Mexico’s
Manufacturing Renaissance
Manufacturing Renaissance
Manufacturing is the bedrock of modern civilization. The ability to mass-produce complex goods through technology has not only improved our quality of life across every dimension – it has fueled economic growth and societal development on an unprecedented scale. From the industrial revolution that powered England’s dominance in the 19th century to America’s foundations in steel, manufacturing has always been at the heart of economic prosperity and growth. It was manufacturing that rebuilt Japan after World War II, fueled the meteoric rise of the Asian Tigers, propelled China to global prominence, and now holds the potential to bend the arc of Mexico's future.
The pace of advancement is startling. It took humanity 4,000 years to surpass horse-drawn speed with the steam engine, but only a century to progress from the first flight to orbiting the sun at 400,000 miles per hour. And the acceleration is only beginning. We stand on the cusp of a manufacturing revolution that will be driven by robotics, artificial intelligence, advanced sustainable materials, and additive manufacturing – an era sometimes referred to as Industry 4.0 that will propel us into a new age of technological achievement. Yet it is clear that this revolution’s benefits have not (and will not) accrue evenly around the world.
Few places render this division more apparent than Mexico, whose manufacturing economy has remained largely static for decades, beleaguered by low reliability rates, a prevailing lack of trust within the ecosystem, limited expertise in strategic industries, and insufficient investment in infrastructure and energy within the primary sectors of the economy. Mexico was uniquely positioned to benefit from globalization; but as a country, we failed to capitalize on this opportunity.
In the wake of NAFTA, Mexico’s promise was derailed by the Tequila Crisis, which saw capital flight, widespread economic contraction, and a surge of inflation. This was especially sobering to witness during a period where other developing economies thrived: China’s 1978 reforms sparked economic miracles throughout the nineties and beyond, and India’s economy also experienced breakthrough growth as a result of carefully cultivating engineering talent and ambitious infrastructure spending.
As Mexico’s manufacturing base faltered, the country transitioned to a service-based economy, with manufacturing jobs and vocational training losing momentum, and top talent choosing instead to pursue undifferentiated service jobs. An entire generation was conditioned to favor joining consulting firms, starting restaurants, or opening nail salons over careers in machining or metal fabrication shops, leading to thousands of stagnant enterprises and millions of careers failing to achieve their full potential. Today, despite training over two million new engineers each decade, much of Mexico's technical talent remains underutilized, underpaid, and lacking fulfilling career paths that make use of their skills. A generation that should have been a catalyst for social mobility remains woefully untapped.
Now, against all odds, Mexico has a second chance. Both the means of manufacturing and the dynamics of global supply chains are changing rapidly. Post-COVID, enterprises have learned the difficult lesson that offshoring production to cut costs came at the price of relinquishing control over their procurement cycles. Since then, the vulnerabilities of our existing supply chains have only become more apparent, with disruptions surfacing with increased frequency. From the escalating tensions between the U.S. and China, to the ongoing war in Eastern Europe and the Middle East, global instability is becoming the new norm. This fragility is underscored daily by multiple disturbances: the resurgence of protectionism, the shift to nationalism and right-wing politics in Western economies, the rise of piracy in the Red Sea, the obstruction of the Suez Canal, the Panama Canal drought, Taiwan’s tensions and potential blockade, and conflicts in the South China Sea, among others.
And these challenges to globalization are not the only threats. In parallel, humanity faces its biggest challenge to date as the specter of climate change has begun to manifest in increasingly disruptive ways. As the climate crisis grows more apparent, it will prompt severe, desperate, and stringent regulations to address decades of global inaction – measures from significant cuts in production and consumption to detailed measurements of water and energy footprints across factory floors. Ultimately, only the factories that comply with these rigorous standards will prosper.
Resilient supply chains and sustainable practices have never been more essential or urgent. The opportunity before us is massive and will take decades to fully materialize. But capitalizing on it fully requires that we act today. Countries that adapt now will be prepared to take the tide at the flood, poised to lead the coming industrial transformation. For Mexico, it is a chance to join our North American neighbors in restoring economic power to the hemisphere and building a prosperous future on the back of modern global manufacturing.
Yet seizing these opportunities is far from inevitable. Whether Mexico succeeds hinges on the ability of traditional actors in the private and public sectors to collaborate with new enterprises and overcome substantial challenges. Among the most urgent priorities are implementing the rule of law to curb violence, ensuring continuity of treaties and free market agreements, limiting monopolistic influence over strategic sectors, addressing water scarcity, expanding the transportation network, and revitalizing the energy sector with better distribution infrastructure and renewable resources. All of this must be done within a shifting, complex political environment where decision makers have limited information.
We see three interrelated challenges that are core to Mexico’s ability to benefit from the next manufacturing renaissance.
1 First, Mexico must further develop its talent base to compete with advanced manufacturing nations. This will involve educating and attracting top engineering talent at massive scale, which includes importing international experts to transfer global best practices and uplevel the workforce. Ultimately, empowering ambitious entrepreneurs to start their own businesses, spinning the entrepreneurship flywheel and enriching the talent pool.
2 Second, Mexico must focus relentlessly on industrializing and elevating the competitiveness of the tens of thousands of SMEs that constitute the production base of the economy. This requires providing better operational tools through technology, channeling capital via the right financial instruments to solve working capital strangulation, and institutionalizing succession and continuity plans for retiring factory owners.
