As US companies recalibrate the risks of relying on Chinese factories to make their products, some are shifting purchases to Mexico.
Near-shoring has drawn the attention of none other than Walmart, the Arkansas-based global retail empire.
Early last year, when Walmart needed $1 million in uniforms from the company — more than 50,000 in a single order — it bought them not from China but from Preslow, a family-owned clothing business in Mexico.
It was February 2022, and the pandemic had disrupted shipments. The cost of transporting goods across the Pacific had skyrocketed, and the ports were saturated with ships—a strong sign of the dangers of depending on the goods of a single, far-off country.
Among multinational companies, decades of faith in trade with China had begun to be questioned, especially as animosity grew between Washington and Beijing.
In his office in Mexico City, Isaac Presburger, director of sales at Preslow, took Walmart’s order as a sign of his country’s changing role in the global economy.
“Walmart had a big problem with their offer,” Presburger recalled. “They said, ‘okay, Mexico, save me.’”
Basic geography is one reason that drives US companies to relocate purchases to Mexico. Shipping a container from China to the United States takes a month — a time frame that doubled and tripled during the worst of the pandemic. However, a bridge can be built between factories in Mexico and US retailers in two weeks.
During the first 10 months of last year, Mexico exported $382 billion worth of products to the US, an increase of more than 20 percent over the same period in 2021. Since 2019, US imports of Mexican goods have grown by more than 25 percent.
In 2021, US investors spent more money in Mexico — buying companies and financing projects — than in China, according to an analysis by the McKinsey Global Institute.
For now, Mexico lacks the capacity to take China’s place as the dominant supplier of a wide range of goods.
At Preslow’s factory in Tizayuca, some 50 miles north of Mexico City, 200 seamstresses were bent over clattering sewing machines one recent morning, stitching together garments.
But on the storage shelves were stacks of rolls of synthetic fabric, most of it made in China.
“All the basic materials are still imported from China, because there are no suppliers here,” Presburger said. “The fabrics I use are impossible to find in Mexico.”
The biggest impediment to Mexico reaching its potential as an alternative to China may be Mexico itself. Its President, Andrés Manuel López Obrador, has neglected the nation’s infrastructure, including its ports.
Near the Preslow plant, a factory produces up to 6 million buttons a day, employing around 1,500 people. The company, Loren Buttons, has seen its sales grow by nearly two-thirds over the past year. Its clients — brands like Armani and Men’s Wearhouse — are transferring orders from China, said the firm’s director, Sony Chalouah.
“They think the US will continue to fight with China,” he said. “They don’t want to depend on China.”
Lectra, a French company that produces fabric-slitting machines for the clothing industry, has seen its sales in Mexico and Central America grow by nearly a third over the past year.
“What is driving this ‘near-shoring’ is basically the situation between the US and China,” said Carlos Sarmiento, a company executive.
“It’s not that China is going to disappear from the US market,” he added. “It is that there is more openness regarding seeing Mexico and Central America as an alternative.”
By: PETER S. GOODMAN
BBC-NEWS-SRC: http://www.nytsyn.com/subscribed/stories/6551463, IMPORTING DATE: 2023-01-30 23:10:07
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