16 ms·

I think there is an argument for semi-onshoring, aka not quite getting it to the US but reducing supply chain risk: Mexico for low cost labor with low value-add

I think there is an argument for semi-onshoring, aka not quite getting it to the US but reducing supply chain risk: Mexico for low cost labor with low value-added and near zero supply chain risk (if it's a maquiladora on the border), Colombia for low cost with high value added but slightly higher supply chain risk.

Teever 4y ago
Is Mexico really a zero supply chain risk? I don't know much about the cartels or violence in Mexico, but that's the first thing I think of when you describe Mexico as low risk.
- brendoelfrendo 4y ago
  It's unquestionable that violent crime in Mexico has gone up over the past several years, but the question is: does that represent a supply chain risk? I don't have the data, but it doesn't seem like cartels or violent criminals typically target civilian manufacturing infrastructure. Mexico has a lot of manufacturing already, and a relatively healthy demographic distribution (that is, unlike the US and some other developed countries, they actually have enough young folks to replace the old folks leaving the workforce). I feel like Mexico would have to try very hard to fail at being a manufacturing powerhouse in North America. As an aside, this is a good reason for the US to really strengthen its relationship with Mexico and try to help Mexico fix its problems; the US is probably going to be even more dependent on Mexican manufacturing in the future when this whole supply chain shuffle shakes out.
  - throwaway0a5e 4y ago
    The cartels generally don't wanna destroy the factories. They wanna tax them.
  - anonAndOn 4y ago
    >try to help Mexico fix its problems Do you mean like returning the former Defense Minister to Mexico before trial? It's so nice that we can "help". [0]https://www.cbsnews.com/news/salvador-cienfuegos-zepeda-dismissal-drug-trafficking-charges-mexican-general/ https://www.cbsnews.com/news/salvador-cienfuegos-zepeda-dism...
- wsinks 4y ago
  I think their parenthetical about a maquiladora on the border was the hedge on Mexico as zero supply chain risk. There is increased cartel risk. I follow a former White House geopolitical analyst after I met him at a conference. Here's his latest talk on Mexico: https://www.youtube.com/watch?v=yilSJg5CMd4 https://www.youtube.com/watch?v=yilSJg5CMd4
  - toolz 4y ago
    This guy speaks with a great deal of confidence. I love listening to him talk, but the claims he make are breathtaking and he seems to make them without a second thought. For that reason I was curious to see what sort of predictions he's made in the past and see how accurate he has been. Well, maybe not quite as powerful at predictions as he is at making geopolitical claims. (He made a bunch of claims in 2009, for the coming decade I'll paraphrase and link to his predictions) He claimed the middle eastern wars would be withdrawn from and the world would see it as American weakness. That appears to be incorrect from any metric I can find. He claimed chinas economy would collapse within the decade in 2009. Well, that's not anywhere approaching corret. He claimed Germany in the same timeframe would ascend to late 1930 levels of political power. I'm not sure how to quantify that, but I sincerely doubt anyone looks at Germany as strongly as they looked in late 1930s. He predicted Russia would push their western front, but I'm not so sure that was a bold prediction given the russia-georgia war, but he's definitely correct here. Made a soft prediction of an eastern asia conflict due to Japans collapsing demographics, not correct, but not a strong prediction either. Concluded by saying we're going to invert into a deflationary economy, which also appears to be very wrong. I don't know nearly enough to call the guy out by any means, but I do take his word with a lot of hesitancy. I can't think of anyone who speaks as boldly and confidently across such a large domain without feeling the need to evidence their claims. https://www.businessinsider.com/stratfor-predictions-for-the-next-decade-2010-1#china-doomed-1 https://www.businessinsider.com/stratfor-predictions-for-the...
