Infrastructure: a catalyst for North American competitiveness

Trends in Nearshoring

Trends in nearshoring are driving new manufacturing solutions in North America . The closeness of manufacturing to final market is strategic for agile organizations. Customer-centricity is driving corporate strategy, from supply chain footprint to brand interaction with final users.

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Nearshoring in North America can build resilience into supply chains, increase protections to intellectual property under the USMCA, and leverage cultural impacts to productivity, among others. And the concept of ally-shoring aligns the nearshoring trend with the growing desire to do business with like-minded democratic partners.

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Improved infrastructure will help grow the economy, generate revenue for businesses and create jobs for people. Infrastructure, as it relates to manufacturing, is commonly thought about in terms of roads, ports and access to resources. But beyond bridges, access to educational infrastructure is crucial to a modern, highly skilled manufacturing industry in North America.

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Infrastructure, in all its forms, can reduce the cost of delivered goods, facilitate the physical mobility of people and products, remove productivity constraints, and increase competitiveness.

A Boost to US Infrastructure

The current U.S. infrastructure investment is only 1/3 of what it was in 1960. A $1 trillion investment would create an estimated 11 million jobs , about 10% of those destined for manufacturing.

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With the recent passage of the $1.2 trillion infrastructure bill in the United States, many sectors are poised to benefit including: e-vehicles and their supply chains, heavy industrial machinery, semiconductors, broadband & fiberoptics, renewable energies, pharma, construction & materials, trucking & repair, and other related industries.

Infrastructure improvements in transportation could greatly transform the U.S. manufacturing industry, unlocking access to talent pools currently isolated from where manufacturing is growing. Improved connectivity will likely facilitate advanced technologies across many sectors and provide an even sturdier foundation for Industry 4.0. The reimagination of ports and waterways could alleviate disruptions and bottlenecks that have led to inflation. Ultimately, supply chains that have been stretched for years may find resiliency in North America, encouraging reshoring strategies.

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To fill these skill-intensive jobs in advanced manufacturing, experts are calling for continued focus on training for the future of manufacturing in the United States. The jobs of the future are focused on operating, maintaining and programming the machines that are doing a lot of the actual manual labor and hard work that used to be done by American workers. Those unskilled and semi-skilled jobs will either continue to be automated or transferred to low-cost destinations.

Mexico: Collaboration for a Regional Competitiveness

Mexico is a strategic ally for nearshoring operations . The proximity to the United States and the specialization in complementary capabilities contribute to growing regional competitiveness across many industries.

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Global organizations continue to inject capital (physical, intellectual and operational) into Mexico, elevating its strategic role for global footprints. Mexico captured over $30 billion dollars in FDI over the year 2021, of which 44% represented new investment. And Mexican manufacturing exports are on the rise, strongly driven by trade with the United States.

HSBC Global Research, 14 July 2022

With growing FDI comes knowledge transfer, and the local talent market is booming. Many Mexicans play vital roles in the international organizations that they serve. In fact, talent has been a driver for global organizations in Mexico, and with recent shifts to the U.S. employment market, the drive has been reignited.

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These trends in nearshoring are driving new manufacturing solutions in North America, with Mexico directly contributing to the growth of the region. When jobs stay in North America , they directly create more U.S. jobs in both upstream and downstream supply chains including services and technology.

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For a U.S. shift toward advanced manufacturing, they must rely on regional allies to collaborate in the overall value chain, and Mexico is positioned to serve the Americas.

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Read more about how Mexico prepares their workforce in STEM fields .