Mexico is on the rise and is attempting to clean up its act in order to become more attractive to foreign investment.
Although Mexico is on the rise, it has unfortunately continued to decline in its attractiveness due to high levels of crime and violence caused by drug-related trafficking. However government and industry leaders have seen reasonable economic growth in recent years, due to rising benefits from a strong service sector.
Foreign direct investment into Mexico’s infrastructure remains high, and does not seem to be deterred by crime levels. This is primarily due to its close proximity to the USA. However, moving forward, there are several major issues that will play a significant role in how successfully Latin America develops into significant global logistics market for manufacturing and distribution.
First and foremost is their lagging productivity. Latin American’s seem to have this Laissez-faire attitude for work which is primarily responsible for the regions slow economic growth. (about 1.4% per year since 1991; far less than the Asian economies) Restrictive labor laws across the region and area-specific regulations throughout the region have limited the capacity to encourage more productive companies from expanding into the Latin American market. On top of that stringent job security laws and high taxation rates make it difficult for companies to hire people in the local workforces.
Lack of supply chain and cargo transportation expertise compared to developed countries around the world have left Latin America in a weak position. Organizations must invest more in leadership and training, especially at the managerial level. One of the challenges is that colleges and universities throughout Latin America are not yet offering degrees in Logistics Management. More often than not, it’s only a topic within other curricula, such as industrial engineering. Students considering entering the logistics field must learn everything from how to manage a distribution center to how develop winning customer service strategies. And unfortunately, this takes time.
The second area of weakness is the scarcity of qualified managers. This is where Latin America’s talent issue are most acute. High unemployment levels may seem to indicate that there are plenty of workers are available. However, those numbers don’t reveal the scarcity of qualified logistics talent.
The third challenge which is a vast issue for logistics operations in Latin America is the lack of the infrastructure to support the necessary information systems. This region is comprised of primarily emerging economies, and therefore what infrastructure systems exist, generally lacks 21st century sophistication or, in some cases, sheer availability. GV USA’s strategy is to invest in cloud-based systems and build the same common platform in Latin America that it operates in North America.