In today’s global market, companies are constantly looking for ways to stabilize their operations, improve efficiency, and stay competitive. One strategy gaining momentum is nearshore manufacturing – producing goods closer to the target market instead of relying on distant offshore locations. But why are so many companies making the shift?
What is Nearshore Manufacturing?
Unlike offshore production (e.g., U.S. companies manufacturing in China or India), nearshoring is the concept of relocating production closer to the company’s interests. For companies targeting the U.S. market, this often means Central America or the Caribbean. The idea is simple: achieve lower costs without the risks of long supply chains, delays, and communication barriers.
Why is Nearshoring on the Rise?
Recent global disruptions have highlighted the weaknesses of long supply chains. Events like the COVID-19 pandemic and the Suez Canal blockage exposed the risks of relying on faraway production hubs. Nearshoring solves these challenges by offering:
- Faster delivery & fewer supply chain risks
- streamline operations and responsiveness to market demands
- Cost-efficient manufacturing with reduced logistical expenses
- Easier compliance with U.S. regulations and quality
- Real-time communication & faster decision-making
Costa Rica: A Nearshoring Success Story
Some countries have strategically developed nearshore industries to serve major markets more efficiently. Costa Rica is a great example, having built a strong and rapidly growing medical device manufacturing sector that meets U.S. quality standards. In 2023, Costa Rica exported over $8.3 billion worth of products to the U.S., with medical devices making up $5 billion of that total.
The medical device sector alone has grown by more than 15% annually since 2014, reflecting the country’s increasing prominence in the global market. Its proximity to the U.S., stable political environment, and attractive tax incentives have made it a top destination for major U.S. manufacturers like Abbott, Medtronic, and Johnson & Johnson, all of which have established production facilities in it. Additionally, Costa Rica benefits from the CAFTA-DR free trade agreement, allowing duty-free exports to the U.S.
Is Nearshoring Right for Your Business?
For companies looking to expand, cut costs, or improve supply chain resilience, nearshoring is a game-changer. At CRIL Tech, we specialize in helping businesses transition to cost-effective, high-quality nearshore manufacturing. Let us guide you through the process and unlock the full potential of nearshoring. Learn more about our Costa Rica manufacturing solutions