MCALLEN, Texas – A maquiladora industry leader says the amount of interest among manufacturing firms wishing to relocate from China to Mexico is “just unbelievable.”
Enrique Castro is a former president of INDEX at the national level and with the group’s Reynosa chapter. INDEX is the trade association for the maquiladora industry.
Castro gives a monthly report on maquiladora news to the McAllen Economic Development Corporation. In Castro’s absence, this month’s INDEX report was given by Keith Patridge, president of McAllen EDC.
On Castro’s behalf, Patridge reported: “Because of the disruption in the supply chains, Index’s national association is really focused with all their chapters around the country on supplier development in Mexico in order to start facilitating the relocation of companies.
“He (Castro) said the interest in coming back from Asia is just unbelievable on a national level. We are seeing it here but we are also seeing it everywhere in Mexico, of companies looking at moving out of China back into the area.”
Castro’s report echoed the remarks Patridge gave in his MEDC president’s report. Patridge said the trend of manufacturing firms leaving China could be exacerbated by a recent shutdown in manufacturing hubs such as Shanghai and Shenzhen. The shutdown has been caused, Patridge said, by a fresh outbreak of Covid-19.
“Right now, everyone is seeing this in the news. We have a war going on. We have inflation going crazy. We have supply chain disruptions. And, just yesterday you may have noticed that China just went into another shutdown because of another round of Covid-19,” Patridge reported.
“Shanghai, which is the largest port in China, the most active port in China, and Shenzhen, which is where we have been several times, just shut down yesterday.”
Patridge said he does not know how long the Chinese manufacturing plants will remain shuttered.
“All the plants are closed, everything is closed. Both of them, Shanghai and Shenzhen are manufacturing centers. Shenzhen is kind of their Silicon Valley. And so it is going to impact again the supply chain and it is going to probably impact shipping out of Asia again.”
For a combination of reasons, including supply chain disruptions and inflation, Patridge said it is possible that the region could see “a slowing down in projects.” This could be exacerbated if tensions between China and Taiwan continue, he said.
However, the longer term outlook is much rosier, Patridge argued, because new opportunities will open up.
“All these disruptions globally… a lot of these companies are literally saying we have got to have a local supply chain, we have got to really start looking at manufacturing in local markets.”
This will not only mean in North America but Europe also, Patridge said.
“They will manufacture in Europe, they will manufacture here for the regional market. We have been seeing that for quite some time and I think you are going to continue to see it pick up… more and more companies are realizing that is the way to go. You cannot supply the world from one location.”
Patridge added: “So, I think, in the short term I think it is probably going to have an impact on our activity but in the long term it is going to be a good opportunity for us, into the future.”
Editor’s Note: The main image accompanying the above news story shows a file photo of Keith Patridge and Enrique Castro from January 2019. (Photo: RGG/Steve Taylor)
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