT APPEAL: LEVERAGING THE POWER OF NEARSHORING

Moderator: Mundo Montes de Oca, LLYC

Panelists: Ulises Fernández, State Government of Chihuahua

Esua Garza de Vega, State Government of Aguascalientes

10:15 CAPITALIZING ON THE AUTOMOTIVE INDUSTRY’S NEARSHORING MOMENTUM

Moderator: Eugenio Grandio, EMA

Panelists: Julio Galván, INA

Rogelio Arzate, ANPACT

Arturo Ortiz, State Government of Durango

11:30 TARIFFS, TRADE & RISK MANAGEMENT: NORTH AMERICA, CHINA AND THE FUTURE OF USMCA

Moderator: Larry Rubin, AMSOC

Panelists: Alejandro Schtulmann, EMPrA

Juan Pablo Cervantes, COMCE International Section for North America

Daniel Linsker, Control risks

12:15 RESILIENT NEARSHORING: ADAPTING MEXICO’S INFRASTRUCTURE TO TRADE REALITIES

Moderator: Isabel Clavijo, PrODENSA

Speaker: Víctor Monroy, MSC

Antonio Castro, AOLM

Eugenio Fernandez, Legand

Quel Galván, CMIC

01:00 TURNING AI AND INNOVATION INTO REAL BUSINESS VALUE

Speaker: Elías Puente, IBM

01:30 ISOLATED SELF-CONSUMPTION AND STORAGE AS AN IMMEDIATE SOLUTION TO THE ENERGY DEFICIT

Speaker: Mario Benitez, Quartux

03:00 INSIDE PERSPECTIVES ON MEXICO’S LOGISTICS REVOLUTION

Moderator: Abraham Mondragón, Soy Logístico

Panelists: Kenia Page, UPS

José Antonio García, Onest Logistics

Juan Ballesteros, Basi Logistics

Enrique Llaca, Traxión

03:45 FROM ASSEMBLY LINES TO INNOVATION HUBS: MEXICO’S R&D RENAISSANCE

Moderator: Juan Casillas, UNAM

Speaker: Tamara Nieto, UNAQ

David Pineda, Continental Mexico

Jorge A. Vázquez, Zf Group

THURSDAY , MARCH 27

09:00 THE STRATEGIC OBJECTIVES OF INTEROCEANIC CORRIDOR OF THE ISTHMUS OF TEHUANTEPEC

Speaker: Alfonso Dix, INTErOCEANIC MEXICO

Pascual Sepúlveda, INTErOCEANIC MEXICO

09:15 ISTHMUS OF TEHUANTEPEC: GOVERNMENT AMBITIONS & BUSINESS OPPORTUNITIES

Moderator: Antar Mendoza, COMCE Sur

Panelists: Raúl Ruiz, State Government of Oaxaca

Luis Pedrero, State Government of Chiapas

10:00 INDUSTRIAL REAL ESTATE: THE BACKBONE OF MEXICO’S MANUFACTURING GROWTH

Moderator: Miguel Ángel Cavazos, Citius AG

Panelists: Mario Chapa, Vynmsa Hernán Montemayor, roca Desarrollos

Luis Montes de Oca, Elite Last Mille Industrial Park

Neove Pipper, Honeywell

José Robledo, Tuto Power

11:30 FROM DATA TO ACTION: TRANSFORMING MANUFACTURING OPERATIONS THROUGH TECHNOLOGY

Moderator: Julio Hernández, BAIC Trucks Mexico

Panelists: Leonardo Vieira, TrACTIAN

Daniel Argüello, Hikvision

Eduardo Rius, Bizagi

12:20 BEYOND BORDERS: PAYMENTS THAT ACCELERATE BUSINESS

Speaker: Ezra Kebrab, Caliza

12:40 INVESTMENT AND INNOVATION: ENGINES OF AEROSPACE INDUSTRY GROWTH

Moderator: Roberto Corral, InnoCentro

Panelists: Óscar Rodríguez, BJX Aerospace

Paola Hernández, Honeywell

03:00 HOW NEARSHORING IS RESHAPING SUPPLY CHAINS IN 2025

Moderator: Héctor Díaz-Santana, KPMG Mexico

Panelists: Astrid Abugaber, Abu Logistics

Milton Magos, Traffix

Sandra Aragonez, ConaLog

Carlos Santillán, AML

03:45 THE ROAD AHEAD: STRATEGIC PRIORITIES FOR MEXICO’S AUTOMOTIVE INDUSTRY

Moderator: Diana Avalos, AMIVE

Panelists: Lauren Brown, Mercedes-Benz Mexico

Enrique Marin, Audi Mexico

Julio Hernández, BAIC Trucks Mexico

STRATEGIES, TOOLS TO ATTRACT INVESTMENT IN THE NEARS HORING ERA

Despite geopolitical tensions and global trade shifts toward a more regionalized model, the Mexican government maintains the goal of keeping the country as a leading global exporter. The federal government expects Mexico to become the 10th-largest economy by 2030. Meanwhile, federal authorities are pushing for reduced procedures for new investors, as well as developing key sectors under Plan México.

Global f oreign Direct Investment ( f DI) decreased 8% in 2024 while in Mexico it actually increased 2%. “Despite the downward trend seen in the rest of the world, growth in fDI signals the potential for Mexico to continue fostering investment,” says Ismael Ortiz, Head of the Global Economic Intelligence Unit, Ministry of Economy. He highlights the role that Mexico’s f ree Trade Agreements (fTAs) play in making it an attractive investment destination, with USMCA as the key to the North American region, even amid tariff challenges. Through CTTTP, the country is also an important actor in the Pacific.

The federal government is optimistic about Mexico’s continued growth as the country is already the ninth largest exporter globally,

with the value of all Mexican exports totaling US$593 billion in 2023 and an average annual growth rate of 9.3% over the past 30 years. Similarly, over the past 12 years, Mexico has reported relatively steady and stable f DI inflows. By the end of 2024, the country registered a record US$36.8 billion in fDI.

Ortiz identifies the manufacturing sector as one of the most promising sectors, driving over half of this investment. The transport sector, beverages and tobacco, computing equipment, chemistry, and basic metallurgy sectors follow.

Challenges to Investment Attractiveness

Amid geopolitical and trade tensions, particularly between China and the United States, the Mexican government introduced Plan México, aiming to attract US$277 billion in national and foreign investments across approximately 2,000 projects. The plan outlines several economic objectives, including increasing investment to over 25% of GDP, generating 1.5 million additional jobs, raising national content by 15%, establishing domestic vaccine production, reducing investment processing times, increasing the number of skilled professionals, and becoming a Top 5 global tourist destination.

Mexico seeks to leverage Plan México to enhance its nearshoring appeal, particularly in the automotive, electronics and semiconductors, medical devices and pharmaceuticals, and information technology sectors. The plan includes fiscal and financial incentives, infrastructure development, strategic sector strengthening, regulatory certainty, and human capital development.

“The situation Mexico is in, regarding tariffs and trade negotations, could deeply shift international trade paradigms. In this context, the Ministry of Economy is taking charge

in navigating these threats and fostering investment in the country,” says Ortiz. Ultimately, he adds, investment keeps reaching the country and the government is interested in reaching agreements to foster growth.

To support incoming projects, the Mexican government, through the Ministry of Economy (SE), established two mechanisms to facilitate domestic and foreign investment: the Unique r egistry of Investment Projects ( r UPI) and the Unique Counter for Investment in Mexico (VUIMX).

rUPI is a free electronic platform designed to streamline administrative procedures for investment projects starting at US$100 million. It provides guidance and monitoring

throughout the investment realization process, aiming to offer legal certainty to investors.

VUIMX, on the other hand, offers step-bystep guidance to national and international companies on the various procedures required to establish investments in Mexico, aiming to provide clarity and transparency. This platform offers information on general procedures like company establishment and trademark registration, sector-specific procedures relevant to the investment project’s activity, and state-level procedures, linking investors with other counters in federal entities and local points of interest. Additionally, the platform is updated by local authorities procuring timely and accurate information regarding investment procedures in each state.

MEXICO’S INVESTMENT APPEAL: LEVERAGING THE POWER OF N EARSHORING

As the threat of potential tariffs on Mexican imports looms over the Mexican economy, all levels of government are looking to increase the country’s attractiveness as an investment destination. In this context, infrastructure, tax incentives, and close collaboration with the private sector and the academy are essential to boost economic growth, while fostering economic complementarity along the USCMA region.

“Private sector inclusion is essential. Plans often lack continuity after government changes. Therefore, plans should not depend exclusively on federal resources; they must be sustainable and self-sufficient”

Esua Garza de Vega

Minister of Economic Development, Science and Technology | State Government of Aguascalientes

levels of government are looking to leverage their competitive advantages to become the ideal destination for investment to boost job creation.

“What we primarily see with the new arrangement of trade relations is not only a matter of resilience in our supply chains, but the strengthening of a much more powerful and robust trade bloc in North America. Here lies the greatest opportunity,” said Ulises fernández Gamboa, Minister of Innovation and Economic Development, State Government of Chihuahua.

The shift in nearshoring, moving from rapid expansion to a focus on strategic optimization, has been mirrored in Mexico’s investment landscape. Companies prioritize efficiency, cost reduction, and operational flexibility over simply establishing largescale production facilities. In this scenario, all

fernández emphasized identifying each state’s competitive and comparative advantages to craft an investment promotion strategy that extends beyond local boundaries to include Mexico’s USMCA partners. He stressed the need to avoid competition in local and regional strategies, advocating for complementarity among all parties. “Certain types of investment need to reach specific states, and competition between states can be detrimental. Therefore, we must collaborate to determine the most suitable location for these investments, for the country and the region’s economic competitiveness and benefit,” agreed Esau Garza de Vega, Minister of Economic

Development, Science and Technology, State Government of Aguascalientes.

