Workforce Mobility in the Era of Nearshoring
By Editorial Staff
Nacional
December 9, 2024
By Francisco J. Peña Valdés
AEM President McAllen Chapter
The business landscape has evolved in response to globalization, escalating geopolitical tensions, and the growing emphasis on regionalism. In this setting, companies have adopted diverse strategies to relocate their operations, striving to maximize efficiency, reduce costs, and mitigate risks. At the heart of these transformations lies the phenomenon of nearshoring, a trend that is reshaping not only production dynamics but also workforce mobility.
Over time, businesses have developed relocation strategies, collectively referred to as “shorings,” depending on the activity and the location of its implementation. These strategies aim to optimize costs, secure supply chains, and sustain competitiveness. In the era of nearshoring, these decisions have had a profound impact on workforce mobility, with countries like Mexico emerging as key players in this new economic paradigm.
The concept of offshoring traces back to the oil and gas industry, where terms like “inland drilling” and “offshore drilling” described operations conducted onshore and offshore, respectively. By the 1960s and 1970s, the concept expanded to include any industrial, commercial, or business activity transferred to another country, leading to the coining of “offshore” as synonymous with international outsourcing and heralding the expansion of the global economy. Trailblazing companies like General Electric leveraged this approach to cut costs by outsourcing production to countries with cheaper labor.
Offshoring soon evolved into specialized variants. Farshoring followed the offshoring model but extended it to geographically distant countries such as China, Vietnam, Japan, and Taiwan. While farshoring significantly reduced costs, it also introduced challenges like complex supply chain management and extended delivery times.
As businesses’ priorities shifted beyond cost savings to factors like proximity, stability, and strategic alliances, nearshoring gained prominence. This form of offshoring involves relocating operations to neighboring or nearby countries, maintaining low costs while reducing transportation times and minimizing risks linked to time zone differences. Mexico, with its proximity to the United States, trade agreements, and pool of skilled, affordable labor, has emerged as a prime beneficiary of this trend.
Simultaneously, the U.S. began reconsidering its dependence on foreign countries, giving rise to onshoring or reshoring—the repatriation of manufacturing operations. Businesses that had once outsourced production to China started returning to U.S. soil, driven by diminished trust in competitiveness, government policies, or the prioritization of national security in critical sectors like semiconductors.
Another notable strategy, allyshoring, emerged as companies sought to relocate operations to economically viable and geopolitically allied nations. This approach not only reduced costs but also ensured political and economic stability.
During President Joe Biden’s administration, friendshoring entered the lexicon. This strategy encourages relocating operations to “friendly” countries, though it raised concerns about deglobalization and the resurgence of regional economic blocs, challenging the global integration of previous decades.
Some businesses embraced even more flexible solutions like omnishoring, which distributes production across various locations based on market needs. This strategy enables companies to produce smaller batches near key markets and scale production in more cost-effective regions as demand grows.
Domestically, inshoring has surfaced as a counter to international outsourcing. Companies relocate operations within national borders, targeting states or regions with lower costs or favorable tax incentives. Texas, for instance, has become a popular destination, attracting businesses from states like California and Florida due to its business-friendly policies and lower cost of living.
Among these various “shoring” strategies, nearshoring has profoundly influenced workforce dynamics. The shift in production and relocation strategies has directly impacted on labor mobility. In the U.S., the wave of mass resignations in 2021, peaking at 4.5 million in November, marked a turning point for workers seeking autonomy or better opportunities. Although this trend slightly declined, 2023 still saw 3.39 million resignations, highlighting a continued flux in the labor force.
To address worker shortages, the U.S. has sought to attract foreign labor. In 2024, the Biden administration set a refugee admission cap of 125,000, the highest in decades, aiming to address both global displacement and vacancies in critical economic sectors.
Meanwhile, Mexico has also become a refuge destination, experiencing a surge in asylum applications. The Mexican Commission for Refugee Assistance (COMAR) reported 119,248 applications in 2022, rising to 141,053 in 2023. By early 2024, over 8,400 applications had already been recorded, with the majority coming from Honduras, Cuba, Haiti, Guatemala, and El Salvador.
Workforce mobility in the nearshoring era reflects a world in flux, where decisions on where and how to produce are deeply intertwined with economic, political, and social considerations. Relocation strategies are no longer purely cost-driven but have become integral to labor strategies in this evolving global landscape.