The phrase “Mexico is the new China” has become a convenient shorthand in investment decks and business conferences. The story writes itself: geopolitical tension pushes US firms to reduce dependence on Chinese factories; supply chains shorten; assembly and production migrate just across the border; Mexico, already tied into North America’s trade architecture, becomes the obvious landing zone. Warehouse vacancies in the north fall, industrial parks advertise waiting lists, and governors in export-heavy states talk of a once-in-a-generation opportunity. Yet scratch below the headlines and a more complicated, less cinematic reality appears — one where some regions and sectors ride a genuine wave of demand, others mainly rebrand existing activity as “nearshoring”, and the structural constraints of infrastructure, security and energy supply quietly narrow the scale of what is possible.

From Maquila 1.0 to Nearshoring Hype

Mexico’s integration into North American manufacturing is not new. For decades, border maquiladora plants have assembled electronics, auto parts, appliances and medical devices for the US market. Trade agreements first locked in tariff preferences; cross-border supply chains then deepened as firms learned how to spread production across jurisdictions. Nearshoring, in that sense, is less a revolution than a rebranding of a model that already existed — with two important twists. The first is scale: the combination of US–China trade frictions, pandemic-era supply disruptions and political pressure to “produce closer to home” has pushed more companies to consider diversifying away from Asia. The second is breadth: sectors that once saw Mexico primarily as an assembly base are now, in some cases, exploring more complex local footprints.

But the jump from “some firms shifting some lines” to “Mexico as the great winner of global realignment” is large. It assumes that capacity, institutions and politics can adjust fast enough to turn interest into concrete, multi-year investment. It also assumes that the benefits will spread beyond a familiar corridor of export-oriented states. Neither assumption is guaranteed.

Where the Boom Is Real — And Where It Is Mostly Noise

The strongest nearshoring signals are concentrated in a familiar geography: border states such as Nuevo León, Chihuahua and Baja California; Bajío states with automotive and aerospace clusters; and some central corridors tied into logistics and consumption. There, industrial land has tightened, demand for skilled technicians and engineers has risen, and local governments compete to attract new plants with infrastructure promises and regulatory handholding. Site-selection consultants report a visible increase in inquiries; developers point to export-oriented tenants that previously would have chosen Asia but now consider Mexico first.

In other regions, nearshoring looks more like a narrative overlay. Existing manufacturing expansions are retroactively framed as part of the new wave. Service and logistics firms add the term to marketing material. Political speeches invoke a boom that is hard to distinguish, in the data, from the continuation of pre-existing trends. The risk of such narrative inflation is that it obscures where the binding constraints really lie. If everything good that happens is labelled “nearshoring”, it becomes harder to see where the model is not taking root at all.

Nearshoring Narratives vs On-the-Ground Reality

A useful way to cut through the noise is to contrast the dominant storylines with what investors and firms describe in private. Each narrative captures a piece of the truth; each also glosses over friction.

For companies choosing between locations, the question is less “Is Mexico a winner?” than “Which parts of Mexico, in which sectors, at which cost, compared to which alternative?” The answer varies sharply between a high-tech supplier in Monterrey and a labour-intensive firm considering the deep south.

Infrastructure, Energy and the Real Cost of Proximity

Geography gives Mexico a unique advantage: trucks can move goods from factory floors to US distribution centres in days rather than weeks. But proximity on a map is not the same as frictionless logistics. Ports, highways, rail lines, customs facilities and intermodal hubs all shape the effective distance between plant and market. In several key corridors, infrastructure has struggled to keep pace with industrial expansion. Congested border crossings, bottlenecks at ports and overloaded local roads add time and unpredictability to supply chains that were supposed to become simpler.

Energy is another constraint. Modern manufacturing — especially in electronics, automotive and advanced components — demands reliable, affordable electricity. Investors ask detailed questions about grid capacity, generation mix and the speed of new connections. They also face a world in which global brands and consumers care increasingly about the carbon footprint of supply chains. Mexico’s debates over its power sector, the role of state-owned utilities and the balance between fossil fuels and renewables therefore intersect directly with nearshoring prospects. A site with attractive labour and logistics but uncertain or carbon-heavy power looks less compelling to firms under pressure to decarbonise.

Security and the Governance Premium

For all the emphasis on tariffs and trade rules, one of the quieter filters in location decisions is security and governance. Companies building multimillion-dollar plants want to know that their executives can travel safely, that transport routes will not be regularly disrupted by violence, and that contracts can be enforced without excessive reliance on personal connections. Mexico’s security landscape is uneven: some industrial regions have built relative pockets of stability; others are more exposed to organised crime, extortion and theft.

This does not automatically deter investment; firms often learn to operate amid risk. But it changes the risk–reward calculation. Insurance and security costs rise; some high-value processes are kept elsewhere; boardrooms weigh headlines about crime alongside spreadsheets about labour costs. The “governance premium” — the extra return investors demand to compensate for institutional weakness — becomes part of the nearshoring equation, even if it rarely appears in public statements.

