San Antonio Express-News (Sunday)
As Mexico pivots, San Antonio will benefit
Nearshoring and Mexico’s role in it have received attention in the Texas news media as our southern neighbor promotes itself as an alternative manufacturing location to China.
While there is debate about whether nearshoring is already occurring at a significant level, it is probably most accurate to say that its potential has yet to be realized, but the potential certainly exists and the process has begun.
A reversal of prior offshoring to China is underway because of recent trans-Pacific supply chain disruptions, geopolitical tensions between China and North America, and China’s increasing controls on investment.
San Antonio will see an uptick in freight and logistics activities from nearshoring. Mexican federal data show increases in investment in manufacturing, categorized as nearshoring, in 10 states, including Nuevo León, Coahuila, Guanajuato, San Luís Potosí and Tamaulipas.
Nuevo León Gov. Samuel Garcia has courted such investment and even attracted Chinese companies to develop industrial space in the Monterrey area.
Garcia recently traveled to East Asia to promote his state, resulting in some $5 billion in announced investments by
Chinese and Japanese companies. Nuevo León represents an interesting case study of Mexico’s evolving federal system, and the tendency for states to actively recruit such investment.
No doubt the proximity to Texas has contributed to the nearshoring trend.
Most likely, transportation infrastructure, whether existing or planned, factors into investment decisions. In my book, “Geographical Scale and Economic Development: Lessons Learned from Texas and Mexico,” I discuss Mexico’s interior “dry ports,” or intermodal facilities that enable streamlined transfers of shipping containers between rail and trucks.
Interpuerto Monterrey and Interpuerto San Luís Potosí are served by Canadian Pacific Kansas City, or CPKC, Railroad. Furthermore, Garcia has launched an ambitious expansion of his state’s highway infrastructure to better link Monterrey to the Colombia Solidarity Bridge on Laredo’s far west side.
Laredo officials are in talks with Nuevo León to potentially add an additional bridge lane dedicated to Tesla’s supply chain, linking the company’s plants in Monterrey and Austin.
To compete with CPKC for Canada-to-Mexico rail service, Canadian National Railroad has partnered with Union Pacific and Ferromex, Mexico’s largest rail carrier, to establish the Falcon Premium Intermodal Service to provide shipments of containers from Silao, Guanajuato and Monterrey to Chicago, through Eagle Pass and San Antonio. Canadian National claims the service shaves a day off the trip.
Plans by Coahuila Gov. Miguel Riquelme Solís will expand and improve his state’s highway system to boost traffic through the border cities of Piedras Negras and Ciudad Acuña, both of which enjoy favorable connections to San Antonio. But those cities will also be better connected to Lubbock and points north via “Ports-toPlains,” an expansion of Interstate 27 from Lubbock to the Mexican border, and from Amarillo to the Canadian border.
For many shippers, the expanded I-27 will provide an alternative to the crowded I-35 corridor, especially for those seeking to connect to West Texas, Denver and the Great Plains. Coahuila’s portions of Ports-to-Plains will provide improved highway linkages between Torreón, Monclova, Saltillo and the border.
As nearshoring brings more manufacturing to Mexico, it serves to strengthen Texas’ ties to our southern neighbor, further boosting our state’s manufacturing activities. All of these conditions give the North American production platform a competitive edge over East Asia.
Some caution is warranted, however. Mexico faces shortages of natural gas needed to power manufacturing, and Texas has the capacity to provide it if Mexico’s federal government would open that sector to additional foreign investment. Likewise, the Texas government would be well-advised to consider the positive impact that nearshoring offers our state’s manufacturing and logistics sectors, and to refrain from hindering the efficient movement of freight across the US-Mexico border.
Michael S. Yoder is an instructor with Texas A&M International University’s Department of Social Sciences and a research fellow with the University of Texas at Austin.