Challenges for nearshoring: IMCO analyzes indicators that would be priorities

MEXICO CITY (El Universal).— Nearshoring is an important opportunity to increase the attraction of investments focused on boosting industry, but different regions of the country face some structural challenges to realize this opportunity, according to the Mexican Institute for Competitiveness (IMCO).

Faced with the challenges of nearshoring in Mexico, IMCO and the Friedrich Naumann Foundation (FNF) analyzed various indicators considered as priorities by both authorities and investors and potential investors, determining 21 variables related to the labor market, basic inputs, housing and the regulatory environment in the entities.

Four axes

The updated version of the analysis highlights that in the four areas analyzed (Labor market, Housing and basic services, Infrastructure and Rule of law and regulatory framework), Nuevo León, Aguascalientes and Coahuila have a better performance than the rest of the federal entities. In addition, they have facilities to take advantage of the trend of relocation of productive chains.

While Oaxaca, the State of Mexico and Zacatecas are the states whose structural conditions make it difficult to attract investments and increase economic activities linked to “nearshoring.”

A key factor

In the labour market sector, the study focused on the direct relationship with the workforce, educational infrastructure and access to job training and skills, and another very important quality that they took into account was the mastery of English.

The results show that people from Guanajuato, Tlaxcala, Sinaloa and Durango have greater potential in the labor market, while California Sur and Jalisco have a smaller number of people available with the aforementioned qualities.

English proficiency is one of the fundamental elements in the labor market and also one that companies take into account when investing in the country.

In this case, the regions of Jalisco, Nuevo León and Michoacán have the highest levels; on the other hand, Coahuila, Chiapas and Oaxaca have lower levels.

For the issue of housing and basic services, the availability of housing in the different entities of the country, access to basic services in homes and the number of public transport vehicles that allow workers to connect their homes to their workplace were taken into account.

Dwelling

The states with the highest annual housing production are Quintana Roo, Nuevo León and Aguascalientes, while Guerrero, Chiapas, Campeche and Oaxaca obtained the last places on the list.

This point is key to knowing the increase in spaces available for new employees and the amount of housing infrastructure in a place.

The data on public transport is a little more complex, as access between the different regions of Mexico is uneven, with Mexico City being the best connected in the country with 3,000 passenger transport units per million inhabitants.

At this point, the availability of basic inputs such as electricity and water at affordable prices and with constant supplies, as well as the state of the hydraulic infrastructures of the regions, were analyzed.

The number of plants that treat industrial wastewater is directly related to the amount of water granted for industrial use in each entity, reflecting the capacity of the local infrastructure to reuse water resources and ensure supply.

Campeche and Baja California Sur were the states that meet these hydraulic qualities, compared to Veracruz, Nayarit, Chihuahua, Coahuila and CDMX, which do not have sufficient infrastructure.

Reliable and affordable electricity is key for companies to see a competitive place to invest, which is why the states of Baja California, Sonora, Sinaloa and Chihuahua led the list as the regions with the most affordable prices.

Rule of law

The last point that IMCO and FNF took into account for the analysis is related to the indicators of criminal incidence of companies, the perception of the efficiency of the regulatory framework of the regions and government programs for investments.

Sinaloa and Yucatán are the states with the greatest competitiveness for business development, while in Hidalgo and Morelos there are few companies that have this government support.