Will New Chinese Investment in Mexico Benefit North America?

Introduction

In recent years considerable pressure has been brought by the U.S. government (the Biden administration now and Trump beforehand) on American businesses to reshore or nearshore[1] their operations away from China. This pressure is having significant impact on Chinese companies that are determined to preserve or expand their market share in the world’s largest consumer market. This brief explores the current expansion of Chinese investment in Mexico, the pressures encouraging such investment, and the likely short- and long-term impacts on the North American economy.

Context and Overview

One of the key impacts is expected to be on the amount of U.S. content in products made in Mexico for the U.S. market: It is estimated that traditionally about 40% of the value of Mexican exports to the United States are parts and components made in American factories, while only about 4% of the content of imports from China are American-made.[2] Even if the use of U.S. parts and components by Chinese producers in Mexico is far less than 40%, it will likely be much more than 4% and so provide significant stimulus to U.S. employment and exports. This is perhaps the most persuasive argument for the United States to encourage Chinese nearshoring to Mexico of goods that do not raise national security concerns.

Whether this nearshoring to Mexico reflects investments by American, Chinese, or other businesses, it seems inevitable that in time, many of these factories will begin sourcing at least some, and probably a significant portion, of their raw materials and components from North America. This is likely to happen even where U.S. legislation and industrial policies do not require specified levels of North American content. As the globalization that has dominated world trade for the past several decades gives way to an increasing focus on regionalism, North America under the U.S.-Mexico-Canada Agreement (USMCA) could be one of the prime beneficiaries of the shift.

Since October 2021, an estimated $7 billion of new foreign investment has entered the state of Nuevo León, currently one of the Mexican states most popular for foreign investment. Chinese enterprises are responsible for about 30%, and U.S. sources account for about 47%.[3] Overall, the lion’s share of Mexican exports to the United States originates from production facilities in five northern states — Nuevo León, Jalisco, Chihuahua, Tamaulipas, and Baja California — an estimated $71.7 billion in the third quarter of 2022, compared to $63.1 billion for the remaining 27 states (fourth quarter 2022).[4] These five states benefit from proximity to the U.S. border and to the U.S. interstate highway system as well as to U.S. supplies of natural gas and in some instances, electricity.[5] Nuevo León also benefits from a very business-friendly reputation, particularly since October 2021 when Samuel García became governor. He has been actively recruiting Asian companies to invest in Nuevo León, suggesting at Davos in early 2023 that “Nuevo León is having a geopolitical planetary alignment” and saying “we’re receiving a lot of Asians that want to come to the U.S. market.”[6]

Why Reshoring/Nearshoring?

As Chinese nearshoring to Mexico proceeds today, the irony is palpable given the significant offshoring of Mexican production to China several decades ago. There were some cost savings then as Chinese labor costs were lower than Mexico’s, and many businesses were willing to move production to Asia even for relatively minor savings — despite the risks of supply chain disruption.[7] Still, Chinese companies are investing in Mexican production now for many of the same reasons that enterprises from the EU, Korea, Taiwan, and Japan did so beginning 30 years ago: low labor costs, proximity to the world’s largest consumer market, avoiding penalty tariffs (e.g., on autos or TV sets or computer servers[8]), along with diversifying production to avoid over-reliance on the home country.

Key considerations for reshoring and nearshoring include:

• Trade War and Penalty Duties. The U.S.-China trade war, now in its fifth year, shows no signs of mitigation, and results in U.S.-imposed penalty duties of 7% to 25% on more than $350 billion in annual imports from China into the U.S.[9]
• Motor Vehicle Content Requirement. Certain goods —e.g., motor vehicles — require a higher percentage of North American content under the USMCA than under its precursor NAFTA (North American Free Trade Agreement) — 75% instead of 62.5%.[10] This means that some Chinese auto parts suppliers to the U.S. and Mexico will need to consider providing those components from factories in Mexico rather than in China.
• Electric Vehicles and Batteries. Products such as electric vehicles and EV batteries may benefit from U.S. subsidies under the ill-titled “Inflation Reduction Act,” but only if they are manufactured in North America, with many of their components sourced in North America as well.[11]
• Most-favored-nation Duties. Even when Chinese goods cannot enter the U.S. from Mexico duty-free under the USMCA because they do not meet the USMCA rules of origin, they are typically subject to U.S. most-favored-nation (MFN) duties which average about 2%[12] — these duties apply regardless of the factory owner’s nationality. Most consumer goods will meet USMCA origin rules.[13]
• Supply Chain Disruptions. COVID-19 caused disruptions in transoceanic supply chains and now the Russia-Ukraine war is affecting maritime transport. Future problems are bound to arise, whether from natural or man-made causes, leading some businesses to replace “just in time” sourcing[14] with “just in case” supply chain management.
• Reduced Transport Costs and Delays. Even though shipping costs have returned to pre-COVID-19 levels,[15] nearshoring also leads to lower transportation costs and fewer delays. A container shipped from Shanghai to California or Mexico typically requires three weeks or more at sea, and shifting production from China to Vietnam or Malaysia doesn’t appreciably shorten transit times. In contrast, a truck-carried container dispatched from Monterrey in Mexico to most cities in the U.S. takes three days or fewer to arrive.
• Lower Wage Costs in Mexico. Average manufacturing wage costs are relatively low in Mexico, around $480/month compared to $840/month in China.[16]
• Geopolitical Factors. Geopolitical factors to consider include U.S. restrictions on imports of materials like solar panels or cotton from the Uyghur region of China and the ever-present threat of a Chinese invasion of Taiwan, which would be an economic and political disaster.
• U.S./China Trade Restrictions. The U.S. government has imposed restrictions on trade (including trade in vital machinery) between U.S. and Chinese companies. Initially limited to certain high-tech or national security related equipment, these restrictions may be expanded in the future.
• “Made in Mexico.” Many goods produced by Chinese companies in Mexico can be labeled “Made in Mexico” under US customs rules, which is a selling advantage to some American consumers who are leery of purchasing Chinese products if similarly priced alternatives are readily available.
• Duty-Free Export to Mexico’s Trading Partners. Goods produced by Chinese companies in Mexico that satisfy the applicable rules of origin can also be exported duty-free to some 50 other countries with which Mexico has free trade agreements (FTAs), including the EU, Japan, and many Latin American and increasingly Asian countries (such as the Parties to the Comprehensive and Progressive Transpacific Partnership).[17]
• Access to a Skilled Workforce. Although Mexican higher education has a mixed reputation, the Tec de Monterrey, a 27-campus private university headquartered in Monterrey, is well regarded, particularly with respect to engineering graduates and other skilled professions.[18]

How Does It Work?

Investing in a foreign country, with different language and culture, is never easy, whether the investor is American, Chinese or another nationality. The newcomers typically face language barriers, cultural differences that affect intrapersonal relations, different laws and regulations, and a host of other challenges. However, in many of Mexico’s border areas, some of these hurdles are mitigated by a group of real estate developers or other facilitators — Mexican (and sometimes American) businessmen who construct industrial parks and facilitate the entry of foreign investors. These entrepreneurs may simply provide real estate (land and factory buildings) or, acting as “shelter” operators, handle the more complex steps for setting up a new business: arranging for energy supplies; the permitting and legal requirements for establishing a facility; hiring appropriate workers; and managing exports.

In a widely cited example César Santos, an industrial park operator in Nuevo León, gained control a decade ago of a 2,100-acre parcel of land (formerly a cattle ranch) only 150 miles from the Texas border,[19] an ideal location for factories focused on production for immediate export to the United States. As of early 2023, the industrial park’s factories and warehouses host more than 20 Chinese investors (with up to $300 million each) in diverse industries: furniture, auto parts, and construction equipment parts.[20] A hotel, thousands of homes for workers, and temporary apartments for visitors were all in the planning stages.[21] Similar operators exist in other border states — for example in the state of Tamaulipas and some of its cities like Matamoros[22] — and are working with Chinese, American, and other actual and potential investors.