The federal government’s Plan México considers key strategies, including substantial tax incentives and the development of specialized regional hubs, particularly targeting high-growth sectors like electric vehicles and aerospace. A core component of this strategy, published in the Official Gazette of the federation (DOf) on Jan. 21, 2025, is a decree designed to create a competitive investment environment for domestic and foreign businesses. This includes immediate deductions on new fixed assets, ranging from 41% to 88% depending on the asset type, and the establishment of an Evaluation Committee to ensure transparency and compliance.

Mundo Montes de Oca, Mexico Public Affairs, Advocacy & Corporate Diplomacy Director, LLYC, considers that Plan México sends a positive message to the private sector, as it shows political will and creates certainty for the business community. However, he said coordination and further incentives are necessary to achieve the government’s plans. “It will also be necessary to put in

place other types of liquid stimuli through alliances with the financial sector, in order to generate very concrete types of support for these nearshoring opportunities and to take advantage of them in the best way possible,” said fernández.

Plan México also emphasizes the inclusion of MSMEs, dedicating at least MX$1 billion (US$49.4 million) to smaller businesses, and aims to drive long-term growth by incentivizing investments in training and innovation. Despite these efforts, joining forces with the private sector and industry associations is perceived as a viable option to increase the potential benefits of fDI in the state. “We have developed programs with the National Autoparts Industry (INA) to map the capabilities and certifications that SMEs hold, to generate growth programs to include them in value chains. We are also conducting a mapping of products that could be manufactured in Mexico but are being imported, aiming to shift to local production. We intend to replicate this exercise across other industries,” Garza de Vega noted.

Garza de Vega and fernández stressed the importance of close collaboration and seeking complementarity across Mexican states and the USMCA region to boost economic growth and efficiencies across value chains. They also called for programs like Plan México to be self-sustainable, to avoid them depending on a single federal administration, allowing it to become a trans-sexenal project.

CAPITALIZING ON THE AUTOMOTIVE INDUSTRY’S NEARSHORIN G MOMENTUM

Mexico is at a crossroads, with the opportunity to capitalize on shifts in investment, export, and import policies driven by a dynamic geopolitical landscape. With nearshoring positioning the country as a key destination for companies

seeking to strengthen supply chains, industry leaders emphasize the importance of security, energy availability, workforce development, and investment in new technologies to sustain and expand this momentum.

“Security has been a major concern in Mexico and had previously halted investment in certain locations. Beyond security, energy availability is crucial to expand existing operations and attract more investment, especially as new technologies require high energy consumption,” explains rogelio Arzate, Executive President, ANPACT.

“We compete with emerging markets like Vietnam in terms of labor costs. Investors should see Mexico not just as a gateway to the United States but as a center for development. We need to transition from a manufacturing economy to one focused on development, creativity, and innovation”

Eugenio Grandio President | EMA

Mexican capital companies; it also includes foreign firms that create jobs for Mexicans and produce for the domestic market. If we strengthen our supply chain, we can add value in quality and labor,” Arzate adds.

According to industry experts, pursuing the transition to electromobility and the integration of new and diverse technologies is key for profiting from nearshoring. “We are already behind in transitioning manufacturing lines, but we still have time. By 2030, we estimate that 50% of vehicle production will still be gasoline- and diesel-powered, meaning the components we currently produce will remain relevant. However, we need to provide certainty and support to companies interested in manufacturing auto parts for electromobility,” explains Galvan.

Arturo Ortiz, Head of the foreign Investment Attraction Unit, Durango, noted that, despite challenges, Mexico has not experienced a decline in investments. “In the past two years, we have not seen a negative impact on the projects we have managed. The key is to focus on high-value investments that generate competitive salaries and attract young talent,” he said.

One of the key factors in capitalizing nearshoring is Mexican talent, already considered as a cornerstone for automotive competitiveness. However, a complete educational overhaul is needed to jumpstart change in the industry. “The quality and talent of the Mexican workforce provide certainty at a global level. However, what is taught in schools is already obsolete. By adopting a dual education model, where companies collaborate with educational institutions, we can address this issue without losing four or five years,” says Julio Galvan, Manager of Economic Studies, INA.

In addition to talent development, strengthening local suppliers is a priority. “We need to work with Tier 2, 3, and 4 suppliers in Mexico, develop their capabilities, and enhance their curricula. Made in Mexico is not just about

“Safe truck stops are an important investment in Mexico, along with charging stations for electric, hydrogen, and diesel-powered vehicles. We also need to develop a circular economy and recycling processes, particularly for batteries, is a key long-term investment area,” Arzate emphasized.

Industry experts also agree that Mexico must change how it perceives itself to tap into new ventures in the automotive industry. “There is misinformation about the industry, portraying Mexico as China’s backyard for auto parts manufacturing. However, there are already 49 Chinese-owned manufacturing plants in Mexico, which account for less than 3% of total industry investment. We are seeing a 21% increase in investment, with US$2.4 billion expected by 2025,” explains Galvan.

Eugenio Grandio, President, Mexican Electromobility Association (EMA), highlighted the need for a strategic vision. “We compete with emerging markets like Vietnam in terms of labor costs. Investors should see Mexico not just as a gateway to the United States but as a center for development. We need to transition from a manufacturing economy to one focused on development, creativity, and innovation,” he stated. “China made a significant leap in automotive technology, particularly in batteries, by implementing government-led

policies that encouraged r&D. If we change our culture to reinvest profits into r&D, we can achieve the same regional and international advancements.”

Leaders agree that Mexico must set a clear direction for its automotive sector to remain competitive. “Chinese economies have spent 20 years focusing on developing a single market, while our local economies zigzag, reacting to external changes. Mexico needs to choose a path and follow it,” Grandio said.

TARIFFS, TRADE, RISK MANAGEMENT: NORTH AMERICA, CHINA AND USMCA

North American trade is at a crossroads due to the constant threat of the United States imposing tariffs on Mexican imports. Despite these tariffs not yet materializing, the business sector must evaluate strategies to face upcoming challenges, amid tense MexicoUnited States relations. In this regard, Larry rubin, President, AMSOC, acknowledges that Mexico is positioned as a key and central part of US policy, demonstrating the significant impact and importance of the country for the North American region.

Since the beginning of his administration, US President Donald Trump has threatened a 25% tariff on imports from the United States’ main trade partners, Mexico and Canada, creating uncertainty surrounding the future of USMCA, as these tariffs would de facto eliminate the trade agreement’s benefits. While the Mexican government has called for a “cool head” approach, the business sector is still cautious about the potential effects of tariffs and the possibility of Mexico imposing retaliatory tariffs, which could undermine the USMCA region’s competitiveness.

Experts recognize that these tactics are part of Trump’s negotiation approach. “Trump had already used tariffs as a tool of pressure and had spoken about the possibility of leaving NAfTA. As in the past, these measures are being used to achieve the objectives of his political platform,” explains Alejandro Schtulmann, founder and President, Head of research, Emerging Markets Political risk Analysis (EMPrA).

In this scenario, Schtulmann acknowledges that Mexico has made progress in terms of security amid negotiations with the US regarding migration and drug trafficking. Although the president’s handling of the situation has been delayed and reactive, according to Schtulmann, she has managed it well, gaining points in her favor and receiving support from the private sector.

This context has created uncertainty, nonetheless, which has been reflected in the pace and the way nearshoring is developing in Mexico. Though tariffs have been delayed until April 2, 2025, and even if a 25% tariff on all goods is unlikely, if they occur, the electronics and automotive industries would see major impacts, with the automotive sector seeing 31.9% of its fDI coming from the United States.

To understand the impact of negotiating through tariffs, Juan Pablo Cervantes,

“Mexico remains an attractive market. The real concern is whether the government will focus on improving competitiveness by addressing issues such as energy, water and environmental permits to foster investment. That is the key to seizing the opportunity”

Daniel Linsker

Partner and Regional Director for Mexico, Central America and the Caribbean | Control Risks

President, COMCE International Section for North America, believes it is worth considering that last year exports reached US$617 billion, with a 4% annual growth. “These figures are key to avoiding falling into panic. While the change of government creates expectations, Mexico remains part of the world’s most dynamic economic bloc, North America, and continues to be a manufacturing leader.”

Trilateral trade amounts to US$1.6 trillion annually, highlighting the importance of preserving, protecting, and strengthening USMCA. “More than falling into rhetoric, it is essential to remember that the bilateral relationship with the United States is structural and helps us better understand Mexico’s true position in the global context. While it is a moment of uncertainty, it also represents a great opportunity,” adds Cervantes.

Daniel Linsker, Partner and regional Director for Central America and the Caribbean, Control r isks, identifies that nervousness comes from the fact that politically, everyone assumed that the US president would understand the importance of Mexico and the symbiotic nature of their relationship. “However, in reality, he sees it as a zero-sum game and has not conceded.”

The current hold on US tariffs applies to goods covered by USMCA, prompting increased interest from companies, particularly SMEs, in obtaining an USMCA certification. However, only 48.9% of these companies currently meet the requirements for tariff protection under the agreement. To access the US

market, companies exporting from Mexico have two primary options: complying with USMCA’s r egional Value Content ( r VC) requirement of 75%, allowing tariff-free entry, or utilizing the Most-favored-Nation (MfN) mechanism, which imposes a lower 2.5% tariff. Many companies that do not yet meet USMCA standards rely on the M f N framework.

