North American Manufacturers Increase Procurement from Mexico and Latin America! Closer Production Bases to Own Countries are Reuqired

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I would like to broadcast IINO san’s Logistics Radio.

Today I would like to talk about, “Procurement Bids from Mexican Suppliers Surge, Purchases from China Decline” from article of Wall Street Journal.

Daily Logistics Radio by IINO san in 7th Apr. 2022

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The Rise of Mexican Suppliers

Currently, global supply chains are disrupted and manufacturers are restructuring their purchasing.

In this context,new data suggests that Mexican suppliers are on the rise.

According to software procurement firm, Jaggaer, last year, major U.S. manufacturers purchased six times more from Mexico-based suppliers than they did in 2020.

Products include chemicals, agricultural products and construction materials.

Data from 30 major U.S. manufacturing clients also show that the number of Chinese suppliers that received procurement bids declined by 9% in 2021.

This is a move to recover from a series of hits to the supply network, including Corona pandemic, port bottlenecks, extreme weather, and conflicts.

Latin American Suppliers Increase, Asian Region Decreases

The company also announced that between 2020 and 2021, Mexican suppliers receiving bids from major U.S. buyers increased by 514%, and Latin American suppliers increased by 155%.

At the same time, it said, those manufacturers’ purchases from suppliers in the Asia-Pacific region decreased by 26%.

Changes in the Supply Chain

A survey of 2,000 U.S. and U.K. executives by a London-based consulting firm found that 15% are moving production closer to their home countries or sourcing from suppliers in neighboring regions, and 26% are considering doing so.

Sourcing goods from a variety of suppliers, from one to two, three, or four, to get them on the shelves and to consumers,” is “a major challenge currently addressing,” the article reported.

There is a move to source from multiple companies and multiple regions, furthermore, to source closer to their home country.

Shift of Production Bases

As a result, the production base is changing. It is shifting in such a way that long-distance shipping routes from Asia to Europe and the U.S. are decreasing.

In addition, an increase in transportation from Mexico and Central and South America to North America will trigger even greater development in Central and South America.

These market trends may lead to increased in trucking from Mexico to North America and in investments to northern Africa, which could become a production center for Europe.

I believe that the recent supply chain disruption has made people, especially in Europe and the U.S., aware that keeping production bases away from their home countries is very risky.

I will continue to update the information on global trends and hope that you will use it as an indicator of future developments.

That’s all for today. Thank you.