BROWNSVILLE, Texas – An expert on reshoring says the Texas-Mexico border region can benefit from the COVID-19 induced disruption to the supply chains used by manufacturers in China.
Rosemary Coates used to help U.S. companies locate in China. Now, as founder and executive director of the Reshoring Institute, a 501c3 nonprofit, and president of Blue Silk Consulting, she is doing the reverse.
Coates spoke at a Virtual Site Selector Tour of Brownsville hosted recently by the Greater Brownsville Incentives Corporation and Select USA.
“We have been going on for seven or eight years now, helping companies bring manufacturing back to the U.S.,” Coates said in her remarks.
“Over time there have been a few big things that have happened. The tax reform act of 2017, the trade war, the 301 penalty tax on Chinese imports. These have all affected re-shoring. The big one as COVID-19.”
COVID-19 has been different to the other major challenges, Coates explained.
“The other ones were economic issues… COVID-19 introduced risk into supply chains and as a result of that we have many clients that are knocking on the door saying, help us find manufacturing locations (in the United States).”
One of the regions Coates is most excited about is the Texas-Mexico border.
“We are particularly excited about the border region because of the opportunity to manufacture in a low-cost environment in Mexico and then also the cross border (region) with the USMCA influence with cross border commerce to the customer base.”
Coates called it a win-win for everybody.
“Even though COVID is this horrible thing we are living through, we think the outcomes are going to be quite positive for the regional economy.”
Mario Lozoya is executive director of the Greater Brownsville Incentives Corporation. Lozoya asked Coates to expand upon her remarks about the impact of the coronavirus on companies manufacturing abroad but selling their produce in North America.
“There have been a number of trends or things that have happened recently that have caused manufacturers to rethink their global strategies. Certainly the tariffs have caused at least an an initiation of discussion regarding where in the world companies manufacture, where they actually going to put manufacturing,” Coates said.
Another guest speaker on the virtual tour was Chris Wilson, deputy director of the Mexico Institute.
“Chris mentioned Amazon. Amazon has taught us all to expect deliveries overnight or in two days, and that includes industrial products as well. So, we have tightened those supply chains. The expectations are heightened and then with COVID we really have exposed the lack of inventory in pipelines, a lack of planning, so, all of a sudden these manufacturing companies that I have worked with for over 20 years, the executives are now saying, wow, you know, we need to take a step back and evaluate where our risks are and what our strategy should be for manufacturing.”
Coates said in the trade it is called “China plus One,” meaning a manufacturer wants to be in China but also needs another base.
“China plus one other country or some global manufacturing strategy where we move manufacturing to different areas, depending on what happens in the world, the geopolitical environment, the weather, other risks that might be introduced,” she explained.
“What I love about the border region, along the Texas border particularly, is that you have the opportunity to utilize or make use of low cost manufacturing that is then streamlined by cross border operations with USMCA, and at the same time support business and industry on the U.S. side. So, just because you are manufacturing in Mexico, you are still creating jobs in the U.S. because there is cross border traffic, there are customs brokers, there are warehouses, truckers, distribution, there are all kinds of economic benefits.”
Lozoya, of GBIC, asked Coates to pick one industry, as an example, to make her point. She chose the automotive sector.
“I think the primary beneficiary if I was to pick one industry, would be automotive. So, as you may remember the automotive industry is centered on Wuhan, China, and most of the automotive parts were coming out of that particular region, as well as metal and fabrication, that was the big center,” Coates said.
“And then you had ripple effects through the electronics industry, and the Pearl River Valley outside of Hong Kong… those regions have become vulnerable to the tariffs as well as the COVID virus coming out of Wuhan, and automotive was particularly affected. As we know, automotive parts are manufactured a lot in Mexico. There is a big automotive industry and I think the companies that are in those industries are rethinking what manufacturing in China means and whether they could move it to Mexico.”
More about Rosemary Coates
This is from Coates’ LinkedIn page:
I am the Founder and Executive Director of the Reshoring Institute and President of Blue Silk Consulting. I am a Chinese Manufacturing Expert Witness, a Global Supply Chain Management Consultant, with an MBA, 25+ years experience in Management Consulting. I am often selected as a Keynote speaker at business events and conferences.
I serve as an Expert Witness for legal cases involving global supply chain matters and Chinese imports..
I am Executive Director of the Reshoring Institute (501c3 non-profit) in conjunction with six US universities and partner universities in Europe. www.ReshoringInstitute.org Our focus is Reshoring research and assisting companies in bringing manufacturing back to America.”The Reshoring Guidebook” is available on Amazon.
Prior to BSC and the Reshoring Institute, I was a Senior Director at SAP, Supply Chain Practice Leader at Answerthink Consulting and KPMG Peat Marwick, and Regional Manager at Hewlett-Packard.
I have consulted with 80+ global and domestic clients on systems and processes. I have considerable international experience and have worked for extended periods in Asia and Europe. My experience spans a broad range of industries including High Technology, Chemicals, Health Care, Consumer Products, Industrial Products, Food Distribution, Transportation and Warehousing, Publishing, Retail, Oil & Gas.
I am a global Supply Chain Architect and Strategist and author of five books: “42 Rules for Sourcing and Manufacturing in China” (a Best Seller at Amazon.com); “42 Rules for Superior Field Service,” “The Reshoring Guidebook,” and “Legal Blacksmith – How to Avoid and Defend Supply Chain Disputes.” All of these books are available on Amazon.com.
Editor’s Note: The main image accompanying the above news story shows Rosemary Coates.
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