In this context, experts highlight two key points: the Mexican government’s focus on a more socially oriented policy and the leadership that the business sector has shown in navigating nearshoring opportunities. regarding Mexico’s social policy, Schtulmann mentions that although Trump has pressured Mexico on trade issues, there has yet to be a policy aimed at promoting Mexican democracy.

Additionally, the contrast between the technology and energy sectors reflects these challenges. “The technology sector in Mexico has thrived due to appropriate regulation without excessive government intervention, while the energy sector faces obstacles that hinder growth. If current barriers were removed, the energy sector could contribute up to two additional points to the GDP,” Schtulmann believes.

regarding the leadership of the business sector, Cervantes mentions that this is a favorable moment to explore other markets and consider what Mexico can also do at the bilateral level: diversification. “Within COMCE itself, which reflects our commercial vocation, we are joining efforts to approach these

markets, renew and strengthen communication channels, and mobilize trade missions,” says Cervantes. However, Linsker considers that “Mexican entrepreneurs have had a comfortable position. Having the world’s largest economy within a free trade agreement has made seeking other markets not as attractive. But, it is time to go out and compete.”

Experts have called for Mexico to explore alternative markets, leveraging its 14 free trade agreements with over 52 countries. This extensive network, along with Mexico’s participation in multilateral and regional organizations like the WTO, APEC, OECD, and ALADI, offers a broad foundation for trade diversification. However, some argue that reshaping the entire trade relationship is unrealistic, given that over 82% of Mexican exports are destined for the United States.

They contend that the US market’s purchasing power and volume cannot be easily replaced. Nevertheless, Mexico could potentially substitute certain inputs or agricultural products to mitigate the impact of potential tariffs. “Mexico remains an attractive market. The real concern is whether the government will focus on improving competitiveness by addressing issues such as energy, water and environmental permits to foster investment. That is the key to seizing the opportunity,” says Linsker.

for Schtulmann, “Mexico can withstand the situation, although the window of opportunity for nearshoring has closed. Mexican companies have the chance to strengthen the domestic market, which would help increase economic resilience and consolidate the country’s position in the region.”

NEARSHORING: ADAPTING MEXICO’S INFRASTRUCTURE TO TRADE REALITIES

Nearshoring has emerged as a major opportunity to attract investment and strengthen Mexico’s industrial sector. However, to fully capitalize on this trend, the country must overcome structural challenges in logistics, infrastructure, and manufacturing. A key factor in ensuring a resilient and optimized supply chain lies in the real-time exchange of information and the ability to adapt to global trade shifts.

“Infrastructure and nearshoring are inseparable. Infrastructure is not solely physical, and in my opinion, the country’s biggest need right now is digital infrastructure to streamline port traffic. We cannot accept customs delays of more than 20 days as normal. The question is, what good are 20 lanes if you are held up at customs for 20 days?”

Antonio Castro President | AOLM

while some states like Baja California and Sonora benefit from affordable electricity, others such as Baja California Sur and Quintana r oo face higher energy costs, potentially deterring investment. “ f or a country seeking to industrialize, energy cannot be a problem. Labor loses relevance, while energy gains importance due to automation,” said Victor Monroy, Managing Director for Mexico and Central America, MSC Mediterranean Shipping Company, noting the important role of having a reliable energy source played for China during its early industrialization stages.

Additionally, water infrastructure must be improved to support sustainable manufacturing operations. The sufficiency of wastewater treatment plants varies across the country, with states like Campeche performing well, while others like Chihuahua and Coahuila show significant deficiencies.

The availability of essential resources such as electricity and water is crucial for industrial growth. According to IMCO,

To address these issues, the Mexican Chamber of the Construction Industry (CMIC) has proposed increasing public investment in infrastructure to 5-6% of the GDP. This includes modernizing roads, railways, ports, airports, and

urban mobility systems, ensuring that logistical bottlenecks do not impede nearshoring growth, as MBN reported. “It is necessary to promote the construction of climate-resilient infrastructure and, simultaneously, the inclusion of clean energies. We consider that an institute or collegiate body responsible for longterm economic planning should be created. furthermore, we must ensure that all processes comply with environmental regulations and promote transparent mechanisms for publicprivate investment in logistics infrastructure,” noted Quel Galván, Executive Vice President of Business Development in Private Infrastructure, CMIC.

Logistics Performance and Digital readiness

Mexico’s logistics capabilities have declined in recent years, as evidenced by its drop in the World Bank’s Logistics Performance Index (LPI) from 55th place in 2018 to 66th in 2023. This decline is attributed to inefficiencies in transportation, customs, and supply chain digitalization. According to Agility’s 2024 Emerging Markets Logistics Index, Mexico holds significant potential for logistics investment but struggles with security concerns and digital readiness, as MBN reported.

Logistical deficiencies costed Mexico an estimated MX$169.3 billion (US$8.82 billion) in 2023, equivalent to 4% of the GDP. To address this problem, CMIC proposes to focus on enhancing multimodal connectivity, strengthening regional development hubs, and implementing long-term infrastructure planning. “Infrastructure and nearshoring are inseparable. Infrastructure is not solely physical, and in my opinion, the country’s biggest need

right now is digital infrastructure to streamline port traffic. We cannot accept customs delays of more than 20 days as normal. The question is, what good are 20 lanes if you are held up at customs for 20 days?” said Antonio Castro, President, Mexican Association of Logistics Operators (AOLM).

Manufacturing and Supply Chain resilience

The Baker Institute says that Mexico’s strategic location provides a competitive advantage, reducing transportation times and costs for businesses serving the North American market. The country’s extensive coastline and trade agreements facilitate streamlined trade operations, which are further boosted by the USMCA, however, experts believe geographical factors should not be the only competitive advantage. “for now, geographical location determines our competitiveness, but if we do not develop infrastructure and talent, other countries that do will be more competitive in the future,” noted Eugenio fernández, COO, Legand.

To strengthen global value chains, it is essential to align manufacturing capabilities with logistical and infrastructural advances. Companies must invest in digital transformation, automation, and real-time tracking systems to enhance supply chain visibility and efficiency. The adoption of smart logistics solutions, such as AI-driven predictive analytics and IoT-enabled tracking, can help manufacturers mitigate disruptions and adapt to evolving trade dynamics.

“As logistics operators, we agree that digitalization is crucial. Effective connectivity and synchronization between industry, logistics, and government are necessary for resilience,” Castro pointed out.

Market Diversification

Mexico has a network of 14 f ree Trade Agreements (fTAs) with 52 countries and 30 Agreements for the Promotion and reciprocal Protection of Investments (APPrIs) with 31 countries, providing preferential access to various international markets.

In an environment of uncertainty regarding potential US tariffs on Mexican products, the business sector is seeking alternative markets to leverage the country’s extensive f TA network. However, Isabel Clavijo, Vice President of Institutional r elations, P r ODENSA, considers it is essential to evaluate the risks and special characteristics of the markets companies are considering to venture. Planning is necessary, and exploring new markets is not easy. It requires in-depth study, from consumer preferences to logistical and regulatory issues,” she added.

Galván noted that diversification is essential, highlighting the growing middle class in markets like Asia, and suggesting evaluations of South Korean and Japanese markets. He also emphasized the advantage of proximity to Central America.

fernández considers Mexico has the potential to enter the European market, as it has had frictions with the United States. However, the country must start investing in meeting ESG metrics, as these are important for the EU. He also noted that India is growing in a very interesting way. “If we do things right, we can stop being the backyard of the United States and start being the world’s commercial partner,” he added.

However, experts point out that seeking new markets is not the only way Mexico can leverage its f TAs, as it can seek for supplies for its manufacturing processes. “These treaties cannot be solely for selling, but also for sourcing, especially for production inputs that currently come from China or could be supplied by Vietnam, for instance, with whom we share a trade agreement,” he added.

TURNING AI AND INNOVATION INTO REAL BUSI NESS VALUE

Technology is one of the most important tools for improving efficiency in businesses. IoT and AI solutions have the potential to add significant value for companies and their employees. Implementing comprehensive ecosystems that consider specific needs and tailored technological solutions is the key to the future.

Elías Puente

Latin America Industrial Sector Leader | IBM

“The way we work has changed. The ‘new model’ leverages productivity beyond the traditional framework,” says Puente. IBM envisions the use of technology to replace many tasks currently performed by humans across the value chain, not necessarily through robotics but through a much broader technological approach.

Around 76% of companies plan to implement AI/ML in their projects over the next three years. “If you are not adopting technology, you are falling behind and losing competitiveness,” Puente warns. The most sought-after innovations by CEOs are AI and IoT, as these technologies streamline workflows and enhance operational efficiency.

Elías Puente, Latin America Industrial Sector Leader, IBM, highlights the unprecedented speed, reach, and scalability of generative AI’s impact. According to him, generative AI has the potential to increase global GDP by 7%. This transformation is reshaping traditional work models, boosting productivity beyond conventional methods.

Additionally, IBM is also focusing on creating digital workers through AI integration. “We use our technology to transform companies, making them more efficient and improving workflows. Digital workers shorten processing times by simulating human behavior and orchestrating human-machine interactions,” Puente explains. The goal is to reshape the traditional work pyramid into a diamondshaped structure, where technology handles

repetitive tasks, allowing employees to focus on higher-value activities.

“Our objective is to prepare people to use technology effectively. Through our Skill Build program, we aim to train 20 million people by 2030, with 2 million specifically trained in AI by 2025,” Puente states. This initiative ensures that individuals can access free, open, and simple training, benefiting both businesses and workers.

According to IBM, the first point of contact in any business environment should be technology. However, Puente emphasizes the importance of selecting the right technology for each business component, as generative AI is not a one-size-fits-all solution. The goal is to automate workflows as much as possible, with human intervention reserved for critical decision-making.

