What Does LatAm Need to Be a Strong Link in the West’s Supply Chain?

San Francisco — The prospect of a recession is increasingly present in the plans of companies around the world, but there is also room for opportunity. Some executives in the market, such as Marcelo Claure (former SoftBank COO) or IADB’s president Mauricio Claver-Carone, are vocal about the role of Latin America in the face of supply chain issues and how the region can take advantage of nearshoring policies to become suppliers for Western countries, at the expense of manufacturers in Asia.

The term nearshoring is used to describe the outsourcing of products and services in a supply chain to neighboring or nearby countries.

Claure’s view is shared by executives and industry experts. Jennifer Bisceglie, CEO of Interos, a provider of Artificial Intelligence (AI) for supply chain management, told Bloomberg Línea that the current scenario presents a great opportunity for Mexico to enter the developed economy.

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EXCLUSIVE: Nearshoring Could Bring in US$70 Billion to Latin America: IDB President Mauricio Claver-Carone

The head of the multilateral organization spoke in an interview with Bloomberg Línea about the reforms required for this.

As the energy transition drives investment in regional solutions, this could generate employment opportunities in Latin America. Silicon Valley strategy expert Michelle Messina told Bloomberg Línea that there is a big call for nearshoring from the United States to get the chain away from China, and that could turn into an advantage for Panama Canal deals, though it also entails risks.

“If we were [in Latin America] nearshoring and manufacturing more products in the United States, we might not get many raw materials available in other parts of the world. Because we create more raw materials, there might not be as much transit through the Panama Canal. But the United States is the biggest user of the canal. It is difficult to predict what the impacts will be,” she said.

The CEO of Interos, meanwhile, said that “all the cards are on the table now” because the name of the game is alternative sources of supply in the face of the global crisis in the chain.

“Any country in the world has the opportunity to enter the developed economy if they have the resources, the elements, the capabilities, the skill set and the people that can be trained for those jobs, and if they have transport lines to get those products out,” Bisceglie said.

The executive said she believes that supply chain problems can provide opportunities for all countries in the world to have access to other markets, something that will increase their GDP (Gross Domestic Product) and make them more competitive globally.

For her, for example, Brazil and Argentina could appear as suppliers of lithium for electric vehicle batteries to the United States, but this will depend on the following questions:

• Do those countries have the right materials?
• Do these countries have the right skills?
• Do those countries have good transportation?

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-- This article was amended on June 17 at 12:00 EST to reflect the correct name of the president of the Inter-American Development Bank.