Monterrey Metropolitan Area Is the Most Attractive Region in Mexico for Nearshoring
Monterrey is at the forefront of the new nearshoring wave. Many companies choose this city because of its robust infrastructure, highway connectivity, highly skilled workforce, and proximity to the U.S. Additionally, Monterrey possesses a stable economy. It also offers tax incentives and other advantages to help companies to reduce costs and increase profits.
By nearshoring to Monterrey, companies can take advantage of the competitive labor costs and skilled workers available in the city while still maintaining proximity to their U.S.-based operations. Furthermore, many businesses find that the improved customer service and product quality they experience by moving operations to Monterrey are worth the cost savings.
A recent report published by CBRE shows Monterrey and Saltillo are concentrating 61% of the nearshoring-related industrial space demand in 2023. Even though the largest investor in Nuevo Leon is still the U.S., Asian countries are willing to expand operations or establish a new site in North America and invest heavily in this state.
In 2022, Nuevo Leon registered US$4.49 billion in Foreign Direct Investment (FDI), and the Monterrey Metropolitan area captured most of it. The Federal and State governments are keeping confidential the amount of FDI captured by Monterrey, but the companies’ announcements show that most of their investments are concentrated in that area.
The Nuevo Leon State Government said around 164 new companies have announced investments in Nuevo Leon since October 2021, 87 of them are new companies coming to the state.
However, the FDI in Nuevo Leon in 2023 has kept a strong path. In the first semester of 2023, Nuevo Leon captured US$2.79 billion of FDI, according to the Secretariat of Economy (SE).
In quarterly reports published this year, this secretariat says that the largest FDI in Nuevo Leon is from Tesla, Ternium, Quanta, KIA, Forvia, and Whirlpool. Even though some of these investments are made in Pesqueria and Santa Catarina, these municipalities are part of the Monterrey Metropolitan area.
Most announcements made by companies investing this year in Monterrey are in manufacturing, especially in the automotive sector. The arrival of Tesla has made the Monterrey Metropolitan area more attractive for current and potential suppliers.
Real estate companies in Mexico have said Monterrey, Tijuana, Ciudad Juarez, and Reynosa have registered record absorption levels in the last 18 to 24 months and will continue receiving more projects in the next two years.
Moreover, Monterrey has a mature and diversified industry. In 2022, the products with the highest international sales were trailers and semi-trailers for any vehicle, other non-motor vehicles, auto parts, malt beer, and fruit juices or fruit and vegetable juices, according to the Mexican Federal Government data.
Still, Monterrey has some challenges to overcome, such as the hydraulic and electrical infrastructure, logistics, and industrial land availability. The different Mexican Governments are addressing some of these challenges. In the meantime, foreign companies can ensure a smooth transition and successful outcomes for their nearshoring projects using a shelter company like Tecma.
Overall, nearshoring to Monterrey offers many advantages for businesses looking to reduce costs while still providing quality products and services to their customers. With access to skilled labor, low-cost production capabilities, tax incentives, and close proximity to U.S. markets, companies should consider nearshoring in Monterrey.
If you are interested in exploring Nearshoring opportunities in Monterrey, schedule a free consultation with one of our Industry experts.