Torres: Near-shoring is the hot topic to talk about right now
PHARR, Texas - Jorge Torres, president and founder of Interlink Trade Services, kicked off IWS2 with a discussion about near-shoring.
IWS2 was the second in a series of productions by the Pharr Bridge Board that focus on the lack of industrial warehouse space in the upper Rio Grande Valley.
The event drew land developers, realtors, economic development leaders, and those in the import-export business.
“So near-shoring means relocating supply chains to diminish the risk from disruptions that are currently impacting the world. Near-shoring makes sense as the pandemic highlighted the weakness of the interconnection and dependence on a fully globalized supply chain,” Torres said.
“Regionalization is the answer, as we've seen, and we're seeing the positive impact of that in the North American region. While many (manufacturing) companies are taking steps to relocate their assembly production facilities, there are also resources or parts and components within the supply chain. Some suppliers are going even further and relocating their operations to be closer to their customers.”
Torres referenced Tesla in his presentation.
“Tesla is opening an operation in Santa Catarina, Monterrey, Mexico. One of the reasons why they decided to open a facility there is because of the accessibility to raw materials. It's much better (for accessing raw materials) than other parts of the world. So that's a key element.”
Torres also spoke about the current trend of Chinese companies moving to Mexico.
“We hear a lot about China. The Chinese are coming. Yes, that's true. Chinese manufacturers are increasingly setting their sights on Mexico for bringing production closer to the American market. This reflects the higher cost of Chinese exports under US tariffs and disruptions to the global supply chain,” Torres said.
Rather than looking for suppliers in other parts of Asia, Torres said, Chinese firms are looking at Mexico.
“Mexico is becoming the new alternative because it offers proximity to the US, lower labor costs and access to preferential treatment under the USMCA, or the US-Mexico-Canada Agreement,” Torres said.
“So yes, we're sort of seeing this. A lot of companies that were making products in China are shipping production to North America including Mexico to take advantage of USMCA in mitigating tariffs.”
Torres cited a report from a consultancy firm that showed “strong evidence that American manufacturers are looking to relocate closer to home.”
“A lot of manufacturers or companies that were making products in Asia, in Vietnam and Cambodia, those countries… because of the supply chain disruptions and the increased cost of transportation, they are deciding to either ship those operations to North America, or (with) any new products or new production, (they are) setting it up in North America.”
Here is an audio recording of Torres’ remarks at IWS2. It includes an introduction to the summit by Luis Bazan, director of the Pharr International Bridge.
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