    - wolverine876 4y ago
      > He claimed Germany in the same timeframe would ascend to late 1930 levels of political power. I'm not sure how to quantify that, but I sincerely doubt anyone looks at Germany as strongly as they looked in late 1930s. Agreed literally, but post-Ukraine Germany has made an historical shift, for the first time since WWII, to invest seriously in their military and support foreign militaries, and before that, during the Trump administration, they gained much influence and stature as arguably the world leader on human rights. > He claimed the middle eastern wars would be withdrawn from and the world would see it as American weakness. That appears to be incorrect from any metric I can find. That actually has been US policy under Obama, Trump and Biden: Trump tried to withdraw from everywhere. Under the Democratic Presidents, the policy has been that the US is less dependent on Middle Eastern oil, the Middle East is consuming not-unlimited US geopolitical power (including military power), and we need to shift geopolitical resources to China while deepening our relationship with NATO. Obama withdrew from Iraq, made a deal with Iran, and instead of supporting the Saudis he tried to balance them and Iran; he also began the shift of geopolitical resources, including military, to China. Trump withdrew from Iraq and Syria, and undermined various other relationships. Biden pulled out of Afganistan (Middle East adjacent, bordering Iran), explicitly stating the the reasons above (China, etc.) and is shifting more resources to China, and has clearly defined them as 'the pacing threat'. And many have claimed, including after the two Iraq/Syria pullouts and the Afghan pullout, that America is weaker.
- qiskit 4y ago
  They are zero risk in that they are completely within our sphere of influence. Canada and Mexico are as zero risk as you can get from an american perspective.
  - Teever 4y ago
    As a Canadian I agree with you on Canada but im a little skeptical about Mexico. Again, im no expert on Mexico but from my understanding of the cartel situation Mexico isn't even in the sphere of influence of Mexico. I don't thing the US would want to put critical supply chains Ina country like Mexico unless they're willing to put troops there to eliminate the cartels, which to be honest would be a terrible idea.
    - 8note 4y ago
      Wouldn't the us just pay off the cartels?
      - Teever 4y ago
        And when the cartels alter the deal?
- galaxyLogic 4y ago
  Cartels are bad, but they really want to do more business rather than less, import more into the US. More ordinary trade there is, easier it is also to smuggle drugs I would guess.
milkytron 4y ago
Auto manufacturers are already doing this. https://tax.thomsonreuters.com/blog/mexico-as-a-new-capital-of-the-automotive-industries/ https://tax.thomsonreuters.com/blog/mexico-as-a-new-capital-...
munk-a 4y ago
If we saw increased off-shoring to Colombia would it possibly finally result in a continuous Freight rail line through Central America? It's always struck me as exceedingly odd that Panama is the terminus for all land-borne transportation.
- derevaunseraun 4y ago
  > It's always struck me as exceedingly odd that Panama is the terminus for all land-borne transportation. Might be because there's this chunk of Panama/north Columbia that's run by Guerillas and is one of the most dangerous places in existence (https://en.wikipedia.org/wiki/Dari%C3%A9n_Gap https://en.wikipedia.org/wiki/Dari%C3%A9n_Gap)
  - scythe 4y ago
    There has also been concern that a land-based link would hamper the containment of foot-and-mouth disease that was eradicated from North America, and there are environmental concerns. Colombia proposed building a road through the whole gap: https://www.latimes.com/archives/la-xpm-1995-08-20-mn-36988-story.html https://www.latimes.com/archives/la-xpm-1995-08-20-mn-36988-... But this has been heavily protested by environmentalists and natives alike. It might be less controversial to go northeast to Acandí by tunneling under the mountains, which would leave almost all of the forest untouched. Then you could build a long bridge, a coastal highway, or just keep using the ferry.
