Nearshoring in Mexico: Pitfalls, Potential, and Possible Problems

Thanks to global supply chain disruptions, growing hostilities between the US and China, and rising import tariffs, U.S. companies are reconsidering a business plan that calls for them to outsource so much of their production to foreign companies in Asia. Instead, they are pivoting to onshoring back in the US, and “nearshoring” production in Mexico.

This new supply chain approach calls for sourcing products closer to home. For U.S. companies, that means setting up suppliers in Latin America — specifically, Mexico.

Mexico benefits from its geographic proximity to the U.S., its well-established export-oriented industrial sector, a labor force that values manufacturing jobs, and its inclusion in the US-Canada-Mexico North America free trade agreement, notes Forbes.

The move to Mexico is happening fast. Axios reports that the number of companies making moves to nearshore their production nearly tripled last year — to 42 percent of the companies polled, versus 17 percent in 2022 and just 11 percent in 2021.

Those companies join behemoths such as Walmart and automotive giants General Motors and Tesla that are already well on the way to bringing manufacturing closer to home.

With so many companies jumping on the nearshoring bandwagon, we asked two executives with experience working in Mexico for their advice. Klaus-Juergen Wolf, who has spent 15 years as a C-suite interim executive, and Jay Winkler, whose consulting company, Brave Lion Group, works with manufacturing firms, shared the following insights and suggested questions you should ask, concerns you should address, and the possible problems you could face if you nearshore production in Mexico.

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Executive Search Services: Why Interim Executives Are Right for Fast-Growing Companies

Interim executives — experienced C-suite leaders who take on short-term roles — traditionally are found in turnaround situations, coming in to save companies on the brink. Or they are brought in to keep a company moving forward while a new permanent hire is identified and onboarded. And interim executives are a key part of the post-acquisition strategy for private equity firms.

But there’s another leadership role that is tailor-made for an interim leader: Using their skills, experience and executive talent to guide fast-growing companies.

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CFO Resignations Hit Record Highs. Who Will Fill the Role When Your CFO Leaves?

During the first quarter of 2024, 82 Chief Financial Officers of the biggest public companies left their jobs, tying a record set in Q1 2021. The difference between then and now? Many of the CFOs who resigned in 2021 were retiring post-pandemic. Today, many of them are taking over as CEO, COO, or some other C-suite position.

According to data reported by the management consulting firm Russel Reynolds Associates, 271 CFOs left their post as finance chief in 2023. And Russell Reynolds says that 291 new CFOs were appointed in 2023 — nearly two-thirds of them first-time CFOs.

That adds up to a huge demand for new CFOs around the globe.

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Why Every Company Needs a Technology Roadmap

In today’s world, every company needs to function as a technology company. eCommerce? Of course – without tech, there is no e in commerce. Auto manufacturers? You bet — carmakers spend at least as much time and energy on developing the software that runs their vehicles as they do getting the mechanics right. Healthcare? Absolutely — just ask the folks at Ascension Health, America’s largest Catholic hospital chain and the victim of a cyberattack that left nurses and doctors scrambling to take notes by hand and send patient orders by fax.

When every company is a technology company, it means that all key stakeholders, not just the IT teams, need a high-level understanding of the role technology initiatives play in achieving business goals from product development to strategic planning.

What is a Technology Roadmap?

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Resolving Conflict on the Management Team: Why it Starts and How to Fix It

Not long ago, InterimExecs was approached by a human resources professional who was concerned about the level of conflict among the members of the management team. The clashes had reached a point where they were, she said, ready to kill one another.

That got us thinking: Is conflict simply the nature of the beast these days?

Turns out the answer is no, according to Alicia Fortinberry and Bob Murray. Their company, Fortinberry Murray, is “committed to arming people and businesses with the knowledge and practical skills to build the organizations, communities, families and relationships that are compatible with our ‘design specs’ and enable people to be healthy and fulfilled.”

