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Businesses across the Americas are experiencing the benefits from nearshoring as US companies switch production from Asia and build supply chains closer to home. Meanwhile, Latin America makes inroads from the increase in trade and investment, creating opportunities for local businesses to further grow.
The effects of this reshuffling of global trade are beginning to be bear fruits, with nearshoring expected to add an annual $78 billion in exports across Latin America and the Caribbean in the near and medium term, according to the Inter-American Development Bank.
With the reconfiguration of supply chains, inward investment flows to many countries across the continent are increasing – and the potential is even greater. Mexico and Brazil would see the biggest gains, though all countries would benefit from the phenomenon (IDB).
estimated impact in exports across Latin America from nearshoring
in the region Santander supports through its Multinationals initiative
Santander pledge for Mexico’s agriculture SME’s
estimated impact in exports across Latin America from nearshoring
in the region Santander supports through its Multinationals initiative
Santander pledge for Mexico’s agriculture SME’s
New factories in the automotive industry, textiles and pharmaceuticals have been established for several years, but the region also stands to capitalise on strategically important emerging industries such as renewable energy and mining of rare earth metals for the green transition.
Mexico has been the main beneficiary of nearshoring so far, with large increases in manufacturing output of cars and consumer goods. However, there is growing interest in the agriculture sector, and Santander has pledged $3 billion pesos for the remainder of 2024 to help small and medium enterprises take advantage of opportunities in the US.
A related trend that is also boosting economic activity in Latin America is friendshoring, a concept built around the rerouting of supply and can lead to the creation of a world-class business ecosystem that uses local supply chains and promotes intra-regional trade.
For multilatinas - also known as family-owned businesses headquartered in the region, local capital, that also operate in other markets - it offers new prospects of regional and international expansion, while boosting innovation and competitiveness. Many of these businesses have already moved beyond the traditional focus on manufacturing and commodities to explore providing services like call centres, IT and finance.
Santander’s unique Multinationals initiative supports businesses that are looking to expand regionally or export to new markets. It is a strategic partner for more than 2,500 companies, giving them access to a sophisticated technology platform with a range of international banking services normally associated with large global corporations.
Nearshoring has the potential to transform Latin America into a global manufacturing hub, just as offshoring completely changed the economies of South Korea, China and Vietnam 30 years ago. We are very active in helping companies in both North and South America identify and fund opportunities. For SMEs in the US, nearshoring is unfamiliar territory and they value our ability to accurately assess and price risks when financing expansion of manufacturing across the border or shifting operations from other regions.
We are the ideal partner to help our clients in their international journey and accompany them setting up operations abroad. Our successful approach to entering new markets is based on the connectivity of the five businesses, our global tech capabilities, a deep local knowledge and the trust that Santander represents in the countries in which we operate. This approach is not exclusive to South America, but is a reality at Group level, where we support all businesses seeking new opportunities who expand internationally.
We explore nearshoring in more detail and hear from Santander’s regional heads of North and South America on how these trends will deliver further benefits to businesses and economies.
US business open to nearshoring in Mexico and further South
The de-risking dynamics that entice US companies to set up operations closer to home should, in theory, bring Brazil, Chile and Argentina into play as attractive nearshoring options, says Christiana Riley.
Santander drives growth in South America based on the Group's strengths
By leveraging our operating model and global technology capabilities we continue to strengthen our retail banking, help businesses grow internationally, boost consumer finance or innovate in payments, says Carlos Rey.
Mexico’s SMEs set for a rich harvest from nearshoring revolution in agriculture
Mexico is already the United States’ largest trading partner but a greater emphasis by SMEs on exporting agricultural products, would generate even wider economic benefits, says Rodolfo Hernández Sada.
