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Supply Chain

Higher Mexican wages complicate push for non-China supply chains

GM, Panasonic among companies seeing big increases in labor costs

Activists hold signs outside a General Motors factory in Silao in February 2022. Its union secured the first double-digit wage hike in years this year.   © Reuters

MEXICO CITY -- Three years after a revamped North American trade pact took effect, demands by labor unions and stricter standards for tariff relief are squeezing manufacturers from Japan and elsewhere that have set up shop in Mexico.

The trend comes as supply chain risks caused by U.S.-China tensions accelerate a push for nearshoring, or a moving production closer to target markets. The recent headwinds could force companies that sought to take advantage of cheap Mexican labor to produce goods for the neighboring U.S. market to reassess their strategy.

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