As pandemic disrupts supply chains, Mexico tries to lure U.S. firms from China
“As a result of the covid, many global value chains are going to form regional chains for reasons of efficiency, profitability and also for safety,” said Ernesto Acevedo, the country’s deputy economy minister. “Mexico is going to take advantage of this moment.”
U.S. companies were beginning to shift some production away from China before anyone had heard of covid-19. Aside from trade tensions, firms complained about intellectual property concerns, rising labor costs and political instability. In February, the consulting firm Gartner found that 33 percent of global supply-chain leaders had either shifted sourcing and manufacturing activities out of China or planned to in the next three years.
The question, then, is where those companies will relocate. Countries across Southeast Asia are attempting to attract them. Japan set aside $2.2 billion this year for the effort. President Trump made his own pitch of sorts on Twitter last year, ordering U.S. firms to “immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.”
Enter Mexico, …continued .
[Source: Washington Post]