Top-rated chief executives from Mexico have one word to describe the opportunities of 2023 and beyond: nearshoring.
The phenomenon, which is the opposite of offshoring, describes the massive relocation of production by many U.S. companies to Mexico amid ongoing tensions between the U.S. and China. In March, Tesla announced plans to build a new factory in Mexico, joining BMW and Ford which already have operations south of the US border. But it’s not just cars: the first quarter of 2023, Mexico experienced a remarkable 48 percent year-on-year increase in foreign direct investment, according to Bloomberg. Mexican exports could potentially increase by a total market of $155 billion over a five-year period, according to Morgan Stanley, the equivalent of over 10 percent of Mexico’s GDP.
For some of the Mexican leaders among Institutional Investor’s Latin America Executive Team nearshoring is an opportunity to capture spending on infrastructure and sustainability flooding out of the U.S. “Our industry transition to a green and circular economy will open up new avenues of growth as we innovate products and services essential for a rapidly growing and more sustainable world,” says Fernando A Gonzalez, who will soon reach a decade as chief executive of Cemex, a Mexican building materials company best-known for manufacturing and distributing cement. He was the top-scoring chief executive in the cement and construction industry as voted for by sell- and buy-side professionals surveyed by II.
Participants in the survey also honored Lorenzo Dominique Berho Carranza of Mexican real estate company Corp. Inmobiliaria Vesta, which scored a major goal this summer when it debuted on the NYSE, a moment Carranza described as a “milestone.” Vesta’s team raised the most funds by a Mexican company in nearly 11 years, bringing the total raised from the debut to $446 million. But Carranza is not sitting back, instead pumping proceeds from the float straight into growing the company.
That growth, Carranza says, will acome from opportunities connected to nearshoring as U.S. companies eye real estate to move operations closer to home. Carranza says Corp. Inmobiliaria Vesta is focused on growing its portfolio of industrial real estate in response to demand from international companies. He believes the focus on manufacturing of IT hardware, batteries, electric vehicles, and other parts could lead to a second wave of nearshoring over the course of the next five years, creating demand for industrial space in the country. Corp. Inmobiliaria Vesta is working with government bodies and corporate partners to address obstacles to growth in Mexico’s industrial real estate sector, including historic underinvestment in basic infrastructure like electricity. “We believe that nearshoring could have a transformative impact on Mexico's economy,” Carranza says.
To determine the members of Institutional Investor’s 2023 Latin America Executive Team, we surveyed buy-side analysts, money managers and sell-side researchers at securities firms and financial institutions that cover the region, including those who cast and received votes in this year’s Latin America and All-Brazil Research Team surveys. Survey results reflect the opinions of 1105 investment professionals at 508 financial services firms.
We asked the participants to rate the chief executive officers, chief financial officers and investor relations professionals at the companies in their coverage universes. CEOs were rated on their credibility, leadership and communication. CFOs were rated on their ability in capital allocation, financial stewardship and communication. For the Investor Relations programs, companies were rated on the following attributes: IR team authority and credibility; business and market knowledge; earnings calls; responsiveness; virtual meetings/presentations; and timing, consistency and granularity of financial disclosure. All votes are weighted by rating (five being excellent; one being average) and aggregated to create the CEO, CFO and IR Program rankings. Corporates were rated on their corporate ESG strategy, ESG engagement and financially material ESG disclosure to create the ESG rankings. Additional, voters were asked to rate the companies’ analyst/investor event and company board of directors.
The overall rankings in each of the categories —CEO, CFO, IR Professional, IR Company, ESG, Analyst Day, Company Board —are based on combined buy- and sell-side votes. Separate rosters (buy side, sell side) are also available for each award classification.
Honored Companies are companies who achieved at least one published position. To earn the designation of Most Honored Company, a company must achieve a weighted score of 15 or more points across the seven categories in the combined, buy-side and sell-side rankings, wherein each first-place position is worth three points; second place, two; and third place, one.
Midcap and Small Cap rankings were also produced. Midcap is defined as companies between $2 billion and $10 billion in market capitalization. Small cap is defined as companies with less than $2 billion in market capitalization. Market cap numbers were taken at the end of polling in March. To achieve Most Honored Company in the midcap and small cap rankings, companies must receive a minimum score of 14 and 13 points, respectively, across the seven categories in the combined, buy-side and sell-side rankings.
Most Honored Companies were also calculated using all companies, regardless of market cap or sector, for the following countries: Argentina, Brazil, Chile, Colombia, Mexico, and Peru. Most Honored cutoffs were 15 points for the overall and midcap results. In the small cap results, the top company in each country was named Most Honored.
New this year are the Latin America (ex-Brazil) rankings based on the company’s headquarters. Most Honored cutoffs were 17 points for the overall ranking and 29 points for the midcap ranking. In the small cap results, the top company in each sector was named Most Honored.
To be eligible for inclusion on the 2023 Latin America Executive Team, a company must be headquartered or have operational or executive headquarters in the region. We keep confidential the identities of the survey respondents to ensure their continuing cooperation. Voters must meet eligibility requirements, and winners must achieve a minimum vote count. All ballots are subject to review by our Research Operations Group.