Under Mexican law, foreign companies (whether U.S., Chinese, or otherwise) have been authorized to own commercial land in Mexico, even in the border areas, since 1993.[23] While there is no legal bar to a Chinese investor buying property, it may be more convenient to lease the property and factory buildings from a developer such as Santos.

Once decisions are made and leases completed, the foreign companies want to act quickly. Because Mexico’s only port capable of handling large container ships is Lázaro Cárdenas — 710 miles and 12 hours by car from Monterrey — often companies chose to ship containers in bond[24] from China to Los Angeles or Long Beach via truck to Monterrey in Nuevo León. Although Los Angeles is a 1500-mile trip on the U.S. interstate highway system from Monterrey, it is several days closer to China by sea than the Mexican port.[25]

For nearshoring to be fully beneficial, Chinese producers in Mexico will need to secure sources of materials in North America, for example, wood for furniture production. Chinese companies’ supply chain woes will not be alleviated if they must regularly import container-loads of raw materials and components thousands of miles to Mexico from China and elsewhere in Asia. Nor are they likely to be able to enjoy duty-free entry of their finished goods into the United States and Canada if they rely heavily on components imported from outside North America, since the USMCA rules of origin typically require substantial quantities of North American raw materials, parts, and components. As companies like Lenovo have discovered, despite some success in shifting parts of their component supply chain (motherboards) from China to Mexico, in other categories there are as yet no local sources.[26]

The Challenges

Reliable Clean Energy and Water Supplies. Potential difficulties for foreign investors setting up manufacturing plants in Mexico include finding a dependable (24/7), clean and reasonably priced source of electric power and natural gas (which is difficult to access in some parts of Mexico due to a limited network of pipelines). Currently, would-be factory owners may have to deal with water shortages as well. Audi Mexico, like some other large companies, has found it difficult to secure a reliable electricity supply. Its expansion in Mexico has been stalled for nearly a year because the Mexican government has refused to permit Audi to install its own clean, independent (solar) power production facilities, demanding instead that Audi rely on the Comisión Federal de Electricidad’s electricity produced with coal or Pemex’s dirty fuel oil.[27] While one can reasonably expect that most Chinese companies have not made future carbon-neutral commitments, it is always possible that in the future, one or more U.S. customers will balk at purchasing goods manufactured with dirty electricity, whether that power is being used in Mexico, China, India, Vietnam, or elsewhere. Today, some Asian companies that are considering Mexico for investment being relocated from China are also considering alternate locations such as India, Vietnam, and Malaysia; even though Mexico has various comparative advantages it will not always prevail.

Worker Availability and Culture. Mexico has a different work culture from China, and unionization and enforcement of worker rights is becoming more common.[28] Under the USMCA, labor enforcement actions can be brought against specific factories. The rules apply equally to all owners, whether Mexican, American, Chinese, or anyone else.[29] Currently sufficient workers may be hard to find as Nuevo León and some other northern states have a 3.6% unemployment rate.[30] Less popular destinations such as Hermosillo and Empalme (cities in Sonora), may offer less competition for workers, yet are still within a few hours by divided highway from the U.S. border — this is an advantage both for shipping manufactured goods north, and for sending parts and components from Asia south via the ports of Los Angeles and Long Beach.[31]

Efficient Transportation. Efficient transportation of raw materials and components from China or elsewhere in Asia, often via the Los Angeles, Long Beach, or Houston seaports, may raise logistical issues from time to time. Even so, these U.S. ports are close to major Mexican border cities and they are among the five largest volume container ports in the United States.[32]

Security Issues: Drug Violence and Other Crime. It is also difficult to deal with high levels of drug and other violence in many parts of Mexico, although Nuevo León has a better reputation for security than further south near Mexico City, according to some sources.[33] A particular threat to production in Nuevo León is the poor security of Mexico’s Highway 85, which extends from Monterrey to the U.S. border, where cargo theft reportedly increased 23% compared to 2021, with an 80% increase in the use of violence.[34] The recent kidnapping and murder of two Americans who traveled to Matamoros,[35] a border city in one of the Mexican states that leads in attracting foreign investment, suggests a level of lawlessness that may be quite different from what Chinese investors have been led to expect.

