The metallurgical and foundry industry has been one of the most benefited by the relocation phenomenon or 'nearshoring' in Mexico due to the arrival of foreign companies, a boost for the sector that estimates a growth of between 30% and 40% for the next two years, according to information from the Mexican Society of Foundry Workers, AC (SMFAC).

In addition, SMFAC noted that investments of 1.8 billion dollars have been recorded so far in 2024 and another 1 billion are expected to be made before 2026.

The European countries that are investing the most resources in the steel market are Germany and Italy, due to the high electricity costs they receive in their destinations of origin.

In this regard, the general director of SMFAC, Bruno Jaramillo, stated that the North American country must “invest in industrial parks and in energy savings” , since due to the increase in demand “we currently need around 25 to 30 industrial parks in the short term so that we can be at good levels.”

The director of FundiExpo, one of the most important fairs in the sector, said that “75% of the machinery used by more than a thousand companies that make up the metallurgical and foundry sector in Mexico is foreign, so it is also convenient that they be produced in the country.”

As for human resources, he pointed out that 350,000 Mexican families depend on this sector, but he also argued that "there is a 62% deficit of qualified workers (...) so human capital is very limited."

This relocation scheme for production chains is benefiting both Mexico and other Latin American countries, especially Brazil, which remains the largest economy on the continent and contributes 3.1% of the industrial gross domestic product (GDP) through this sector.

Mexico, an alternative for German metal

Regarding the international outlook on Mexico, the representative of the German metal casting technology fair GIFA, Sarah Möller, said that the country “offers good opportunities for this sector.”

He also commented that “ high electricity costs are affecting the industrial sector in Europe and this may be a factor that motivates companies to relocate .”

Electricity prices have risen since the end of the Covid-19 pandemic , coupled with the war between Russia and Ukraine, which also affected the rise in prices, with record increases of up to 15 euros per megawatt/hour, according to the global energy and raw materials consultancy ICIS.

The Logistics Word. The Mexican metallurgical industry estimates a 40% growth due to nearshoring