  - minsc_and_boo 4y ago
    Not just that, you have some of the highest concentrations of sea shipping lanes in the world competing nearby, with rugged landscape, earthquakes, and multiple socipolitical barriers along the route.
    - R0b0t1 4y ago
      Sounds like they need some freedom.
      - 4y ago
JumpCrisscross 4y ago
> there is an argument for semi-onshoring, aka not quite getting it to the US but reducing supply chain risk "Friend shoring" [1]. [1] https://www.bloomberg.com/news/articles/2021-06-24/-onshoring-is-so-last-year-the-new-lingo-is-friend-shoring https://www.bloomberg.com/news/articles/2021-06-24/-onshorin...
- somethoughts 4y ago
  Perhaps what would be interesting would be to enable some sort of reverse special economic zone just within the US border such that the corporations would be in US jurisdiction but the employees could flow through with minimal overhead - with some sort of fast pass checkpoint. A separate more tightly controlled border checkpoint could then happen as you move further into the US.
  - _s 4y ago
    So exploit workers by bringing them from overseas, and treat them differently to the local laws? You’ve just described Qatar, Bahrain, UAE etc. Maybe reconsider why local labour is expensive and why it’s worth paying for.
    - JumpCrisscross 4y ago
      > So exploit workers by bringing them from overseas, and treat them differently to the local laws? OP said they would be "in US jurisdiction," and thus, presumably, subject to American labor laws. What I think they were suggesting was a visa-free zone within the U.S., which is an interesting idea.
      - _s 4y ago
        Hmmm I didn’t get that impression from this; > corporations would be in US jurisdiction but the employees could flow through with minimal overhead It implies to me that the corporations get to be US based and reap those benefits while employees are not and can be taken advantage of. Though I do agree with you - there’s a few experiments happening with special economic areas / designated cities in a few places (again, a few in the Middle East) to attract talented individuals and companies to whom local laws may not apply.
gumby 4y ago
The US also has to take antitrust seriously so that there aren’t single points of failure at a corporate level. Geographically it’s a huge country so really would benefit from having factories scattered around the country/NAFTAland. Even if some of them clustered in a preferential region (lumber in Canada, car parts in Mexico, certain foodstuff is in California) it offers some risk. Remember when a fire in a single factory in Japan crippled the semiconductor industry world wide a few years ago?
- tharkun__ 4y ago
  Canada would like to talk to you about car parts and being a preferential region for that as well (Ontario, think Windsor i.e. right across from Detroit - not that Detroit's car manufacturing is going strong or anything like that but still). Growing food in California should be re-thought if you ask me, given the prolonged drought conditions. At some point shipping water to California just doesn't make sense any longer. Instead of shipping the water to California, grow the food where the water is, even if the yields aren't as high. Like you said, a single crop failure in California can wipe out near 100% of the US' food production for certain fruits and vegetables or at least a very very sizable portion of it.
  - fennecfoxen 4y ago
    No one is shipping water to California. The water for California agriculture is diverted from its natural flow, yes, but it comes from mountains located on the east side of California. On the far side of these mountains you will find the humid wetlands and the wide rivers of ... Nevada. Perhaps you can try kayaking on Groom Lake someday.
outside1234 4y ago
Or just basically anywhere but "always in China" We are at systemic risk from our reliance on China.