Political Issues. As Audi’s experience demonstrates, foreign investors have often had difficulty dealing with the Mexican government under President López Obrador, whose six-year term extends through September 30, 2024.[36] In addition, China’s relations with the Mexican government have been unpleasant and/or unpredictable for China in the past, as a dispute over a previous trans-isthmus railway project indicates.[37] Mexico has been accused by the United States of violating the rights of foreign investors under the USMCA in the petroleum sector and those who have invested in clean energy — windmills and solar panels. Those disputes haven been under consultation between the United States and Canada on the one hand, and Mexico on the other, for almost a year without any public evidence of progress.[38]

Many potential U.S. investors in Mexico are concerned about human rights and environmental issues; Chinese companies seem to be much less worried about such matters and are generally more experienced in dealing with often unpredictable government interference in business activities.

Bureaucratic Issues. Apart from these political issues, Mexico — like China — has a reputation for onerous administrative requirements, although perhaps less so than 10-20 years ago, including with the highly successful “maquiladora” program, renamed in 2006 as the “Manufacturing, Maquila and Export Service Industry” program (IMMEX)[39] in existence a quarter-century before NAFTA and periodically modernized.

Despite the many potential disadvantages, they are often outweighed by other advantages of factory production in Mexico. Mexico’s apparently successful courting of Tesla, which has committed to (but not yet begun) building a massive auto assembly plant in Nuevo León, attests to this.[40]

What’s in It for the USMCA Nations?

Mexico. It is clear that when Chinese manufacturers bring billions of dollars of new foreign investment into Mexico, employ thousands of workers, and generate billions worth of new exports, Mexico benefits. This has happened despite the López Obrador government appearing to have little interest in attracting new foreign investment or job creation. As observers directly involved with encouraging Chinese and other investors to enter Mexico have emphasized, “Mexico needs to reinforce its status as a magnet for foreign investors … by send[ing] positive signals, especially now that we have a golden opportunity to really boost manufacturing and supply chains in Mexico.”[41] Hopefully, when Mexico’s next president takes office in October 2024, he or she will make improving the investment climate a top priority.

Canada. For Canada, the benefits of Chinese investment in Mexico are less obvious, although expanded supplies of reasonably priced auto parts made in Mexico by Chinese suppliers will also support the Canadian auto industry, given that it is highly integrated with automotive producers in Mexico and Canada. This may also be important with other industries that span North America, including producers of medical devices, some industrial products, pharmaceuticals, chemicals, furniture, aerospace technology, and electronics. Firms operating in Canada are competitive because of low energy costs and a well-educated work force.[42]

United States. The broadly focused “Buy American, Invest American, Employ Americans” theme that dominates current U.S. industrial policies may indicate a Biden administration preference that all goods sold in the United States be made in the U.S. Realistically, however, for some products labor costs and other factors make elimination of imports impractical — including most footwear, clothing, consumer electronics, and items like furniture and computers that are made in Mexico by Chinese companies.

Conclusion: Strengthening North American Economic Integration Is Vital

Moving Chinese Production to Mexico is Economically Desirable for the U.S. North American economic integration remains vital to the U.S. as well as to Mexico and Canada. There are several reasons why shifting Chinese production to Mexico — whether by Chinese- or American-owned companies — is economically beneficial for the United States:

1. The shift strengthens the Mexican economy and Mexican employment at the expense of China.
2. The substitution of lower-cost Mexican labor for Chinese labor, and shortening the supply chains, could ultimately reduce the costs of the goods being sold in the U.S. (mostly duty free), which benefits American consumers and the global competitiveness of American exports.
3. When Chinese (and other nearshored) firms in Mexico can substitute materials and components sourced in North America rather than Asia, suppliers throughout North America will benefit.

