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Survey: Mexico Still Top Choice for Manufacturing Near-Shoring

A recent poll of 80 C-level and other senior executives from across over 15 industries reveals that 63 percent planning to source closer to home identified Mexico as their top choice. In contrast. Only 19 percent chose for the U.S. for near-shoring activity.

Global global business-advisory firm AlixPartners LLP conducted the online survey of manufacturing firms between January 24 and April 8, 2011. The majority of the businesses (87 percent) are considered international companies as they own or operate operations outside the United States.

Already nine percent of executives surveyed already near-shore their manufacturing operations, while 33 percent of them indicated they plan to do the same within the next three years. Only 19 percent said they've have experienced supply-chain disruptions in Mexico because of security issues. Within the next five years, 45 percent said they expect to see "modest improvement" in safety/security there, while five percent believe there will be "dramatic" improvement and 29 percent think the situation will not change at all.

"Despite security concerns in Mexico, the country has a lot of appeal right now because of its proximity to North American demand and the continuing need of many companies to improve their working-capital positions," said Chas Spence, a director in the Latin American Manufacturing Practice at AlixPartners. "That appeal could grow if fuel prices continue to rise globally."

Companies surveyed gave three key advantages expected to be gained from near-shoring in Mexico: improved speed-to-market times, reduced freight costs, and lower inventory costs. Other reasons: time-zone benefits (e.g., improved management coordination) and better "cultural alignment" with North American managers.

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