“Technology can reduce energy consumption by 30% and significantly improve operations. In business risk management, its implementation can lower risks by 30% to 40%. It is not an estimate, we have already done this,” Puente notes. Moreover, AI-driven training programs enable large-scale workforce upskilling, tailored to specific job roles.

IBM encourages companies to explore, analyze, and evaluate how technology can transform their operations and address challenges such as nearshoring. The company’s commitment to technological efficiency is also reflected internally. Arvind Krishna, Chairman and CEO, IBM, pledged US$2 billion annually in savings through AI, improving the company’s efficiency. The result exceeded expectations, yielding US$3 billion in cost savings. This demonstrates the real business value of AI and innovation when strategically implemented.

ISOLATED SELF-CONSUMPTION, STORAGE: AN ENERGY DEFICI T SOLUTION

In the face of Mexico’s ongoing energy deficit and rising electricity costs, a solution is emerging that promises to offer immediate relief: isolated selfconsumption and energy storage. This can help businesses to better manage their energy consumption, controlling costs and improving energy resilience.

As nearshoring continues to gain momentum in Mexico, many industrial consumers face significant challenges in scaling their operations efficiently. Mario Benitez, Wholesale Energy Director, Quartux, highlights that “when an industrial consumer already has a plant or is planning to set one up, they will undoubtedly face two challenges: electricity infrastructure and compliance with

all the necessary regulations.” These obstacles are particularly important in the context of the nearshoring trend, where businesses are increasingly relocating manufacturing processes closer to North America.

In the context of Mexico’s evolving energy landscape and the growth of nearshoring, businesses are increasingly confronted with the limitations of existing infrastructure. Benitez points out the critical needs companies face, stating that “the capacity of the electricity infrastructure is limited: substation overloads are common in industrial parks and the reliability of the supply is compromised.” These challenges are especially evident as companies scale up operations to meet the demands of the

nearshoring trend. Beyond addressing these infrastructure issues, businesses also bear significant responsibilities in ensuring a sustainable and reliable energy future.

Companies must “advance toward decarbonization through sustainable solutions,” states Benitez, while also “guaranteeing security and reliability in the electrical supply and optimizing costs to achieve greater competitiveness and profitability.” The new regulatory environment and the rise of isolated self-consumption and storage systems provides a viable path forward, helping companies balance these critical needs and responsibilities while positioning themselves for long-term success.

One of the key points Benitez raises is the rising cost of electricity during peak hours, typically in the evening, when consumption spikes. These peak hours represent a significant portion of energy expenses for businesses, with costs climbing to 30-40% of a company’s total energy bill. As Mexico continues to rely on traditional energy sources, the pricing during these highdemand periods remains volatile. This leaves businesses vulnerable to unpredictable cost surges that can significantly affect their bottom lines. “With new regulations providing clearer guidelines, the implementation of isolated self-consumption and storage systems offers a potential solution to these challenges, enabling businesses to not only reduce energy costs but also comply with regulations while enhancing sustainability efforts,” shares Benitez.

The adoption of isolated self-consumption, along with energy storage systems, presents a clear solution to this issue, adds Benitez. Isolated self-consumption allows businesses to generate their own electricity, reducing reliance on the national grid during peak times. By generating energy from renewable sources, such as solar or wind, businesses can tap into clean energy without being subjected to fluctuating grid prices. Energy storage systems further support this model by storing excess energy generated during low-demand periods, which can then be used

to cover peak-hour consumption. This not only reduces costs but also stabilizes energy supply, ensuring that businesses can maintain operations without disruption.

The recent regulatory changes in Mexico have made these solutions more feasible than ever. Benitez pointed out that prior to these changes, one of the main barriers to implementing energy storage systems was the lack of clarity in the rules and financing models. However, with updated regulations, the framework for distributed generation and energy storage has become more straightforward, enabling businesses to adopt these technologies with greater ease. f urthermore, regulatory shifts have made financing more accessible, providing companies with the support needed to invest in renewable energy systems and storage infrastructure. The clarity in regulations has also addressed the challenges that companies faced when trying to navigate the complex energy landscape, offering them the opportunity to adopt more sustainable practices without facing significant hurdles.

Benitez emphasizes that the energy storage market is poised for growth, especially given the dramatic decrease in battery prices. As storage solutions become more affordable, businesses are increasingly able to incorporate these systems into their operations, leading to greater energy independence and cost savings.

Mexico’s logistics landscape is undergoing significant transformation due to rising cross-border trade and modernization initiatives. In January 2024, the Ministry of Communications and Transport (SICT) launched the National Highway Infrastructure Program 2025-2030, which will see an investment of MX$173 billion (US$8.47 billion) to enhance over 4,000km of roads.

However, President Claudia Sheinbaum’s 2025 Economic Package has been criticized for reducing resources for key areas, including a 5% cut in transportation investment (MX$10 billion less than 2024), a 43% reduction in road infrastructure spending (MX$27 billion), a 58% reduction in water projects, and a 9% reduction in hospital infrastructure. Similarly, logistics insiders believe the lack of investment in road and transportation infrastructure could undermine Mexioc’s ability to attract investment and disrupt trade flows. “There is a lack of necessary attention to customs issues for nearshoring. The northern border needs expansion so that traffic flows and is made easier, especially to promote last-mile delivery,” saiys Juan Ballesteros, CEO, Basi Logistics.

While institutions like MONEX forecast high occupancy rates in the industrial segment, some companies like Mazda are reevaluating their investment plans in Mexico. The potential tariffs, along with global economic uncertainties, have led Mazda to develop a “Plan B,” which could involve scaling back investments, shifting focus to r&D, or relocating production to other countries. “All eyes are on the Trump effect, but we must also look at the bigger picture across the continent and in other markets,” says Abraham Mondragón, Board Member, Soy Logístico.

Mordor Intelligence reports that Mexico’s freight and logistics market is growing sustainably, with an estimated value of US$124.4 billion in 2025 and projected to reach US$162.2 billion by 2030. The Mordor Intelligence report also states that the maritime sector is witnessing substantial investment, with ports handling a record 2.95 million TEUs from January to April 2024, an 18.2% increase from the previous year. Pacific Coast ports alone managed 2.14 million TEUs, with notable growth at Manzanillo (14.5%) and Lazaro Cardenas (35%). The US$140 million expansion at APM Terminals Lazaro Cardenas further highlights the sector’s commitment to capacity enhancement and modernization.

Simultaneously, Mexico’s energy infrastructure is evolving to support logistics operations. Investment in renewable energy projects and the expansion of fuel distribution networks are critical for reducing operational costs and improving sustainability. The country’s focus on energy security, including natural gas distribution and electricity grid enhancements, will be essential for meeting the growing demand from logistics hubs and industrial corridors. “Energy security ensures lowercost supply chains. Water and energy are key investment decision factors. Companies are increasingly focused on sustainability,” says Kenia Page, Commercial Director, UPS.

Last-Mile Logistics and E-Commerce Boom

Mordor Intelligence reports that the Courier, Express, and Parcel (CEP) segment is the fastest-growing in Mexico’s logistics market, projected to expand at a 7% CAGr between 2024 and 2029. This growth is primarily driven by e-commerce, with online shoppers expected to reach 78 million by 2025. Major logistics players are investing in EV fleets and automated sorting systems to enhance lastmile delivery efficiency. Estafeta’s acquisition by UPS in July 2024, along with its fleet of six Boeing 737-400 freighters, underscores the strategic importance of Mexico in global supply chains and cross-border e-commerce.

Plan México

President Claudia Sheinbaum’s Plan México aims to attract private investment and promote regional industrial development. Key aspects include:

+ Establishment of Well-Being Hubs with fiscal incentives and special customs regimes.

+ Strategic Industrial Corridors, such as Nuevo Laredo for automotive and electromobility, Hermosillo for energy and pharmaceuticals, and Lazaro Cardenas for agribusiness and semiconductors.

+ Public Investment in Infrastructure, with US$5.55 billion allocated for 1,980km of critical highway projects and over 5,600km of passenger rail developments, generating 3.6 million jobs.

Challenges in Attracting Investment

Despite the positive trajectory, Mexico faces several challenges in attracting further investment in its logistics sector. These include regulatory complexity, security concerns, infrastructure bottlenecks, labor shortages and skill gaps, and sustainability.

Between 2021 and 2024, companies occupied about 13 million m2 of industrial space in Mexico, representing 4 out of every 10m2. However, the entry of new Mexican companies into the market has declined by 43%, according to SiiLA. In 2024, industrial warehouse occupancy reached 5.26 million m2, a 14.7% drop from 6.17 million m2 in 2023.

The proposed 25% US tariff on Mexican goods, delayed until April 2 for USMCAcovered products like automobiles, poses significant challenges for cross-border companies, affecting costs, competitiveness, and investment. PwC estimates that up to US$122 billion in Mexican exports could be impacted, particularly in digital processing units, motor vehicles, and crude oil. This uncertainty may deter foreign direct investment and push businesses to explore alternative markets.

To mitigate risks, companies are adopting flexible strategies, such as diversifying markets beyond the United States, leveraging nearshoring for cost efficiency, and using financial tools like tariff hedging. Technology firms can counter rising costs through automation, AI, and data analytics to enhance efficiency.

José Antonio García, Director of New Business Development, Onest Logistics, stresses the importance of talent development, especially to achieve a more efficient logistics sector, essential for the transportation of goods produced under the concept of nearshoring. However, challenges arise due to the lack of skilled professionals. “The worrying aspect is the area of transporters; there is a shortage of about 50,000 drivers, which causes 30,000 trucks to be idle, increasing costs. The new generations do not want to enter this field due to insecurity, and some transporters seek work in the United States, where there are better salaries and safer roads,” García stated. This talent shortage poses a significant impediment to the logistics sector, affecting both efficiency and cost.

