
Posted May 12, 2023
By Matt Insley
“Friendshoring”: ¡Bienvenidos a México!
Last summer, the major buzzwords in U.S. corporate boardrooms included the terms onshoring, reshoring and nearshoring; heck, we even heard “friendshoring”!
Former World Trade Organization (WTO) chief Pascal Lamy noted: “Offshoring happened because it was more efficient. (Let’s be real: It was cheaper!) “Reshoring happens because fragilities that were not priced in have appeared.”
Instead of de-globalization, Lamy forecasted “slow-balization” — a prolonged period of domestic insourcing of materials, manufacturing and services.
“It is limited by the fact that it is costly and that consumers will have to pay this extra price,” Lamy concluded.
In our case, the unifying idea is bringing a company’s outsourced manufacturing back to the United States — or, at least, to a “nearby” country, which, ostensibly, doesn’t hate our guts.
Regardless, legendary Big Short investor Michael Burry said of the phenomenon: “Onshoring/blue collar shortages plus global supply chain restructuring raise long-term inflation’s floor even as the bullwhip cycles lower to that end.”
Meaning? Onshoring, by any other name, is (for now) a theoretical solution which will do nothing to cool inflation in the near term.
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Your Rundown for Friday, May 12, 2023...
“Friendshoring”
Nevertheless, the whole “friendshoring” thing might be making the leap from theory to reality in Mexico. On Monday, Economy Minister Raquel Buenrostro announced a new “industrial corridor” to connect the Atlantic and Pacific Oceans.
“The so-called Interoceanic Corridor will include 10 new industrial parks across the Isthmus of Tehuantepec — the narrow ‘waist’ of southern Mexico between Salina Cruz, Oaxaca and Coatzacoalcos, Veracruz,” says an article at Mexico News Daily.
“A big concern of this administration has been lowering the asymmetry between north and south,” Buenrostro says of the wealth disparity between the two regions of Mexico.
To alleviate the economic imbalance, plans for the Interoceanic Corridor include a “300-km transoceanic freight rail line” as well as improved shipping ports and “a new gas pipeline… constructed in the oil-rich region.”
Source: Gobierno de Mexico
Bidding rules for six of the 10 industrial parks will be published next week.
“Companies from countries including the United States, Canada, Taiwan and Germany are encouraged to bid,” the article adds, “with potential investors for the new sites coming from current ‘nearshoring’ industries such as auto manufacturers, tech companies and semiconductor producers.”
As you might imagine, the Mexican government is offering scads of incentives; for example, a possible six-year “income tax reduction of up to 90%... depending on the number of jobs created.”
I expect Mexico to be a clear winner from the reshoring phenomenon; already the country’s GDP grew by 3.9% year-over-year in the first quarter of 2023… But the drug cartels? That’s not just a theoretical threat.
Market Rundown for Friday, May 12, 2023
S&P 500 futures are up 0.25% to 4,150.
Oil’s up 0.60% to $71.32 for a barrel of West Texas crude.
Gold is up 0.15% to $2,023.90 per ounce.
And Bitcoin is down 1.80% to $26,400.
Send your comments and questions to, feedback@newsyoucanacton.com.

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