Executive Briefings

Near-Shoring in Mexico Is Attractive, But Congress Needs to Tidy Up Some NAFTA Business First

Imagine a supply chain in which American shippers need not look farther than their next door neighbor for the manufacturing of goods. For many U.S. and Canadian companies, Mexico is an obvious choice for near-shoring operations.

A survey by AlixPartners found U.S. landed cost for a Mexican-made product with moderate complexity, labor input and shipping - say a machined part - was 68 percent lower than the cost of making it in the United States, compared to 74 percent in China and 71 percent for India.

However, there are several obstacles to this activity, mostly emanating from Washington, that require shippers to use their lobbying clout to overcome, not the least of which is forcing Capitol Hill lawmakers and White House officials to finish what was started about 25 years ago with the North American Free Trade Agreement.

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Imagine a supply chain in which American shippers need not look farther than their next door neighbor for the manufacturing of goods. For many U.S. and Canadian companies, Mexico is an obvious choice for near-shoring operations.

A survey by AlixPartners found U.S. landed cost for a Mexican-made product with moderate complexity, labor input and shipping - say a machined part - was 68 percent lower than the cost of making it in the United States, compared to 74 percent in China and 71 percent for India.

However, there are several obstacles to this activity, mostly emanating from Washington, that require shippers to use their lobbying clout to overcome, not the least of which is forcing Capitol Hill lawmakers and White House officials to finish what was started about 25 years ago with the North American Free Trade Agreement.

Read Full Article