Nearshoring’s Uneven Map Inside Mexico

A core political promise of nearshoring is that it will spread opportunity more widely across Mexico. Yet the early geography of the shift suggests something closer to reinforcement than transformation. States that were already plugged into export value chains, with clusters around autos, aerospace, medical devices or electronics, find it easier to move up the ladder. They can offer suppliers existing ecosystems of logistics, skilled labour, universities and ancillary services. Local officials in these areas are accustomed to dealing with multinational investors; permitting and land issues, while not frictionless, are more predictable.

In contrast, regions with weaker infrastructure, limited industrial traditions and heavier governance challenges struggle to convert nearshoring rhetoric into signed deals. The risk is a two-speed Mexico: an export-focused north and centre that deepen their ties to North America’s industrial machine, and a south that sees little of the new investment but continues to provide migrant labour to the US, the north and abroad. If that pattern hardens, nearshoring may widen internal inequalities even as it boosts aggregate exports.

Jobs, Wages and the Quality of the New Work

For workers, the key questions are more immediate: what kinds of jobs are being created, at what wages, under what conditions, and with what prospects for advancement? Many nearshoring-linked roles resemble those of earlier maquila waves: assembly-line positions, logistics work, technical maintenance, supervision. These can provide a step up from informal or low-wage local alternatives, especially for young workers. But they do not automatically translate into rapid upward mobility, particularly where turnover is high and career ladders are shallow.

Some firms, especially those in higher-value segments, are investing in training, vocational partnerships and incremental localisation of more complex tasks. Over time, this can turn what began as an assembly base into a more sophisticated industrial ecosystem. Whether this becomes the norm or remains the exception will depend less on slogans about nearshoring than on policy choices about education, technical training, labour standards and support for local suppliers.

Local Suppliers: Upgrading or Bypassed?

One of the overlooked questions in the nearshoring debate is how deeply foreign investors integrate with Mexican suppliers. A scenario in which multinational firms import most high-value inputs, perform final assembly in Mexico and then ship products north would boost exports and employment, but only up to a point. The more transformative scenario would see a thicker web of domestic firms providing components, services and specialised inputs, building their own capabilities in the process.

Early signs are mixed. Some sectors report growing orders for Mexican component manufacturers and service providers; others see global players bringing long-standing Asian or US suppliers with them, reproducing existing networks in new locations. Supportive industrial policy, cluster development and access to finance can tilt the balance toward local upgrading. Without them, nearshoring risks entrenching a hierarchy: high-value design and core components abroad, mid-value assembly in Mexico, and a domestic supplier base that remains thin.

Politics, Policy and the Time Horizon

Nearshoring decisions are formally private-sector choices, but they are shaped by policy signals. Investors look at how Mexico manages its trade relationship with the US, how it treats disputes under regional agreements, how predictable tax and regulatory regimes appear, and how often rules are changed in ways that affect long-term contracts. They also watch the broader political climate: rhetoric about sovereignty, energy nationalism or foreign capital can influence perceptions, even when day-to-day policy remains pragmatic.

For Mexico’s policymakers, the temptation is to treat nearshoring as a short-term windfall that will arrive almost automatically. A more realistic view recognises it as a contested, incremental process that can accelerate or stall depending on choices made now: on infrastructure and energy, yes, but also on education, legal certainty and coordination between federal and state levels. The time horizon matters. Plants built today will, if all goes well, operate for decades. Investors look beyond a single term in office.

What Would Real Success Look Like?

A genuinely transformative nearshoring outcome for Mexico would show up in multiple layers. Industrially, it would mean not just higher export volumes, but greater local value added and a thicker network of domestic suppliers. Geographically, it would involve some diffusion of investment beyond the usual corridors, even if the north and centre remain dominant. Socially, it would translate into better-quality jobs with clearer prospects for advancement, not just a churn of low-wage positions.

It would also show up in resilience. If nearshoring merely reproduces an old dependence on a narrow set of sectors and markets, Mexico will remain vulnerable to US downturns, policy swings and technological shifts. If, instead, the current wave is used to upgrade skills, logistics and institutional quality, the country could be better positioned to adapt when the global attention shifts again — as it inevitably will.

A Reality Check, Not a Rejection

The point of a reality check is not to dismiss nearshoring as myth. There is real money being spent, real factories being built, and real opportunities opening up for parts of Mexico. The question is how far the reality falls short of the most enthusiastic narratives, and what that gap implies for policy. A limited, corridor-bound boom can still be beneficial, but it will not, on its own, rewrite the development story of a large, diverse country.

Mexico has a rare alignment of external interest and structural advantage. Whether that alignment yields a temporary news cycle or a deeper shift depends on choices made far from the glossy renderings of new industrial parks: choices about grids and schools, courts and customs, local governments and national strategies. Nearshoring may begin with a map of trucking distances. Its real legacy will be written in balance sheets, pay slips and the everyday experiences of the workers who clock in behind those container yards.