New Study Forecasts $78 Billion in Nearshoring Business

Santander Bank cites massive impact throughout Latin America as nearshoring continues to gain popularity and acceptance.

Exports from Latin America to the United States are forecast to increase $78 billion over the next several years, according to a new report from the Inter-American Development Bank.

Santander, the international bank heavily involved in the nearshoring movement, in reporting on the study said, “Businesses across the Americas are experiencing the benefits from nearshoring as U.S. 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 Bank said Mexico and Brazil would see the biggest gains over the near and medium terms, “though all countries would benefit from this phenomenon.”

Santander said it is working with more than 7,800 businesses in the region to advance their nearshoring efforts. “Nearshoring has the potential to transform Latin America into a global manufacturing hub,” said Christiana Riley, regional head of North America, “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 (small and medium enterprises) in the U.S., 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.”

Riley added that “the de-risking dynamics that entice U.S. companies to set up operations closer to home should, in theory, bring Brazil, Chile and Argentina into play as attractive nearshoring options.”