FROM ASSEMBLY LINES TO INNOVATION HUBS: MEXICO’S R&D R ENAISSANCE

Mexico needs a clear strategy to drive its shift from manufacturing to technological innovation. Experts argue that the country’s workforce is as skilled as, if not more than, its global counterparts, a fact proven by advancements in local r &D centers. To position Mexico as a major innovation hub, stronger collaboration between private industry, the government, and universities is essential.

“We need to strengthen ecosystems to nurture the symbiosis between companies and universities,” says Juan Casillas, r egent, UNAM. According to Casillas, private-sector engagement with the federal government is essential to positioning Mexico as an attractive destination for foreign investment. However, he notes that commitment to r&D is not uniform across all companies.

“Nearshoring and R&D do not automatically go hand in hand. Research and development require a rebellious spirit against the traditional nearshoring model. Mexico must become more competitive. The only way to transition from a manufacturing-based economy to a technology-driven one is through coordinated strategies”

Jorge Vázquez

R&D Head Mexico / Location Head Monterrey | ZF Group

“Perhaps Mexican talent is not the most disciplined or rigid, but it is incredibly capable. All it needs is the opportunity,” explains Casillas, emphasizing that local engineers have resolved technical challenges that had remained unsolved abroad for years.

Tamara Nieto, Liaison Secretary, Universidad Aeronáutica de Querétaro (UNAQ), underscores the necessity of transitioning from manufacturing to leadership in r&D. “We have consolidated our position in manufacturing, but there is much work to do to become r&D leaders,” she explains.

At UNAQ, partnerships with companies like GE Aerospace have been instrumental in developing laboratories for sustainable aviation fuel (SAf) research. “The industryacademia synergy is key to success. Without specialized talent, companies cannot thrive,” Nieto asserts. However, she warns that a major challenge is the lack of incentives and federal investment in technology-focused university projects.

Nearshoring and r&D: Independent but Complementary

“Nearshoring is not an excuse or a reason for developing r&D capabilities in Mexico. We need national strategies that allow us to compete globally,” says David Pineda, r&D Director, Continental Mexico. He also stressed that while nearshoring has sparked discussions

about Mexico’s industrial future, it has not directly driven technological advancements.

As an example, Pineda points out that while Mexican engineers have played a significant role in developing cutting-edge automotive LiDAr systems, there is no cohesive national strategy to harness this potential. “If we do not have a plan to capitalize on our talent, we will lose it. It is a diamond in the rough that needs to be polished,” he warns.

Jorge Vázquez, r&D Head, Zf Group Mexico, argues that Mexico has yet to fully embrace r&D as a national priority. “Nearshoring and r&D do not automatically go hand in hand.

research and development require a rebellious spirit against the traditional nearshoring model. Mexico must become more competitive. The only way to transition from a manufacturingbased economy to a technology-driven one is through coordinated strategies,” he explains.

As the automotive industry undergoes rapid transformation, with vehicles becoming more like reprogrammable computers than traditional cars, Mexico’s engineers have already made significant contributions. “The talent is here, and global demand for skilled professionals presents a great opportunity. We can either watch it pass us by or take a leading role,” says Vázquez.

THE STRATEGIC OBJECTIVES OF THE INTEROCEANI C CORRIDOR

The Interoceanic Corridor of the Isthmus of Tehuantepec (CIIT) is Mexico’s bet for a transformative infrastructure project designed to enhance economic and commercial development. CIIT aims to establish a comprehensive intermodal logistics platform, linking the Pacific and Atlantic oceans via an integrated transport network that involves railways, ports, and industrial parks. This project aims to play a key role in strengthening trade between Asia and the US East Coast while fostering regional development, according to the federal government.

“The Interoceanic Corridor, with its strategic development hubs and industrial parks, will drive trade and generate a greater economic impact once it reaches full operational capacity. Some lines are already in service, and Line K is expected to be inaugurated later this year or early next year,” said retired Vice

Admiral Pascual Sepúlveda, Projects General Coordinator, INTErOCEANIC MEXICO.

CIIT involves the rehabilitation and construction of key infrastructure, including 1,200km of railway networks spread across three major rail lines and industrial parks strategically located to attract investment. The project will also upgrade port and airport facilities, modernize maritime trade capabilities, and enhance energy and telecommunications infrastructure, including a gas pipeline and an optic fiber network. The project impacts 79 municipalities, 33 in Veracruz and 46 in Oaxaca, and extends trade connections to Guatemala via the Ciudad Ixtepec-Ciudad Hidalgo railway (Line K).

railway Network Development

The corridor includes multiple railway lines undergoing extensive rehabilitation:

+ Line “Z” (Coatzacoalcos-Salina Cruz), covering 307km. This line saw 210km rehabilitated, including 82 railway bridges and 290 drainage projects. It has been fully operational since Dec. 22, 2023, transporting over 63,000 passengers and 316,000mt of cargo.

+ Line “fA” (Coatzacoalcos-Palenque, Chiapas), spanning 310km. The line’s full rehabilitation included 91 railway bridges and 667 drainage works.

Operational since Sep. 13, 2023, it has transported over 19,000 passengers and 29,000mt of cargo. future development includes transshipment yards at roberto Ayala (Huimanguillo) and Pakal-Na (Palenque).

+ Line “K” (Ixtepec, Oaxaca-Ciudad Hidalgo, Chiapas). This is the longest line, spanning 459km. It is undergoing staged rehabilitation, with Segment 1 (Ixtepec-Tonala) at 87% completion. The entire line is expected to be fully operational by 2Q25, with Segment 1 operational by July 2024. A major milestone is the elevated viaduct in Huixtla, reducing 14 level crossings.

Industrial Development and Economic Growth

CIIT features 12 Development Poles for Well-Being (PODEBIS), targeting industries such as electronics, semiconductors, automotive, auto parts and transportation equipment, medical devices, pharmaceutical, agroindustry, power generation and distribution equipment, machinery and equipment, metals, petrochemical, logistics. Some of these poles have already been awarded through international public bidding, while others are undergoing the bidding process. These are:

+ Coatzacoalcos I (257.70ha) and II (131.82ha), Salina Cruz (82.09ha): Awarded to Desarrolladora Multimodal del Istmo, Mota-Engil, Grupo INDI, Carso, and ICA.

+ Asuncion Ixtaltepec (Chivela) (234.12 ha): Managed by MArZAL.

+ Texistepec (467.85 ha), San Juan Evangelista (360.25 ha), Matias romero (185 ha), Santa Maria Mixtequilla (502.42 ha): Concessioned to Proistmo.

+ Ciudad Ixtepec (412.54 ha): Awarded to Helax Istmo Holdco.

+ San Blas Atempa: With 331.53ha, its bidding process closed on feb. 24, 2024.

+ Tapachula I (268.72 ha) and Tapachula II (149.71 ha): Upcoming bidding process.

+ Teapa, Tabasco (100 ha): Land donation process underway.

Tax Incentives and Economic Benefits

Companies established within PODEBIS and engaged in activities such as construction, logistics, administration, maintenance, and commercialization can access various tax incentives. At the federal level, they benefit from accelerated depreciation of fixed assets during the first six years of operation.

“They will also benefit from a 100% exemption of Income Tax (ISr) for the first three years, followed by progressive discounts ranging from 90% to 50% over the next three years. Transactions conducted within and between PODEBIS will be exempt from Value Added Tax (VAT) for six years,” said Sepúlveda.

At the state and municipal levels, additional benefits include discounts on payroll tax, property tax, and construction permits, facilitating investment and the establishment of new businesses in these areas.

These incentives aim to drive regional development by generating formal employment, improving wages, and increasing labor productivity. They also encourage the relocation of companies and their supply chains, with an expected creation of 500,000 formal jobs in the four entities within the influence area of the CIIT.

Additionally, efforts are focused on strengthening economies of scale, promoting local supply chains, and consolidating targeted public investment. All these factors contribute to an orderly industrialization process with more competitive and sustainable working conditions.

Port Expansion and Modernization

Salina Cruz is strengthening its port infrastructure by aligning and reinforcing the docks at its Multi-Purpose Terminal. The entrance is being expanded from 80m to 120m, and the construction of a 1,600m west breakwater is underway. Additionally, a specialized Container Terminal (TEC I) is planned, contingent on reaching an annual volume of 150,000 TEUs.

“The Interoceanic Corridor will bridge regions, creating benefits not only for Mexico but for global trade. By leveraging access to both oceans, imports and exports stand to gain significantly. This project also offers two key advantages: lower costs compared to California ports and reduced transit times. Operations are already underway, and as port infrastructure improves, we will be able to handle even greater cargo volumes. We welcome all types of shipments. Our mission is to drive prosperity and development, ensuring this initiative delivers meaningful impact”

Alfonso Dix

Business

Development General Coordinator | INTEROCEANIC MEXICO

As a critical component of the CIIT, the Salina Cruz Port Breakwater strengthens connections between Mexico and markets in the United States, Asia, Central America, and South America. Domestically, it links the Pacific coast with the southern and southeastern regions of the country, facilitating trade flows to Veracruz, Chiapas, Puebla, Mexico City, Campeche, and Merida. The port aims to evolve into a major logistics and commercial hub, handling not only petrochemicals but also fertilizers, agricultural components, and equipment.

Aligned with CIIT’s sustainability vision, Salina Cruz is implementing environmental and biodiversity preservation measures. The port’s 14m-deep access channel is being modernized to expand its capacity. A specialized container terminal will complement another in Coatzacoalcos, enhancing interoceanic transport capacity to 1.4 million containers annually.

