Experts Warn of a Slowdown in Nearshoring on Mexico’s Northern Border, Resulting in Significant Job Losses

Specialists warned on Monday about a “slowdown” of the nearshoring phenomenon on the northern border of Mexico, where the maquiladora industry lost more than 100,000 jobs in the last 18 months, according to a report by the Border Business Block.

The report noted the disappearance of 101,501 export manufacturing jobs in border cities such as Tijuana, Ensenada, Mexicali, Tecate, Nogales, Ciudad Juárez, Acuña, Nuevo Laredo, Reynosa, and Matamoros, which equates to 10% of the 1.032 million jobs that existed in October 2022, when the figure reached its peak.

Ciudad Juárez alone, the largest employment hub of this type in Mexico, cut 54,906 jobs in 10 months, the document indicated, based on data from the National Institute of Statistics and Geography (Inegi).

Thor Salayandía Lara, president of the Border Business Block, told EFE that this job loss poses a “serious risk” to the economy of the entire Mexico-United States border, due to its high dependency on export manufacturing and its lack of economic diversification.

UNCERTAINTY

The business leader attributed the situation to political uncertainty in Mexico and the United States, where presidential elections coincide this year.

He predicted that after the upcoming U.S. elections, there will be a change in U.S. economic policy, which is already wreaking havoc on the border economy.

“Right now, the manufacturing industry has been depressed, there hasn’t been much work due to various issues, such as the economic and political turbulence or uncertainty we’re experiencing in both Mexico and the United States,” he asserted.

The Government of Mexico has highlighted nearshoring, where companies relocate their investments and manufacturing closer to their markets, as the country’s economic engine, reporting 127 announcements of future foreign investment totaling more than $39 billion so far in 2024.

However, the Border Business Block accused the Mexican government of “complicating the arrival” of the industry because the procedures to set up maquiladora companies are “very complicated and time-consuming.”

Additionally, it pointed out the insufficient infrastructure, particularly the electrical infrastructure.

“There are many warehouses full of finished products, and many of the companies we have here have the United States as their main client. They can say what they want about nearshoring and new investments, but from the perspective of clients, marketing, manufacturing, and production, it’s too slow,” he added.

JOBS

Lorenzo Quezada, laid off by a manufacturing company, pointed out that when employment decreases, companies cut temporary workers.

“Fifteen days ago, I lost my job because of those contracts that say the time is up and that’s it. And we need to feed the kids, pay for water and electricity, gas, and now with this heat, the air conditioning, the electricity,” he lamented.

He added that getting hired is increasingly difficult because companies are more demanding.

“Even if you have experience in the manufacturing sector, you need a certificate. Yesterday we went to a harness factory, and I had worked with harnesses for a while, but the guy said, ‘We’re doing everything with certification now,’ and they told me I needed to be certified,” he described.

Resumen en Español: 

Especialistas alertaron sobre un enfriamiento del fenómeno de relocalización de empresas en la frontera norte de México, con una pérdida de más de 100.000 empleos en los últimos 18 meses. Según el informe del Bloque Empresarial Fronterizo, desaparecieron 101.501 empleos en ciudades como Tijuana y Ciudad Juárez, esta última perdiendo 54.906 puestos en 10 meses. Thor Salayandía Lara, presidente del bloque, señaló que esto representa un grave riesgo económico debido a la alta dependencia de la manufactura de exportación. Atribuyó la situación a la incertidumbre política en México y EE.UU., con elecciones presidenciales coincidiendo este año. Aunque el gobierno mexicano promueve el ‘nearshoring’ como motor económico, las empresas enfrentan complicaciones burocráticas y falta de infraestructura adecuada. Lorenzo Quezada, un trabajador despedido, expresó la dificultad creciente para encontrar empleo debido a las altas exigencias de certificación por parte de las compañías.