Canada and U.S. Can Ship Duty-Free to Mexico. Further, American and Canadian companies can send equipment, supplies, machinery, raw materials, and other assets to plants in Mexico duty free (regardless of plant ownership).[43] In contrast, because of long shipping distances and other costs, e.g., Chinese import duties, it is unlikely that U.S.-owned factories operating in China will source a substantial portion of their materials and equipment from the United States if lower-cost Asian alternative sources exist.

Co-Production Will Continue. Co-production is where American or Canadian factories produce the capital-intensive elements in the production cycle, while Mexican operations furnish the more labor-intensive elements. This process has been used for at least three decades in aerospace, automotive and advanced electronics sectors, along with low-tech clothing. Co-production can be expected to continue even if the Mexico-located producer in the equation is Chinese rather than American, Canadian, or Mexican-owned.[44]

Reduction in Undocumented Immigration. For the United States in particular, there is an indirect benefit of more production of labor-intensive goods in Mexico instead of China: When investment in manufacturing facilities in Mexico creates new jobs for Mexican workers, undocumented immigration to the United States may be reduced.

Fighting Climate Change by Reducing Emissions. Finally, reshoring or nearshoring — can be expected to contribute to global efforts to mitigate climate change. Reducing the number of containers shipped from China and elsewhere in Asia to North America will also reduce greenhouse gas emissions. The substitution of local or regional supplies of raw materials and components in place of those from distant sources could over time be a significant force encouraging lower carbon emissions. If large manufacturers such as Tesla pressure Mexico to produce more clean energy, this could also make a difference.

Endnotes

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[1] “Reshore” commonly means returning to the U.S. manufacturing that left the country for China (or elsewhere in Asia) 10-15 years ago; “nearshoring” means moving Asian production nearer to the U.S., typically to Mexico or Canada.

[2] See Peter S. Goodman, “‘OK Mexico, Save Me’: After China This is Where Globalization May Lead,” New York Times, January 3, 2023, https://www.nytimes.com/2023/01/01/business/mexico-china-us-trade.html?smid=nytcore-ios-share&referringSource=articleShare.

[3] Peter S. Goodman, “Why Chinese Companies are Investing Billions in Mexico,” New York Times, February 7, 2023, https://www.nytimes.com/2023/02/03/business/china-mexico-trade.html.

[4] Noi Mahoney, “5 Things Mexico Must Do To Win at Nearshoring,” Freightwaves, February 1, 2023, https://www.freightwaves.com/news/5-things-mexico-must-do-to-win-at-nearshoring.

[5] For example, in 2021, 76% of Mexico’s total natural gas supply was imported from the United States: “U.S. Natural Gas Exports to Mexico Established a New Monthly Record in June 2021,” U.S. Energy Information Administration, July 23, 2021, https://www.eia.gov/todayinenergy/detail.php?id=48836#.

[6] Goodman, Chinese Companies, see note 3.

[7] Advantages for Chinese production at the time in addition to low labor costs were the strong business ecosystem, lack of regulation, low taxes and tariffs, and currency manipulation to favor exports. See Prableen Bajpai, Michael J. Boyle and Suzanne KvilHaug, “Why China is ‘the World’s Factory,’” n.d., Investopedia, https://www.investopedia.com/articles/investing/102214/why-china-worlds-factory.asp# (last accessed March 8, 2023).

[8] For example, Germany’s Volkswagen established major auto production facilities in Pueblo, Mexico in 1964. See “#TBT – The Rich History of Volkswagen’s Puebla Plant,” VW US Media Site, July 16, 2020, https://media.vw.com/en-us/releases/1354#.