According to SEMA r , a new commercial port is under construction with a 300m-wide entrance and a 1,600m long west breakwater. This expansion is expected to accommodate large vessels and generate over 512 direct jobs and 2,560 indirect jobs.

Major expansion projects at Coatzacoalcos include extending the Pajaritos terminal dock from 270m to 400m and completing a 4km railway access. Segment 5 has been

concessioned to Terminales del Istmo Salina Cruz-Coatzacoalcos (TISCC). Like Salina Cruz, a specialized Container Terminal (TEC) will be developed upon reaching 150,000 TEUs per year. The Port Mexico Chemical Terminal is nearing completion.

At Dos Bocas, the eastern breakwater is being extended from 1,640 to 2,140m (82% progress), while the western breakwater will be expanded from 780m to 1,360m. Additionally, a pier for PEMEX’s Mineral Bulk Terminal is under construction and expected to be completed by June 2025.

At the Port of Chiapas, maintenance dredging was completed on Nov. 29, 2024, removing 775,295 m3 of material to maintain a depth of 11m. The maneuvering basin, with a 450m diameter, was also improved. Hydrodynamic and coastal studies by UNAM have been completed to prevent sediment accumulation in the navigation channel and interior port. A proposed hookshaped breakwater extension is expected to reduce sediment inflow by 71%, ensuring long-term operational efficiency.

Strategic Alternative to the Panama Canal

The CIIT aims to become a viable alternative for cargo transport between Asia, the US Midwest, and the US East Coast, offering cost savings compared to California ports and shorter transit times than the Panama Canal. With a projected capacity of 13 million TEUs annually, the corridor will significantly enhance trade routes between Asia and the US Gulf Coast (USGC) and US East Coast (USEC).

for nearly two years, the Panama Canal has faced operational setbacks due to severe droughts, leading to prolonged restrictions, vessel congestion, and major disruptions in maritime trade. This situation has opened a window of opportunity for Mexico to position the CIIT as a reliable and efficient alternative. The corridor will reduce transit times, lower dependency on the Panama Canal, and strengthen connectivity between the Pacific and Atlantic Oceans.

Mexico’s geostrategic position places it at the center of critical global trade routes, linking Asia, America, and the European Union. This prime location enhances Mexico’s potential to play a pivotal role in international logistics, with the CIIT strengthening its position within global supply chains.

Our mission is to drive prosperity and development, ensuring this initiative delivers meaningful impact,” said Alfonso Dix, Business Development General Coordinator, INTErOCEANIC MEXICO.

ISTHMUS OF TEHUANTEPEC: AMBITIONS, BUSINESS OPP ORTUNITIES

The Interoceanic Corridor of the Isthmus of Tehuantepec (CIIT), initiated under López Obrador, seeks to integrate Mexico’s Southeast into the federal government’s shared prosperity agenda. As President Claudia Sheinbaum continues this project, local governments must establish clear strategies to maximize its potential economic benefits.

“The southern and southeastern regions present significant opportunities for agro-industry, wind energy generation, and the production of agricultural and livestock products. Given this potential, we aim to attract pharmaceutical and medical device companies to the area”

Raúl

Ruiz

Minister

of Economic Development | State Government of Oaxaca

modernized ports in Coatzacoalcos and Salina Cruz, along with strategic connections to Guatemala, seeks to integrate Mexico’s southeast into international commerce. Both ports have gone through upgrades for general cargo, agricultural commodities, minerals, and hydrocarbons.

Beyond its core function as a transoceanic route, CIIT is designed to stimulate regional development through 10 interconnected Development Poles for Well-Being (PDBs), and enhanced logistical capabilities, including specialized automobile transport utilizing Supermax rail equipment and 200m car carriers.

CIIT aims to link the Pacific and Atlantic oceans, connecting Asian and European markets via a 1,200km rail line, transforming the Isthmus of Tehuantepec into a critical global trade corridor. This project, leveraging

This integration is further secured by a dedicated Marine Infantry Brigade, with over 2,400 personnel and 22 operational units, ensuring the corridor’s infrastructure supports a robust and secure trade network. Additionally, CIIT’s connection to Guatemala through Line K enhances regional trade, while further expansion includes additional PDBs in Teapa, Tabasco, and two in Tapachula, Chiapas, thus extending the project’s economic impact.

Oaxaca’s role in CIIT

Oaxaca experienced a 6.5% growth in 2024, ranking second nationally in economic activity. Data indicates that industrial activity in the state recorded a 15.9% increase, leading nationally in this category. In 2023, the state’s contribution to the GDP was 7.6%, with the construction sector contributing 19%. The latter is seen as a result of CIIT’s construction. According to raúl ruiz robles, Minister of Economic Development, State Government of Oaxaca, apart from CIIT’s direct impact, the development of social infrastructure is seen as a catalyst for progress and a profitable business for those who want to venture into it. The state projects it will need over 70,000 new homes following further development. “It is imperative to establish a comprehensive ecosystem to support the growing population. This includes executives, engineers, and other professionals attracted by CIIT. To serve this population, healthcare infrastructure, including private clinics, is required, as well as the development of educational institutions. f urthermore, attracting national and international investment demands the expansion of services such as hotels and entertainment centers,” he adds.

Oaxaca will host six of the twelve CIIT’s PDBs. This infrastructure positions Oaxaca as a strategic node with access to five ports, seven international airports, and over 1,800km of railway lines. The Salina Cruz Pole is notable, with an area of 82.09ha for activities like agroindustry, machinery, and plastics production.

Estimated investment in projects related to the production of green hydrogen and ammonia in the region exceeds US$10 billion. These projects aim to boost industrial and

energy development in the area, leveraging Oaxaca’s infrastructure and strategic location within CIIT. “The southern and southeastern regions present significant opportunities for agro-industry, wind energy generation, and the production of agricultural and livestock products. Given this potential, we aim to attract pharmaceutical and medical device companies to the area,” ruiz notes, adding the potential Oaxaca has in wind energy production.

Acknowledging that the CIIT is part of a strategy to link Mexico’s industrial capabilities, ruiz statesSouthern Mexico can contribute to federal goals. for instance, r uiz notes that Oaxaca is a mineral abundant state, having the potential to produce important amounts of silver, graphite, and lithium, which aligns with the Olinia project to source the latter mineral for the car’s batteries. “In the semiconductor value chain, design represents 58% and manufacturing 36%. Oaxaca, with the Mixteca University and its strong base of young talent and IT companies, is well-positioned to contribute to semiconductor design,” he adds, noting the impact of including all regions in Mexico into the economic dynamism.

Chiapas role in CIIT

Luis Pedrero, Minister of Economic Development and Labor, State Government of Chiapas, says that while Chiapas was not initially included in the original CIIT draft, the state’s diverse opportunities have prompted local government efforts to actively engage in the project and attract company investments. He highlights Chiapas’ significant electricity generation capacity, specifically its hydroelectric production, which accounts for over 70% of Mexico’s total hydroelectric energy.

Pedrero notes the state’s capabilities in the agribusiness sector as it boasts significant production volumes across a diverse range of agricultural products, including leading national outputs in bananas, tilapia, and coffee, alongside strong positions in mango, sugarcane, and cacao. Additionally, he emphasizes the pharmaceutical industry’s potential in Chiapas, particularly through an export model targeting the Central

American market. While this market does not possess the same purchasing power as the United States, its geographical proximity and population of over 60 million inhabitants present a compelling opportunity.

Chiapas is pursuing productive projects that leverage its strategic link with Guatemala. While current exports from the state amount to roughly 100 containers, demanding reliance on a single cabotage vessel, the saturation of Guatemala’s Puerto Quetzal offers a strategic advantage. “Our strategy involves engaging shipping lines that serve Quetzal to consider Tapachula as an alternative. This presents a promising logistical solution for short-term cargo transport between the ports. furthermore, in the medium term, this development could encourage Guatemalan

industries to shift their production to Mexico, a move supported by CIIT’s ongoing port development in Chiapas,” he explains.

INDUSTRIAL REAL ESTATE: BACKBONE OF MEXICO’S MANUFACTUR ING GROWTH

Mexico’s industrial real estate sector is undergoing rapid expansion, fueled by a combination of nearshoring, increased foreign investment, and infrastructure development. As global supply chains shift toward regionalization, companies are seeking strategically located industrial spaces to optimize operations. However, this growth also presents challenges, including energy shortages, the need for sustainable practices, and regional disparities in development.

“After the disruption of supply chains, the world is no longer betting on globalization. Instead, companies are focusing on regionalization,” explains Miguel Cavazos, Principal, Managing Partner, Citius AG. This shift is leading to space saturation in certain cities while opening opportunities in smaller urban centers.

“Encouraging energy-intensive industries to expand in restricted areas is challenging. Meanwhile, states like Sonora have energy surpluses that remain untapped due to a lack of transmission infrastructure”

José Robledo Commercial Director | Tuto Power

Cavazos also highlights a growing interest in southern states, which historically have been less industrialized than the north. “The appetite for projects in the south is increasing. Local governments need to transition from being mere administrators to actively promoting and facilitating investments,” he adds.

Additionally, Mario Chapa, CEO, Vynmsa, emphasizes the evolving nature of industrial real estate. “We are constantly adjusting to market needs. Previously, companies sought expandable spaces, but now the focus is on reusing existing ones,” he says. This shift is driven by both cost efficiency and sustainability concerns.

Infrastructure and Energy Challenges

A significant bottleneck for industrial real estate growth is energy availability. Energy scarcity is becoming a defining factor in industrial real estate decision making. Hernán Montemayor, CEO, roca Desarrollos, acknowledges the struggle. “for nearly five years, we have faced energy shortages in industrial parks, leading to lost projects. Governments often try to offset challenges through investment incentives,

but not everything can be solved this way. Some of them require long-term development strategies.”