Teever 4y ago

Is Mexico really a zero supply chain risk? I don't know much about the cartels or violence in Mexico, but that's the first thing I think of when you describe Mexico as low risk.

brendoelfrendo 4y ago
It's unquestionable that violent crime in Mexico has gone up over the past several years, but the question is: does that represent a supply chain risk? I don't have the data, but it doesn't seem like cartels or violent criminals typically target civilian manufacturing infrastructure. Mexico has a lot of manufacturing already, and a relatively healthy demographic distribution (that is, unlike the US and some other developed countries, they actually have enough young folks to replace the old folks leaving the workforce). I feel like Mexico would have to try very hard to fail at being a manufacturing powerhouse in North America. As an aside, this is a good reason for the US to really strengthen its relationship with Mexico and try to help Mexico fix its problems; the US is probably going to be even more dependent on Mexican manufacturing in the future when this whole supply chain shuffle shakes out.
- throwaway0a5e 4y ago
  The cartels generally don't wanna destroy the factories. They wanna tax them.
- anonAndOn 4y ago
  >try to help Mexico fix its problems Do you mean like returning the former Defense Minister to Mexico before trial? It's so nice that we can "help". [0]https://www.cbsnews.com/news/salvador-cienfuegos-zepeda-dismissal-drug-trafficking-charges-mexican-general/ https://www.cbsnews.com/news/salvador-cienfuegos-zepeda-dism...
wsinks 4y ago
I think their parenthetical about a maquiladora on the border was the hedge on Mexico as zero supply chain risk. There is increased cartel risk. I follow a former White House geopolitical analyst after I met him at a conference. Here's his latest talk on Mexico: https://www.youtube.com/watch?v=yilSJg5CMd4 https://www.youtube.com/watch?v=yilSJg5CMd4
- toolz 4y ago
  This guy speaks with a great deal of confidence. I love listening to him talk, but the claims he make are breathtaking and he seems to make them without a second thought. For that reason I was curious to see what sort of predictions he's made in the past and see how accurate he has been. Well, maybe not quite as powerful at predictions as he is at making geopolitical claims. (He made a bunch of claims in 2009, for the coming decade I'll paraphrase and link to his predictions) He claimed the middle eastern wars would be withdrawn from and the world would see it as American weakness. That appears to be incorrect from any metric I can find. He claimed chinas economy would collapse within the decade in 2009. Well, that's not anywhere approaching corret. He claimed Germany in the same timeframe would ascend to late 1930 levels of political power. I'm not sure how to quantify that, but I sincerely doubt anyone looks at Germany as strongly as they looked in late 1930s. He predicted Russia would push their western front, but I'm not so sure that was a bold prediction given the russia-georgia war, but he's definitely correct here. Made a soft prediction of an eastern asia conflict due to Japans collapsing demographics, not correct, but not a strong prediction either. Concluded by saying we're going to invert into a deflationary economy, which also appears to be very wrong. I don't know nearly enough to call the guy out by any means, but I do take his word with a lot of hesitancy. I can't think of anyone who speaks as boldly and confidently across such a large domain without feeling the need to evidence their claims. https://www.businessinsider.com/stratfor-predictions-for-the-next-decade-2010-1#china-doomed-1 https://www.businessinsider.com/stratfor-predictions-for-the...
  - wolverine876 4y ago
    > He claimed Germany in the same timeframe would ascend to late 1930 levels of political power. I'm not sure how to quantify that, but I sincerely doubt anyone looks at Germany as strongly as they looked in late 1930s. Agreed literally, but post-Ukraine Germany has made an historical shift, for the first time since WWII, to invest seriously in their military and support foreign militaries, and before that, during the Trump administration, they gained much influence and stature as arguably the world leader on human rights. > He claimed the middle eastern wars would be withdrawn from and the world would see it as American weakness. That appears to be incorrect from any metric I can find. That actually has been US policy under Obama, Trump and Biden: Trump tried to withdraw from everywhere. Under the Democratic Presidents, the policy has been that the US is less dependent on Middle Eastern oil, the Middle East is consuming not-unlimited US geopolitical power (including military power), and we need to shift geopolitical resources to China while deepening our relationship with NATO. Obama withdrew from Iraq, made a deal with Iran, and instead of supporting the Saudis he tried to balance them and Iran; he also began the shift of geopolitical resources, including military, to China. Trump withdrew from Iraq and Syria, and undermined various other relationships. Biden pulled out of Afganistan (Middle East adjacent, bordering Iran), explicitly stating the the reasons above (China, etc.) and is shifting more resources to China, and has clearly defined them as 'the pacing threat'. And many have claimed, including after the two Iraq/Syria pullouts and the Afghan pullout, that America is weaker.
qiskit 4y ago
They are zero risk in that they are completely within our sphere of influence. Canada and Mexico are as zero risk as you can get from an american perspective.
- Teever 4y ago
  As a Canadian I agree with you on Canada but im a little skeptical about Mexico. Again, im no expert on Mexico but from my understanding of the cartel situation Mexico isn't even in the sphere of influence of Mexico. I don't thing the US would want to put critical supply chains Ina country like Mexico unless they're willing to put troops there to eliminate the cartels, which to be honest would be a terrible idea.
  - 8note 4y ago
    Wouldn't the us just pay off the cartels?
    - Teever 4y ago
      And when the cartels alter the deal?
galaxyLogic 4y ago
Cartels are bad, but they really want to do more business rather than less, import more into the US. More ordinary trade there is, easier it is also to smuggle drugs I would guess.

milkytron 4y ago

Auto manufacturers are already doing this. https://tax.thomsonreuters.com/blog/mexico-as-a-new-capital-of-the-automotive-industries/ https://tax.thomsonreuters.com/blog/mexico-as-a-new-capital-...

munk-a 4y ago

If we saw increased off-shoring to Colombia would it possibly finally result in a continuous Freight rail line through Central America? It's always struck me as exceedingly odd that Panama is the terminus for all land-borne transportation.

