Forseveraldecades,outsourcingproductiontothefarEasthasbeenhighlyeffective in reducing production costs for American firms. Recent events, however, have exposed the fragility of long, global supply chains and the rise of China as a middle-income country has eaten into profit margins. Reshoring and nearshoring is picking up pace amid a torrent of geopolitical tension, protectionist tariffs, and COVID. In a world where China is no longer the reliable and cost-effective workshop of the world, what options do US manufacturers have? In this article we discuss the merits and demerits of nearshoring to Mexico which, with its proximity to the US market, improving industrial base, affordable labor, and positive regulatory environment, presents a viable option for many US firms.

From Issue: Demand Shaping With Supply in Mind — The Planner’s Role in a Supply Constrained World
(Winter 2023-2024)

Location, Location, Location: Key Steps in Reshoring Your Supply Chain