José r obledo, Commercial Director, Tuto Power, notes that some regions, such as Queretaro, face significant energy limitations. “Encouraging energy-intensive industries to expand in restricted areas is challenging. Meanwhile, states like Sonora have energy surpluses that remain untapped due to a lack of transmission infrastructure,” he explains.

However, robledo sees opportunity in selfsufficient energy solutions. “Distributed generation and self-supply models could provide stability and predictability, helping companies navigate uncertainties in energy availability and costs,” he concludes.

reutilization of industrial spaces is gaining traction as a sustainable approach to development. Luis Montes de Oca, Co-founder, Elite Last Mile Industrial Park, stresses the importance of proper diagnostics before repurposing spaces. “Understanding why a property was abandoned—whether due to energy shortages, lack of natural gas, or poor

location—is the first step toward reutilization. Large transformation companies that were moved out of urban centers create ideal spaces for last-mile operations.”

“We need to integrate energy-efficient solutions, balance renewable energy sources, and implement smarter resource management systems. Through automation, we ensure facilities operate efficiently, prioritize worker safety, and make better use of energy resources,” explains robledo.

Neove Pipper, General Manager for Building Automation LATAM, Honeywell. She sees nearshoring as an opportunity for Mexico to align its industrial expansion with sustainability commitments.

Despite challenges, industry leaders remain optimistic about Mexico’s industrial real estate trajectory. “We are in a historic moment. r egardless of external threats, Mexico’s conditions are favorable for continued growth. Public policies are aligning to support industrial development, and we must take advantage of this momentum,” says Montes de Oca.

TRANSFORMING MANUFACTURING OPERATIONS THROUGH TECHNOLOGY

Manufacturing leaders are increasingly focused on developing strategic data activation frameworks that align insights with business objectives, delivering measurable value across the production cycle. However, significant barriers persist, including organizational resistance, skills gaps, and the need for advanced automation, AI-driven decision-making, and robust cybersecurity measures. Overcoming these challenges

requires a holistic approach that integrates cultural change, cutting-edge technologies, and cyber-physical security strategies, experts say.

One of the most significant obstacles to digital transformation is organizational resistance. Around 70% of digital transformation initiatives fail due to misalignment with corporate culture, and 80% of manufacturers cite a lack of in-house

expertise as a major barrier. “Our company, focused on process implementation, has experienced resistance. Without a commitment from upper management, we find their teams are similarly disengaged,” said Eduardo rius, Country Sales Manager Mexico, Bizagi.

This highlights the need for reskilling programs and change management strategies to support adoption, which require strong communication with the tech provider and the potential user to identify the ways it can enhance adoption. “When clients have specific future production goals, present actions become crucial. A client with 50 largely manual production lines values handcraftsmanship. We are developing an AI solution to support their philosophy. Initial change resistance gave way to worker enthusiasm when they understood how it would improve their manual tasks. This shift, championed by leadership, has positively impacted the workforce,” said Daniel Argüello, Vertical BD EBG Director, Hikvision.

Leonardo Vieira, Co- f ounder and CEO Mexico, T r ACTIAN, says that when implementing technology, leaders must identify whether it increases profits, reduces costs, or mitigates risks. If it achieves one of these three outcomes, the technology should be implemented. He notes that in an environment with tariff pressures and uncertainty, flexibility in technology adoption is important, but it is also essential to know what will truly contribute to the organization.

Meanwhile, supply chains are rapidly evolving with the integration of AI-driven automation. By 2030, AI is projected to generate US$3.3 trillion in annual economic value for manufacturing. Moreover, 95% of supply chain leaders plan to invest in predictive analytics to enhance resilience, and companies leveraging AI-driven risk management have reported a 40% reduction in supply chain disruptions, underscoring its importance in mitigating operational risks.

Julio Hernández, Director General and Country Manager, BAIC Trucks Mexico, notes that one of the main problems faced in the company’s operations is the illegal extraction of fuel. He notes that in this operational aspect, technology can also help identify when fuel levels in tanks drop drastically. “We had cameras inside the operator’s cabin, which allowed us to generate data. Now, with the integration of AI, we can act on that data and pinpoint the specific situations in which these cases of extraction occurred,” he said.

Beyond automation, manufacturers are increasingly adopting real-time decision intelligence to boost efficiency. r esearch shows that implementing real-time data analytics can result in a 30% increase in productivity and a 50% reduction in downtime. By transitioning to predictive and autonomous decision-making, companies can proactively identify inefficiencies and bottlenecks, ensuring a more agile and responsive production environment.

However, increased connectivity comes with heightened cybersecurity risks. The manufacturing sector is the most targeted industry for cyber threats, with 50% of industrial cyberattacks aimed at this sector.

The global cost of cybercrime is projected to reach US$10.5 trillion by 2025, prompting 70% of manufacturers to increase investments in cyber-physical security solutions. Integrating IT and operational technology (OT) security measures is critical to safeguarding digital assets and production continuity. “In the adoption of technology, it is crucial to inquire with the provider about their ISO 27001

certification, their SOC 2 compliance, the available integration tools, and whether their APIs are open. These factors are decisive in determining potential cybersecurity risks,” Vieira added.

By addressing these key challenges, cultural resistance, AI-driven automation, real-time intelligence, and cybersecurity, manufacturing leaders can establish a data activation framework that ensures longterm competitiveness and resilience. “It is important that companies set the goal of generating efficient production chains. The rapid development of AI is positive, and finding ways to apply it and help other smaller companies apply it is crucial. We must share knowledge,” Argüello added.

BEYOND BORDERS: PAYMENTS THAT ACCELERAT E BUSINESS

Traditional financial systems, burdened by inefficiencies, slow international transactions, and complex regulations, struggle to meet the demands of today’s fast-moving global economy. In this environment, Caliza provides a cutting-edge solution that optimizes treasury operations, streamlines crossborder financial flows, and unlocks liquidity for businesses across the globe.

“The shift toward nearshoring represents a fundamental transformation in how companies manage supply chains, workforce distribution, and financial operations. financial agility will differentiate successful enterprises from those struggling to adapt. By modernizing treasury strategies, businesses

“Treasury transformation is not just about improving efficiency; it is about positioning businesses for long-term success in an interconnected world. By leveraging technology-driven financial solutions, companies can break through traditional barriers, expand their global reach, and build resilience in an unpredictable economic environment”

Ezra Kebrab CEO | Caliza

can turn nearshoring into ‘leanshoring,’ streamlining financial operations while reducing costs and inefficiencies,” says Ezra Kebrab, CEO, Caliza.

International payments remain a major challenge for multinational enterprises. Delays disrupt supply chains, currency fluctuations create financial risks, and compliance with Know Your Customer (KYC), Anti-Money Laundering (AML), and tax regulations adds significant administrative burdens. Kebrab points out that many foreign entities face restrictive banking requirements that hinder their ability to access capital and expand into new markets. Outdated systems and manual workflows further increase inefficiencies, driving up operational costs and limiting financial flexibility.

To address these challenges, Caliza has introduced a streamlined financial infrastructure designed to eliminate friction in global transactions. By integrating instant crossborder payments, different currencies, USD accounts, and automated treasury workflows, businesses gain greater control over their financial operations. “This modernized system accelerates payment processing, reduces exposure through multi-currency holdings, and automates complex financial workflows.

Direct access to US financial systems enables businesses to expand globally with fewer obstacles, making nearshoring a more efficient and viable strategy,” Kebrab adds.

Caliza integrates an AI-driven compliance engine that automates KYC and KYB verification, monitors transactions for AML compliance in real time, and ensures secure money transmission under US regulatory oversight. These advanced safeguards help businesses mitigate financial crime risks while

maintaining trust with customers, financial institutions, and regulatory bodies.

INVESTMENT, INNOVATION: ENGINES OF AEROSPACE INDUS TRY GROWTH

Mexico has the potential to become a key innovation hub in the global aerospace industry. Experts agree that the country possesses the necessary talent, capabilities, and capital to achieve this. However, a more coordinated effort among academia, private companies, and the government is essential at a national level, as current efforts remain largely regional.

“Mexico has a strong position in aerospace interior design, but there is still much to be done in engineering and development,” explains roberto Corral, Co-founder and Vice President, InnoCentro, highlighting Mexico’s need for greater engineering and development efforts.

Corral stresses the importance of supply chain improvements, noting that the country has the potential to enhance its supply capabilities significantly. With over 500 engineers at Honeywell’s research and development center, he believes Mexico can expand its role in innovation and technology.

“Mexico is the 12th largest aerospace exporter, and with global aircraft fleets set to double to 43,000 planes in the coming years, our role in the industry will only grow. Our strategic location has helped, but we need to further develop human capital. Compared to the rest of Latin America, we have a significant advantage in skilled labor,” says Óscar rodríguez, President, BJX Aerospace, BJX Aerospace. However, he acknowledges that while Mexico has made significant progress, barriers to entry remain critical.

Paola Hernández, Customer Business Director, Honeywell, underlines the geographical advantages of Mexico’s aerospace clusters, which help reduce storage and transportation costs, making supply chains more efficient. “Mexico has over 50,000 highly specialized workers and globally recognized certifications, making it competitive in both cost and quality,” she states. She also identifies four key factors for industry growth: expanding the local supplier base, maintaining automation and quality standards, investing in r&D to shift from manufacturing to innovation, and modernizing Mexico’s logistical infrastructure.

