Near-shoring Trend and Improvements in Technology Steer New Manufacturing Production Plants towards the Americas


Both Mexico and the manufacturing industry are undergoing a technological transformation. The internet and linking of machines, sensors and computers to human operators and production managers is advancing and creating better efficiency for advanced levels of monitoring, collecting, processing and analysis of data. Multipurpose robots are being implemented in more countries outside of China since the number of multipurpose robot shipments to China doubled from 2013 to 2015 to about 75,000 units. This trend is now spreading to manufacturing plants in Europe and North America as the robotics technology becomes more affordable. In many instances these robots do not replace workers but rather compliment their efforts and allow human workers to be safer and more efficient while performing less hard labor. These positions do however require more highly skilled operators preferably with industry related experience.

As many manufacturers compete they realize they must stay ahead of technological trends and implementing these and other new technologies in their operations to improve plant productivity and remain in business. However, this means that they expect that their workers will do the same. The manufacturing related job skills which will be in demand in the future include operating new technology and computer skills, problem solving skills, math and basic technical training. Positions which are currently in demand and which will continue to be more highly in demand by 2020 include skilled production workers, engineers and researchers or scientists.

While the talent shortage poses a challenge, perhaps the less obvious challenge is reshoring in and of itself. It would seem that bringing production closer by nearshoring production to somewhere closer to where the business is headquartered would decrease the hurdles facing these organizations. Companies that have already reshored have faced difficulties in stabilizing the new workforce, addressing the organizational skills gap, localizing the supply chain, altering the capital to labor ratio, and contemplating product design. According to recent surveys, nearly half of executives would consider reshoring their manufacturing operations back to U.S., this translates to an inherent increase in the demand for skilled workers. Difficulties in finding the qualified talent may push manufacturers to automate their factories and replace people with machines. However, automation requires highly skilled personnel to operate production processes, though fewer in number. Whether manufacturers and other production based businesses decided to automate or not, manufacturers require skilled workers in their plants. Therefore, it is in the best interests of manufacturers and government to continue to invest in skills development programs that mitigate this challenging issue.

The Mexican government has recognized the need for advanced training in the manufacturing industry and especially the automotive sector. While government agencies have allocated funding for education, organizations with manufacturing plants in Mexico have developed new employment models to attract and retain skilled talent offering unconventional benefits packages. These benefits coupled with an increase in the minimum wage throughout Mexico, of 4.2% to 73.04 Mexican pesos, gives workers further incentive to seek employment in the more industrial markets within Mexico. While the World Bank said in January that Mexico and emerging markets in Central America should fare better than the rest of South America due to their close proximity to the United States economy.