derevaunseraun 4y ago
> It's always struck me as exceedingly odd that Panama is the terminus for all land-borne transportation. Might be because there's this chunk of Panama/north Columbia that's run by Guerillas and is one of the most dangerous places in existence (https://en.wikipedia.org/wiki/Dari%C3%A9n_Gap https://en.wikipedia.org/wiki/Dari%C3%A9n_Gap)
- scythe 4y ago
  There has also been concern that a land-based link would hamper the containment of foot-and-mouth disease that was eradicated from North America, and there are environmental concerns. Colombia proposed building a road through the whole gap: https://www.latimes.com/archives/la-xpm-1995-08-20-mn-36988-story.html https://www.latimes.com/archives/la-xpm-1995-08-20-mn-36988-... But this has been heavily protested by environmentalists and natives alike. It might be less controversial to go northeast to Acandí by tunneling under the mountains, which would leave almost all of the forest untouched. Then you could build a long bridge, a coastal highway, or just keep using the ferry.
- minsc_and_boo 4y ago
  Not just that, you have some of the highest concentrations of sea shipping lanes in the world competing nearby, with rugged landscape, earthquakes, and multiple socipolitical barriers along the route.
  - R0b0t1 4y ago
    Sounds like they need some freedom.
    - 4y ago

JumpCrisscross 4y ago

> there is an argument for semi-onshoring, aka not quite getting it to the US but reducing supply chain risk "Friend shoring" [1]. [1] https://www.bloomberg.com/news/articles/2021-06-24/-onshoring-is-so-last-year-the-new-lingo-is-friend-shoring https://www.bloomberg.com/news/articles/2021-06-24/-onshorin...

somethoughts 4y ago
Perhaps what would be interesting would be to enable some sort of reverse special economic zone just within the US border such that the corporations would be in US jurisdiction but the employees could flow through with minimal overhead - with some sort of fast pass checkpoint. A separate more tightly controlled border checkpoint could then happen as you move further into the US.
- _s 4y ago
  So exploit workers by bringing them from overseas, and treat them differently to the local laws? You’ve just described Qatar, Bahrain, UAE etc. Maybe reconsider why local labour is expensive and why it’s worth paying for.
  - JumpCrisscross 4y ago
    > So exploit workers by bringing them from overseas, and treat them differently to the local laws? OP said they would be "in US jurisdiction," and thus, presumably, subject to American labor laws. What I think they were suggesting was a visa-free zone within the U.S., which is an interesting idea.
    - _s 4y ago
      Hmmm I didn’t get that impression from this; > corporations would be in US jurisdiction but the employees could flow through with minimal overhead It implies to me that the corporations get to be US based and reap those benefits while employees are not and can be taken advantage of. Though I do agree with you - there’s a few experiments happening with special economic areas / designated cities in a few places (again, a few in the Middle East) to attract talented individuals and companies to whom local laws may not apply.

gumby 4y ago

The US also has to take antitrust seriously so that there aren’t single points of failure at a corporate level. Geographically it’s a huge country so really would benefit from having factories scattered around the country/NAFTAland. Even if some of them clustered in a preferential region (lumber in Canada, car parts in Mexico, certain foodstuff is in California) it offers some risk. Remember when a fire in a single factory in Japan crippled the semiconductor industry world wide a few years ago?

tharkun__ 4y ago
Canada would like to talk to you about car parts and being a preferential region for that as well (Ontario, think Windsor i.e. right across from Detroit - not that Detroit's car manufacturing is going strong or anything like that but still). Growing food in California should be re-thought if you ask me, given the prolonged drought conditions. At some point shipping water to California just doesn't make sense any longer. Instead of shipping the water to California, grow the food where the water is, even if the yields aren't as high. Like you said, a single crop failure in California can wipe out near 100% of the US' food production for certain fruits and vegetables or at least a very very sizable portion of it.
- fennecfoxen 4y ago
  No one is shipping water to California. The water for California agriculture is diverted from its natural flow, yes, but it comes from mountains located on the east side of California. On the far side of these mountains you will find the humid wetlands and the wide rivers of ... Nevada. Perhaps you can try kayaking on Groom Lake someday.

outside1234 4y ago

Or just basically anywhere but "always in China" We are at systemic risk from our reliance on China.