3 And third, the ecosystem must adapt to the significant changes brought about by China's decoupling and the backlash of incumbents, which will impact the global supply chain on multiple fronts. That will mean directing existing engineering talent to new suppliers, transferring and re-adapting engineering IP (drawings, tolerances, specs, etc), grappling with the regulatory consequences of trade wars, prioritizing investments in Mexico’s primary sectors, retrofitting entangled contract manufacturing relationships, and managing sourcing constraints and inflationary costs.
These challenges are vast, intricate, and impact multiple uncorrelated fronts. Together, they exceed the ability of any single stakeholder to manage, whether the government, educational institutions, or established industrial players. But with careful coordination, we believe that Mexico and North America can be beneficiaries of these tectonic shifts, capturing a disproportionate share of global demand as manufacturing is re-appropriated by new winners.
Two years ago, we launched Prima to lead the way.
After mapping and visiting thousands of local factories, engaging with hundreds of customers across diverse channels, and processing thousands of RFQs, we are well positioned to grapple with these issues. We have built a manufacturing and supply chain integrator that serves as a single seller of record, with proprietary capabilities across technology, operations, procurement and engineering. This enables us to orchestrate a complex ecosystem of carefully-vetted service providers, offering our customers a one-stop shop for manufacturing solutions. Since our launch, we have earned the trust of our customers by significantly enhancing the reliability and efficiency of their manufacturing procurement needs. Put simply, through Prima, we are able to offer businesses of any size the benefits of scale in terms of talent, technology and capital.
We have also made significant strides in addressing Mexico’s underutilized engineering capacity by attracting, developing, and fairly compensating top talent. By offering meaningful challenges and eliminating red tape and poor working conditions, Prima has empowered engineers with varying levels of experience to realize their full potential. In addition, we have established ourselves as the premier training ground for recent graduates, equipping talented young people with the skills, experience and mentorship needed to excel in the profession.
Technology is at the core of our efforts. By consolidating and systematizing market data and implicit knowledge from across the manufacturing value chain, we are able to streamline both engineering and project management expertise, giving us the unique ability to process hundreds of RFQs daily. By standardizing transaction processes, we enable the deployment of state-of-the-art technologies throughout the manufacturing sector, even at subscale factories which would otherwise entirely lack access to these capabilities.
More broadly, we are designing a set of technological rails that will ensure that Mexican manufacturers are the beneficiaries of global advances in technology, whether in automation, robotics, AI, or beyond. For too long, deficits in knowledge-sharing and implementation have meant that emerging economies miss out on the benefits of novel technologies – even as developed countries embrace them to spring ahead. By orchestrating manufacturing across the Mexican landscape and bringing together the best of local and global capabilities, we are building bridges that will allow this region to benefit from many sophisticated technologies for the first time. We are leveling the playing field.
As we look to the horizon, it is clear that the climate crisis will bring about dramatic changes in regulatory regimes, placing new restrictions on production. Absent significant evolution, these requirements will only widen the gap between Mexico’s existing capabilities and a new wave of global standards. Prima will enable small-scale SMEs to access state of the art mitigation and monitoring technologies, allowing them to compete effectively as the world grapples with this generational challenge.
None of this will be possible without long term investment, from both foreign and domestic investors. And here, too, we are prepared to fill the gap. Over the last two years, we have developed a sharp view on the shape of our existing local capabilities, and what new ones will be required to meet future demand. With this knowledge, we are strategically positioned to attract new capital to our ecosystem and direct investments to enhance and expand Mexico's manufacturing capabilities.
We aim to orchestrate this effort between educational institutions, government initiatives, manufacturing SMEs, technology players, Chinese incumbents, and new sources of demand, ensuring that Mexico can create the competitive advantages needed to thrive on the global stage.
Our future is intrinsically linked to Mexico’s role in the global economy. If the nearshoring opportunity is not fully captured, Mexico may come to serve as a mere conduit for Chinese manufacturers, a form of regulatory arbitrage that allows them to evade tariffs and more effectively access the US market. But done successfully, and effectively leveraging the country’s talent, technology, and capital, this wave of nearshoring could ignite a manufacturing renaissance. This shift carries the potential to profoundly industrialize and grow the economy, potentially tripling Mexico's share of global output in high-margin, technologically defensible sectors.
It is our duty to ensure this becomes reality and to avoid another lost decade at all costs. We cannot rely solely on politicians, the government, or luck. We will need entrepreneurs and the private sector to play a part in revitalizing manufacturing-led economic growth and changing the trajectory of this economy.
By building a robust manufacturing ecosystem, we believe that we will fuel a resurgence in economic progress and innovation. Manufacturing drives GDP growth, job creation, and wealth generation, creating a self-reinforcing spiral of innovation. And manufacturing jobs reduce income inequality and act as a catalyst for democratization and economic growth – the only long-term solutions to our deeply entrenched social and security issues.
Two centuries after the industrial revolution, and thirty years after the Peso crisis, Mexico has another chance to take advantage of a world on the precipice of dramatic change. Our opportunity is profound. If we seize it – with resilience, patience, and humility – the Mexican jaguar could achieve the same ascendance that its Asian tiger peer accomplished in the 1990’s. If we fail, we may end up mired in another half-century of economic malaise. Getting manufacturing right is not simply about economic growth – it’s about realizing the full potential of our nation and its people.
At Prima, we’re not waiting for change to happen. We are driving it forward with every partnership we forge; every engineer we train; every technology we bring to our markets. With a team of nearly 80 across six countries, more than USD $42 million in financing, and a track record of serving more than 200 of North America’s largest companies, we are off to a running start. Our work is just beginning.
