The cost of "low-cost countries" is going up.
The rise in nearshoring — moving manufacturing closer to home, but still in areas with a less expansive labor force — means there's more demand for workers in those regions. Those jobs are coming on top of corporate moves to those countries because of small labor force at home.
In one example, Mexico has seen a 30 percent increase in average wages over the last five years, according to consultants at Plante Moran.
"What we're seeing now is that companies are looking to go to Mexico because they cannot find people in the U.S.," Alejandro Rodriguez of Plante Moran told Kurt Nagl from our sister paper Crain's Detroit Business. "Wages are increasing very rapidly. As a result of nearshoring [and] the many investments that are coming to Mexico, we're seeing even more of an increase in labor costs because companies are competing for talent."
And those costs aren't likely to go down, added Dan Sharkey, an attorney with Brooks, Wilkins, Sharkey & Truco in Birmingham, Mich., specializing in supply chain disputes.
"If you look at Mexico right now, there's a big influx of manufacturing jobs because of what's happening geopolitically," Ray Scott, CEO of automotive seating supplier Lear Corp., said. "So there just isn't enough employees to satisfy it."