[9] See, e.g., Phelim Kine, “From ‘Momentous’ to ‘Meh’ –Trump’s China Trade Deal Letdown,” Politico China Watcher, January 13, 2022, https://www.politico.com/newsletters/politico-china-watcher/2022/01/13/from-momentous-to-meh-the-phase-one-trade-deal-letdown-495705.

[10] USMCA, ch. 4, Appendix, art. 3 (regional value content for vehicles).

[11] See “Fact Sheet — IRA EV Tax Credits,” SAFE Electrification Coalition, August 16, 2022, https://electrificationcoalition.org/wp-content/uploads/2022/08/SAFE_1-sheet_Webinar.pdf.

[12] USTR, “Industrial Tariffs,” https://ustr.gov/issue-areas/industry-manufacturing/industrial-tariffs. Some spikes exist, e.g., certain clothing, footwear, and pickup trucks. See Harmonized Tariff Schedule of the United States (HTSUS), chapters 43, 64 and 87. For Canada, the simple average applied MFN import tariff (2021) on industrial (non-agricultural) goods is 2.1%, https://www.wto.org/english/res_e/statis_e/daily_update_e/tariff_profiles/CA_E.pdf.

[13] See, e.g., USMCA, arts. 4.2 and 4.3 (originating goods).

[14] Or as some would argue, “just in time plus” shipping where businesses hold more inventory than in the past but limit that cushion; see “Managing Complexity in a Changing World,” Old Dominion Freight Line, n.d., at 8, available at https://www.odfl.com/us/en/resources/OD-Outlook/managing-complexity-in-a-changing-world.html (last accessed March 5, 2023).

[15] About $1,250 per container in early March 2023, as compared to $15,000 two years ago.

[16] 2021 data, from various sources, in Managing Complexity, see note 14, at 10.

[17] See U.S. Department of Commerce, “Mexico – Country Commercial Guide: Trade Agreements,” International Trade Administration, September 23, 2022, https://www.trade.gov/country-commercial-guides/mexico-trade-agreements#.

[18] See Technológico de Monterrey, https://tec.mx/es.

[19] Goodman, Chinese Companies, see note 3.

[20] Goodman, Chinese Companies, see note 3.

[21] Goodman, Chinese Companies, see note 3.

[22] See, e.g., “Let’s Work Together,” The Nearshore Company, n.d., https://www.thenearshorecompany.com/contact-us https://www.thenearshorecompany.com/nearshore-outsourcing/ (last accessed March 5, 2023), from a company headquartered in Texas.

[23] There are some restrictions under Article 27 of the Mexican Constitution limiting foreign ownership of properties within 100 kilometers of the international border and 50 kilometers of the seacoast, but many of them apply only to residential, not commercial, properties. See “Acquisition of Properties in Mexico,” Relaciones Exteriores Mexico, n.d., https://consulmex.sre.gob.mx/reinounido/index.php/en/servicios/218-acquisition-of-properties-in-mexico# (last accessed March 4, 2023). The industrial park under discussion, however, is more than 150 kilometers from the border.

[24] The in-bond process allows imported merchandise to enter one U.S. port of entry without customs clearance and be transported by a bonded carrier to another authorized destination: U.S. Customs and Border Protection. Legally, such shipments in bond never enter the customs territory of the United States.

[25] “Distance between Monterrey and Lazaro Cardenas,” DriveBestWay, n.d.,https://www.drivebestway.com/distance/monterrey-nle-mx/l%C3%A1zaro-c%C3%A1rdenas-mic-mx-293980795/ (last accessed March 4, 2023). See Sarah White and Leila Abboud, “US Companies Re-Examining Chinese Supply Chains, Top Shipping Boss Says,” Financial Times, March 2, 2023, https://www.ft.com/content/c072b4b8-afc3-4c48-b5fc-544d232b37f5.

[26] Goodman, Chinese Companies, see note 3.

