Introduction
Mexico continues to be an attractive destination for nearshoring, according to US CEOs consulted by Kearney. Although investment in North America is currently stagnant, there’s a pressing need to convince the Trump administration to grant Mexico preferential treatment under the T-MEC to expedite productive substitution import projects.
Mexico’s Current Attractiveness and Challenges
Despite its appeal, Mexico faces internal risks such as labor reform aiming to reduce working hours, potentially increasing labor costs to compete. Additionally, issues like insecurity, energy and water shortages, as well as infrastructure and logistical obstacles, pose challenges.
Kearney’s Report on Nearshoring and Logistics
According to Kearney’s report on nearshoring up to the first half of 2025 and their previous analysis “Mexico’s Nearshoring & State of Logistics,” Mexico anticipates becoming more investment-friendly once T-MEC negotiations conclude. There’s growing interest from US and other country executives to relocate manufacturing in Mexico.
Investment Trends
- 29% of respondents have already made manufacturing investments in the last 3 years.
- 28% have decided to bring manufacturing operations closer to Mexico or Canada.
- 15% are evaluating projects.
- 7% aren’t considering nearshoring.
Reversal in Relocation Trends
Kearney’s analysis indicates that the business relocation boom faced a setback starting in 2024, following three years of steady growth. Asian nations like Pakistan, Sri Lanka, Taiwan, India, Singapore, and Hong Kong increased their exports to the US market due to Mexico’s inability to supply advanced technology and electronics.
US CEOs’ Perspective on Mexico
Omar Trujillo, a Kearney partner, stated that Mexico remains attractive and will become even more so once the preferential T-MEC treatment is secured from the US government. This will assist the Republican administration in achieving its goal of bringing as much production as possible back to the US.
Asian Manufacturers and Logistical Challenges
José María Ajá, Kearney’s principal, noted that low-cost Asian manufacturing countries (excluding China) have increased their exports to the US, surpassing Mexico’s trade with its primary partner. This raises concerns among US executives about Mexico losing its appeal, especially with new US regulations targeting workers in their territory, such as truck drivers and e-commerce requiring English proficiency.
Logistical Bottlenecks
Kearney warns that road and border issues remain logistical bottlenecks. In 2024, northbound road freight reached a record 57 million tons; in 2025, stricter security and regulatory measures are implemented.
Key Questions and Answers
- Q: Why is Mexico still attractive for nearshoring despite investment slowdown?
A: Mexico remains attractive due to its strategic location, skilled workforce, and existing free trade agreements. However, the investment slowdown is partly due to concerns over labor reform and infrastructure challenges.
- Q: What are the internal risks Mexico faces?
A: Internal risks include labor reform aiming to reduce working hours, potentially increasing labor costs, as well as issues like insecurity, energy and water shortages, and logistical obstacles.
- Q: How have Asian manufacturers impacted nearshoring trends?
A: Low-cost Asian manufacturers have increased their exports to the US, surpassing Mexico’s trade with its primary partner, raising concerns about Mexico losing its appeal.
- Q: What logistical challenges does Mexico face?
A> Road and border issues remain significant logistical bottlenecks, with stricter security and regulatory measures implemented in 2025.
