The Twin Engines of Nearshoring Need to Harmonize

Congressman Carlos A. Gimenez (U.S. Rep, District Fla-28) made a convincing argument last week at a Miami conference on “Western Hemisphere Nearshoring” that Americas-centric trade is deeply important to the long term economic strength of the United States.

Citing China’s ultra-ambitious “Belt and Road” strategy – putting China within striking distance of becoming the world’s leading economic superpower – the Congressman insisted that the United States has much to lose. “The way things are done now, we are feeding the instrument of our own demise,” said Gimenez, noting that dependence on China provides the fuel necessary for China to one day overtake the United States.

“China plays hard. They want to be the number one military power and the number one economic power,” said Gimenez, who is the only member of Congress born in Cuba and currently sits on the House of Representatives’ Select Committee on China.

The call to mobilize around ‘Nearshoring’ is quickly becoming mainstream. The big spark that triggered the campaign to ‘Go Nearshore’ started during the Covid 19 pandemic. Power brokers across the political and private industry spectrum grasped the reality that Nearshoring delivers vital economic capital to the  Hemisphere and allows countries to have better control over their economic futures. This fever has resulted in the formulation of the “The Americas’ Act”, currently working its way through Congress, which aims to accelerate regional economic integration, incentivizing US companies to look southward – and away from the Far East – in establishing and expanding manufacturing hubs. The act also has a range of instruments that seek to vastly improve infrastructure in Latin America and the Caribbean, particularly ports and roadways.

The Hard Goods

It should be noted that the rallying cry that supports “Nearshoring” is almost always centered on manufacturing, logistics and ‘hard goods’ that traverse oceans and fly 35,000 miles above the earth. In general, this type of Nearshoring is more familiar to many and in a sense, easier to understand compared to cross-border technology and BPO services.

Kirk Laughlin, Founder & Chief Analyst Nearshore Americas, and Congressman Carlos A. Gimenez

Countless US manufacturing operations were sent offshore in a big way starting in the 1970s and 1980s. Over the years, this movement has caused much handwringing about the hollowing-out of US manufacturing and the seeding of Asia’s robust trade muscle.

Listening to the Congressman recite the virtues of Americas-centric trade, not surprisingly, reminded me – and the many other from the ‘digital supply chain” wing of Nearshoring in the audience – that this tune, this message of advocacy, is obviously very familiar. (The conference was hosted by the Miami-Dade International Trade Consortium, which is supported by the Miami-Dade County Commissioners.)

Following the Congressman’s remarks, I was given the opportunity to present. I pointed to a couple of key principles that are central to Nearshore’s enduring strength:

• Smart people exist everywhere. Finding them and partnering with them brings exponential rewards at both ends of the relationship.
• All citizens qualify. Let’s stop classifying global citizens based on the limiting, myopic historical lens of the particular country where they live. The business of Nearshore has demonstrated that the value is in the individual, rather than the country where they reside.
• Cultural alignment, proximity, time zone. The classic features of Nearshore are now – and will remain – the critical infrastructure necessary to prevail over other territories that don’t possess these inherent advantages.
• Talent development is the defining feature of 21st century competition. Countries in the region that take education and talent development seriously will see rewards for generations to come.

The conference marked the first genuine opportunity, at least for me, to observe the extended branches of the Nearshore family join together at a single table. The results were empowering. Recognition that the US is competing with a well-prepared, highly-focused competitor like China means we need to build more alliances and be more vocal about how and why Nearshoring brings value to the US economy. But the ‘twin engines’ of Nearshore need to work in harmony.

Where Jobs Land

It was interesting to see how the Congressman addressed the question of where jobs are “sent.” In regard to China, he essentially said that jobs that relocated to China should be returned to the US, but if for some reason they cannot be re-established here then Latin America and the Caribbean should be the next best option.

Acceptance of globalization is not as easy step to take, whether you’re a politician or an ordinary citizen. But when business leaders and politicians agree that Nearshoring is truly something that can help the US succeed, then we have arrived at a new point on the long and winding road globalization has created.

The US would be well served to build a formidable global economic vision that could command the same respect as China’s Belt and Road program. Having a goal to work toward, one that rallies our neighbors in Latin America and the Caribbean to put a higher priority on trade and talent readiness, would put the US on better footing as it wages this multi-decade battle.

But in the meantime, I encourage all of us in the ‘big tent’ of the Nearshoring community to discover our common interests and find every opportunity to make our arguments clear and undeniable: The US and its neighbors in the Americas are stronger when we work together.

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