[27] See “Mexico’s Environmental Ministry Denies Permit for Audi Solar Plant,” Reuters, July 2, 2022, https://www.reuters.com/business/autos-transportation/mexicos-environment-ministry-denies-permit-audi-solar-plant-2022-07-02/.

[28] See USMCA, chapter 23; Annex 31-A (US-Mexico Facility-Specific Rapid Response Mechanism).

[29] Annex 31-A, see note 27.

[30] Goodman, Chinese Companies, see note 3.

[31] “Where to Manufacture in Mexico,” Tetakawi, n.d., https://tetakawi.com/manufacturing-in-mexico/where-to-manufacture-in-mexico/?cn-reloaded=1 (last accessed March 5, 2023).

[32] ODFL, Managing Complexity, see note 14.

[33] Goodman, Chinese Companies, see note 3.

[34] Mahoney, Freightwaves, see note 4.

[35] See Kevin Sieff, Paulina Villegas, Ben Brasch, and Leo Sands, “Two of the Americans Kidnapped in Mexico Found Dead, Officials Say,” Washington Post, March 7, 2022,  https://www.washingtonpost.com/world/2023/03/07/mexico-americans-kidnap-matamoros-medical/.

[36] Mexican Constitution, article 83.

[37] See “Mexico Cancels China Contract for High-Speed Train Line,” BBC News, November 7, 2014, https://www.bbc.com/news/business-29948331.

[38] See USMCA, art. 31.11, which effectively guarantees U.S. investors in hydrocarbons and electrical energy the same treatment of investments as Mexico provided to the other parties of the Comprehensive and Progressive Transpacific Partnership; “United States Requests Consultations Under the USMCA over Mexico’s Energy Policies,” USTR, July 30, 2022, available at https://ustr.gov/about-us/policy-offices/press-office/press-releases/2022/july/united-states-requests-consultations-under-usmca-over-mexicos-energy-policies (USMCA).

[39] Maquiladoras (also known as “twin plants”) are mainly located along the border. A maquiladora is a factory in Mexico run by a foreign company and exporting its products to the country of that company: see Freightwaves, see note 4.

[40] Maya Averbuch, “Tesla Mexico Plant Means $10 Billion Investment, Garcia Says,” Bloomberg, March 3, 2003, https://www.bloomberg.com/news/articles/2023-03-03/tesla-s-mexico-plant-means-10-billion-investment-governor-says (quoting Nuevo Leon Governor Samuel Garcia). Reports suggest that Tesla Chair Leon Musk insisted on the Nuevo Leon location; Mexican President Lopez Obrador, who had preferred a location nearer Mexico City, ultimately gave in.

[41] Mahoney, Freightwaves, see note 4 (quoting Gonzalez Henrichsen, co-CEO of the Nearshore Company).

[42] Mike Doheny, Manuel Gomez, Carlos Nolasco, and Carlos Ornelas, “To Regionalize or Not? Optimizing North American Supply Chains," McKinsey & Company, December 16, 2022, https://www.mckinsey.com/capabilities/operations/our-insights/to-regionalize-or-not-optimizing-north-american-supply-chains.

[43] “Economic Development,” City of San Diego, n.d., https://www.sandiego.gov/economic-development/sandiego/trade/mexico/maquiladoras (last accessed March 5, 2023).

[44] See “U.S.-Mexico Co-Production Should be Embraced,” TECHMA, 2014, https://www.tecma.com/u-s-mexico-co-production/  (citing a Brookings study it states that “the result of U.S.-Mexico co-production is that consumer goods have become more price accessible for citizens of both countries, and that items produced using a mixture of labor and capital from the two nations are more competitive on the global stage”); Joseph Parilla and Alan Berube, “Why the U.S.-Mexico High Level Economic Dialogue Should Engage Sub-National Leaders,” Brookings, September 20, 2013, https://www.brookings.edu/blog/the-avenue/2013/09/20/why-the-u-s-mexico-high-level-economic-dialogue-should-engage-sub-national-leaders/.

 

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