Home Business News Why Some Companies are Holding Off on Nearshoring Production to Mexico

Why Some Companies are Holding Off on Nearshoring Production to Mexico

Why Some Companies are Holding Off on Nearshoring Production to Mexico

THE DAILY SCOPE, 4/20/22: On paper, nearshoring production to Mexico seems like an obvious solution to the pandemic-fueled supply chain backlog, which has caused the price of shipping to increase roughly 10x per container. Moving production closer to end-users aims to make the supply chain more resilient by eliminating long shipping routes that are highly sensitive to global disruptions or price hikes. However, according to a recent study of American manufacturing executives by the Mexico City-based consulting firm Kearney, only 17 percent of CEOs – out of the 70 percent of CEOs considering moving – have actually shifted production to Mexico.

So, why haven’t more companies made the shift to manufacturing south of the border? The answer lies in the lack of easily accessible raw materials and components that are essential to production. This ecosystem of suppliers across China and Southeast Asia has been established for decades. Kamala Raman, a vice president at Gartner Inc., said in an interview with The Wall Street Journal: “Undeniably, China is the single biggest market for all sorts of nuts and bolts, everything from your basic components to sophisticated components…You cannot recreate that ecosystem in any other country of the world.”   

Eclipse TD307MK3
Credit: Eclipse

In other news, Eclipse, a Japanese audio solutions manufacturer, has launched its new loudspeaker: The TD307MK3, which is the company’s first new product of its kind in seven years. The new TD307MK3 features a 6.5 cm fiberglass drive unit and has an integrated mounting bracket that allows it to be hung from a wall or ceiling, making it useable for custom installation projects.

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