“Connecting industries is complicated, but that is why we have intercluster initiatives where different industry clusters collaborate to improve supply chains,” states rodríguez stressing the need for more interconnected industries and the role of “innershoring” to foster local suppliers. According to him, a key challenge is dispelling the myth that r&D can only be done in the US or Europe.

Diversification is another crucial strategy. r odríguez points out that companies in Mexico, especially in the automotive sector, have the expertise to transition into aerospace. However, convincing them to take that step is difficult due to the capital investment required. “We need government support with smart incentives to encourage companies to make this leap,” he states. He warns that failing to adopt new technologies could render companies obsolete within three years.

With 95% of Mexico’s economy driven by SMEs, navigating certification requirements is difficult, making financial incentives crucial. f uture competitiveness will also hinge on data science, analytics, and supply chain optimization. “It is tough to compete with major global corporations, so we need to identify niche opportunities where local companies can enter the supply chain,” he says.

among young girls, especially those from underprivileged backgrounds. With funding from OEMs and airlines, we have already helped some of them enroll in engineering programs,” she shares.

Additionally, rodríguez criticizes the rigidity of academic programs, which take three to five years to adapt. “We need microcredential programs that allow professionals to upskill quickly,” he suggests, adding that the current fragmented approach to training must be streamlined for regional impact.

Óscar Rodríguez President | BJX

Aerospace

Hernández highlights that at Honeywell’s technology and development center in Mexico, engineers conduct prototype testing and develop components for next-generation aircraft. However, she notes that staying updated is a major challenge for the workforce. “The industry is evolving rapidly, and students, workers, and companies must continuously adapt to new trends and regulations in the global supply chain,” she explains.

Hernández is also involved in initiatives to increase female participation in aerospace. “A group of us launched ‘Girls with Goals,’ a program that promotes aerospace careers

“We also need more female engineers. Talent has no gender, and women have a lot to contribute to this industry,” adds Corral, calling for greater inclusion and engagement from universities in industry-linked committees to improve student opportunities.

Ultimately, Hernández believes that without public policies integrating all industry players, progress will be difficult. “We need academia, industry, and government to collaborate. Public policies can help modernize university laboratories and establish industry-wide standards for supplier integration,” she argues. She points to Brazil as an example, where coordinated efforts have led to the success of companies like Embraer. “Mexico has the talent and funding. If we work together as Brazil does, we could manufacture aircraft, satellites—anything,” she concludes.

The rapid evolution of global logistics, driven by consumer demand, has placed an unprecedented focus on transportation, customs brokerage, and warehousing services. The automotive, technology, and steel industries have experienced significant growth, requiring the adoption of advanced technologies to enhance logistics and transportation efficiency. As Mexico aims to solidify its position as a nearshoring hub, strategic investments in logistics and technology will be critical to ensure supply chain resilience and long-term sustainability.

To strengthen its supply chains against potential disruptions, the Baker Institute suggests Mexico prioritize investments in: transportation networks, by expanding road and rail infrastructure to facilitate efficient cargo movement; digital connectivity, by upgrading logistics technology, AIdriven optimization models, and machine learning applications; supply chain security, implementing real-time tracking, cybersecurity measures, and risk management strategies; and sustainability, by promoting ESG-compliant supply chain practices and adopting green logistics solutions.

By focusing on these areas, Mexico can attract and retain investment while ensuring that its logistics ecosystem remains competitive and resilient in the face of evolving global trade dynamics, says the Baker Institute. “Compared to export powerhouses like South Korea and China, which invest heavily in infrastructure as a percentage of their GDP, our resource allocation is significantly lower,” states Sandra Aragonez, President, CONALOG.

Challenges, Considerations for Mexico’s

Nearshoring Strategy

According to the Boston Consulting Group, Mexico remains a key manufacturing hub for North America, but increasing labor costs, infrastructure limitations, and US trade policies pose challenges to the country’s long-term competitiveness. While it continues to be the top nearshoring choice for many companies, those planning new factories must carefully assess evolving conditions. Constraints in labor, infrastructure, and market access may shift the ideal locations within Mexico or even prompt consideration of alternative destinations in the region. “In terms of fDI, a ‘Triple A’ government is essential. This means a government that effectively serves its citizens, strategically attracts companies that align with our national interests, and fosters the growth of local enterprises,” says Astrid Abugaber, founder and Managing Director, Abu Logistics.

Among other challenges the country must address is security and ensuring the rule of law to create more certainty, as Mexico should not only rely on geography. “The current tension with the United States over security underscores the critical need for legal certainty. While Mexico offers significant investment benefits and proximity to the US market, unresolved security concerns and pervasive corruption will ultimately deter investors, regardless of cost advantages,” says Milton Magos, Vice President Mexico, Traffix.

The complexity of supply chains and proximity to key suppliers are critical factors for manufacturers. Industries requiring scale, integrated supply networks, and strong logistics, such as automotive manufacturing, still find Mexico irreplaceable. However, the country must also help SMEs to develop to better serve incoming investments, as strong supply chains are essential for companies interested in Mexico.

for Aragonez, the strength of Mexico’s SMEs is crucial, but significant challenges hinder their efficiency and competitiveness. “Our data reveals that SMEs face double the logistics costs compared to large companies. This disparity stems from two key gaps: a severe lack of planning and a profound digital divide, with many businesses still operating without ErP systems. To attract more investment, we need a robust ecosystem. If Mexico does not have that ecosystem of potential suppliers, then how can it serve incoming companies?” she adds.

Shifting from reinvestment to Transformational fDI

Mexico has historically relied on foreign reinvestment. According to the Ministry of Economy, in 3Q24, Mexico reached a historic high in fDI, totaling US$35.737 billion, a 9% increase compared to the same period in 2023. Of this total, 86% came from profit reinvestment, 6% from new investments and capital increases in established companies, and 8% from intercompany transactions within the same corporate group.

Authorities aim to further enhance investment in the country through Plan México, which includes several strategies to:

+ Enhance investment incentives by providing tax benefits, regulatory simplifications, and financial support for high-value-added sectors such as semiconductors, pharmaceuticals, and clean energy

+ foster r&D by increasing investment in innovation from the 2022 Mexico’s 0.27% of GDP to levels competitive with leading economies

+ Develop specialized workforce programs by expanding technical education and dual training programs aligned with emerging industries

+ Streamline investment processes by reducing the time to finalize an investment from 2.6 years to one year through digital platforms and reduced bureaucracy

By implementing these measures, Mexico can position itself as a hub for transformative investments that drive sustainable industrial growth. However, experts believe that authorities must work on making the project a long-term one. “Plan México holds promise, but its effectiveness hinges on deeper, long-term planning. This ensures that infrastructure investments, which require extended maturation periods, are implemented strategically and that the most beneficial projects are prioritized,” says Carlos Santillán, Director of Business Liaison, AML.

Héctor Díaz Santana, Tax and Legal Partner, KPMG Mexico, indicates that, according to a KPMG survey, companies are increasingly drawn to Mexico not solely for cost advantages. factors such as the agility and resilience of its supply chains, access to skilled talent, and its strategic proximity to destination markets also play a significant role.

for these reasons, business leaders call for professionalization for the workforce and managing positions, the latter with a focus on having a more open mind in terms of technology adoption. “When discussing attracting investment, we often fail to incorporate considerations like vertical warehouses. We still operate with a ‘cheap labor’ mentality, and that needs to change,” Aragonez notes.

THE ROAD AHEAD: STRATEGIC PRIORITIES FOR MEXICO’S AUT O INDUSTRY

Mexico’s automotive industry has the unique opportunity to expand its global presence. Experts argue that the key lies in fully leveraging the country’s numerous trade agreements, which have often been overlooked, favoring the overreliance on the USMCA. They also stress the need for investment in workforce training at all levels to ensure Mexico can efficiently adopt and implement advanced technologies. By doing so, the country can optimize resource utilization, reduce energy consumption, and enhance overall industry competitiveness.

“To remain competitive, we must focus more locally on the continent and ensure that our local suppliers meet international standards,” says Lauren Brown, CEO, Mercedes-Benz Mexico International, highlighting the need to rethink supply chains.

A key component of this strategy is collaboration with the federal government and industry partnerships to mitigate risks for investors. Brown also underscores the importance of workforce development: “We must train workers at all levels and integrate a culture of preparation among younger generations. Working closely with the US, Canada, and other countries will ensure a level playing field and keep us competitive.”

f or Enrique Marin, Head of Corporate Strategy and Corporate Central functions, Audi Mexico, the strategic priorities to remain competitive over the next decade are infrastructure and r&D. “We need to develop infrastructure, especially energy-related, and create innovation centers to train and equip workers with the necessary skills,” he

noted. Audi Mexico has implemented dualeducation programs that combine theory and practice, accelerating workforce preparation.

As the world’s sixth-largest vehicle producer, Mexico has the potential to elevate its production standards and lower its carbon footprint. While electric vehicles are not a universal solution, they represent a significant step toward reducing emissions.

Julio Hernández, Country Manager, BAIC Trucks Mexico, points out the spotlight should be in energy, electrification and technology as heavy-duty transport accounts for 46% of Mexico’s total energy consumption, making it a priority for sustainable transformation. “We have a responsibility to improve vehicle processes, enhance quality, and reduce costs through technology. AI and green certifications can help optimize fossil fuel consumption and lessen the industry’s environmental impact,” Hernández explained.

However, Marin stresses the need for strategic partnerships beyond North America. “Mexico has numerous trade agreements; we must focus on fully utilizing them and building strong partnerships in Asia and Europe to create resilient global supply chains.”

Hernández agrees, as diversifying supply chains would allow for advanced battery and electronics technologies integration from Asian markets. “Historically, we have depended on the US, but now is the time to enter global supply chains and adopt technologies that reduce automotive industry emissions,” he concluded.