InterimExecs CEO Robert Jordan sat down with the duo to talk about conflict on management teams and how to handle it. This is an edited transcript of their conversation.

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Private Company Governance: Why You Need a Strong Board of Directors

Bruce Werner has a blunt message for company owners. “Owners are leaving money on the table. They’re not getting full value from their boards,” he says. “We can improve the outcomes in your business, make your life a little better, and take risk out of the business by having a board do what it ought to. And it doesn’t take that much more effort. You just have to ask a few important questions.”

Werner came up in the family business, a $500 million company that made ladders until it was sold in a leveraged buyout in the mid-90s. After the sale, Werner started, grew, and sold four companies, was a partner in a private equity fund, and served on more than 10 boards, mostly for family-owned firms.

He’s distilled all of that experience into two books, Your Ownership Journey: 12 Secrets for Personal and Business Success, which published in 2022, and Navigating Private Company Governance: The Savvy Business Owner’s Guide to Developing an Effective Board, which published in 2023.

We interviewed him in the wake of the publication of Navigating Private Company Governance and asked him about his advice for business owners wondering whether they need a board of directors for better corporate governance.

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Maximizing Operational Efficiency: Expert COOs Offer Tips for Improving Process and Productivity

Operational efficiency. It’s the holy grail of business success. Chief Operating Officers are charged with creating operations management systems that root out inefficient processes, lower operating expenses, reduce lead times, and increase profit margins.

Two expert COOs, Steve Raack and Mike Bartikoski, are interim executives with repeated successes at mega-million-dollar corporations. They shared what they learned along the way during a wide-ranging webinar and Q&A moderated by InterimExecs CEO Robert Jordan:

Here’s a recap:

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How to Save a Failing Business: 4 Key Steps to a Turnaround

It’s tough to feel optimistic when your business is failing. But, InterimExecs RED Team executive Yoav Cohen knows how to save a failing business. “You almost always have a way out if you act quickly and decisively,” he says.

We asked Cohen to look at the most common reasons businesses fail, break down turnaround strategies for a company in crisis, and share his step-by-step action plan for struggling businesses.

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4 Common Reasons Why Some Businesses Fail While Others Fly High

According to stats from the U.S. Bureau of Labor Statistics, only about one-quarter of business startups will still be operating after 15 years. But why do some businesses fail but others continue to grow and thrive?

Over the last 15+ years, our interim executives have been instrumental in leading business success at companies across countries and industries. Their experience shows that there are some common reasons why businesses fail:

Poor Management

It’s not what business owners want to hear, but poor management is one of the most common reasons for business failure. Cleve Adams, who built a SaaS cyber security software company from pre-revenue to a $1B IPO in three years, notes that the best business ideas won’t work unless you have a quality team laying the groundwork.

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The Six Times PE Funds Use Interim Executives

Many private equity funds hear the words “interim executive” and think the only application is an Interim CEO or CFO for turnaround or short-term fill-in of a portfolio company. But PE funds seeking a great return look to interims for their unique abilities to build and transform companies.

An Interim CEO brought on to lead a recently acquired private equity portfolio company, for example, may match the hold period of the fund. That could mean several years of working to build, grow, and ultimately exit the company, hitting big returns for everyone involved.

Here are six major use cases for an Interim CEO, Interim CFO, or other interim executive in PE-backed portfolio companies:

1. Interim Executives in Diligence

Most funds hope to spread their wings and work beyond industries where they’ve already had success. In looking at new industries where acquisitions may cost less and produce higher returns, a little more diligence is often needed. The further afield a fund goes, the more they need expert leadership removed from prior operating teams.

We recently matched a $5B+ fund with an Interim CEO expert in e-commerce and consumer goods to help determine if a potential acquisition made sense. While the fund had deep experience in the manufacturing space, understanding the current challenges and opportunities to expand go-to-market strategy was essential. Once the deal closed, the executive transitioned into an ongoing advisor role to ensure the acquisition would be a success.

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