The fallout from the economic upheavals of 2020 when coupled with the Russian invasion of Ukraine in 2022 have frayed supply chains from Asia and put global energy markets on edge. 

Two buzzwords are making the rounds of economic development talk as industries readjust and calculate what lays ahead. One term banding about is reshoring. This is the reestablishment of manufacturing operations in the United States after being previously located overseas. An example of reshoring came recently in Corpus Christi when Tesla broke ground on a lithium refinery to boost the manufacturing of its electrical vehicles.

Tesla is also active in nearshoring – the other buzzword – in announcing it will build a gigafactory manufacturing plant in Nuevo Leon near Monterrey. New electrical vehicle production is expected at that plant as early as 2026. Nearshoring refers to companies moving manufacturing processes to countries near the United States, with Mexico being the chief beneficiary thus far.

Opportunities Potentially Arising

The upshot of reshoring and nearshoring is that companies are strategically moving manufacturing facilities and shortening supply chains in the aftermath of product shortages as of late. The deficiencies of globalization in industrial manufacturing and supply materials were exposed three years ago. The distance to major American and European markets from factories in Asia, especially China, were shown to have liabilities. 

In the Rio Grande Valley, economic development specialists and city leaders have begun analyzing and looking at what opportunities might arise for our regional border economy.

There is no consensus at this early point in developments. The early estimation is that the Valley could see gains in logistics and transportation sectors as more companies follow Tesla’s lead and establish new manufacturing facilities in northeast Mexico.

“With nearshoring, more products and services will be moving closer to our border,” said Kim Moore, the interim director of institutional advancement and economic development at South Texas College. “There is a lot of potential here for logistics. We need to be ready to make sure the flow of logistics is here.”

Mixed Views

The topics related to nearshoring were the subject of a recent discussion in Brownsville on the Texas Southmost College campus. “A New Mexican Moment” was the billing of the talk at TSC. The subtext was the opportunities it could bring for U.S. border communities.

The expert invited to speak on the subject was Duncan Wood, a longtime Mexico watcher and the vice president for strategy and new initiatives at the Wilson Center in Washington D.C. Wood gave a mixed view of how a border economy like the one in the Valley could benefit from nearshoring surging in Mexico.

Wood highlighted that 72 percent of reshoring is happening in Nuevo Leon, with Tesla being a prime example. The Mexican state closest to the Valley – Tamaulipas – has seen little of the reshoring happening in neighboring Nuevo Leon due to public safety and crime issues related to drug trafficking. He said ports of entry at international bridges need upgrades to handle increasing volumes of traffic. It is the same for highways leading out of the Valley.

“We don’t see enough examples of cross-border highway projects,” Wood said of Texas working more closely with state governments in Nuevo Leon and Tamaulipas. “It’s a time of great opportunity. I don’t think the federal and state governments are prepared for it.”

Wood does see the Rio Grande LNG plant currently under construction at the Port of Brownsville as a direct beneficiary of changing supply chain networks. European nations reduced oil and energy supplies coming from Russia after that country invaded Ukraine in 2022. The Brownsville LNG’s primary markets for its liquefied natural gas product will be in Europe. 

“There’s a new supply chain paradigm forming,” said of the global shifts in operations. “Europe is in desperate need of energy.”

‘Logistics Will Be Strong Here’

Economic development specialists in the Valley have differing views while sharing optimistic takes on what nearshoring could. mean for the Texas border region. 

Nathan Burkhart, the director of business development for the Brownsville Community Improvement Corporation, sees more of a spillover effect with some opportunities in logistics and light manufacturing components. Portions of essential operations in transporting parts and products could be located at Valley industrial parks, he said, with increasing volumes crossing the border due to nearshoring in northern Mexico. 

Orlando Campos, the chief executive officer for the Harlingen Economic Development Corporation, is slightly more bullish, saying, “transportation and logistics will be strong here.” He sees a five-to-10 year time window in seeing nearshoring opportunities reach the Valley when it comes to logistical operations.

“We’ll see some of it,” Campos said. “Foreign investors are looking at Texas. Here in the Valley, we need to work regionally with our neighbors. A rising tide lifts all ships.”