“Lack of proper industrial policies is slowing Nearshoring in Mexico”: Takao Nakahata

The lack of an industrial policy and limited implementation of solutions for carbon neutrality are causing Mexico to miss out on opportunities with nearshoring, according to Takao Nakahata, Executive Director of the Japan External Trade Organization (Jetro) in Mexico.

“Mexico has attractive aspects, such as its proximity to the United States, the free trade agreement, and a skilled workforce. However, most of these factors are not the result of a clear government policy, and unfortunately, the government lacks an industrial policy aimed at businesses,” Nakahata stated.

“The importance for Mexico, looking ahead, lies in establishing both an industrial policy and a strategy to achieve carbon neutrality,” Nakahata said during the fifth edition of the Industrial Transformation Mexico (ITM).

Nakahata warned that another issue facing foreign industries in Mexico is related to energy supply, especially in states like Guanajuato, Nuevo León, and Coahuila.

In his view, foreign companies looking to invest and expand their industrial parks face limitations in electrical supply.

“If a private company wants to expand, it has to provide extra money to build the electrical supply infrastructure, but all the transmission and distribution of electricity is the responsibility of the state, and only they can do it, so the private company has to pay, but then that station is not theirs but the state’s,” he said.

Jetro’s representative recommended that the federal government establish a mechanism to compensate for this additional cost to investors to incentivize more companies to expand and invest in Mexico.

Another factor hindering further investments in Mexico is port congestion, particularly in the case of Manzanillo, Colima.

Nakahata highlighted that this is a critical point for the importation of inputs from Japan, China, and Korea.

“For 15 years, there has been a project to build a new port in Manzanillo, but it has never progressed. Instead, this government is developing other projects like the Tren Maya, but it is not strengthening port capacity. It is necessary to expand the ports and improve port infrastructure, especially on the Pacific side,” he said.

However, Jetro’s representative affirmed that Asia has confidence in the future of the manufacturing industry in Mexico. He also emphasized Mexico’s crucial role in supplying North America in industries such as automotive.

Nakahata emphasized the intention to have more Japanese companies establish their factories and add value to Mexican manufacturing through technological solutions, automation, and services, citing electromobility as an example.

“We want to promote the technology of Japanese companies to solve or add more value to the Mexican manufacturing industry, but there is a lack of incentives from the government for more innovations to come to the country,” concluded the Jetro executive.

TYT Newsroom