In this episode, Jorge Gonzalez Henrichsen joins us to share his unique path from investment banking and an MBA at NYU Stern to acquiring and then running company at the forefront of the nearshoring movement. He dives deep into both the geopolitical and macroeconomic ramifications of nearshoring and the nitty gritty of what it takes to search for, buy, and then run a cross-border business.
Subscribe and follow the INSEAD Emerging Markets Podcast on Spotify, Apple, or Google.
In this episode, Jorge Gonzalez Henrichsen joins us to share his unique path from investment banking and an MBA at NYU Stern to acquiring and then running company at the forefront of the nearshoring movement. He dives deep into both the geopolitical and macroeconomic ramifications of nearshoring and the nitty gritty of what it takes to search for, buy, and then run a cross-border business.
Subscribe and follow the INSEAD Emerging Markets Podcast on Spotify, Apple, or Google.
00:00:00 NICK LALL
welcome to the INSEAD Emerging Markets Podcast. I'm your host, Nick Law, and I'm here today with Jorge Gonzalez-Henriksen. Jorge is co-CEO of the Nearshore Company. The Nearshore Company helps North American, European, and Asian manufacturing companies to successfully establish reliable manufacturing operations in Mexico by ensuring quality certifications, transparency, and continuous improvement. Jorge is a leading voice on nearshoring and globalization, and he's been featured in publications such as Forbes, the BBC, Sourcing Journal, Supply and Demand, Chain Executive, and Freight Waves. Jorge is also a professor of entrepreneurship at the Instituto Tecnológico Autónomo de México and managing partner of Acacia Capital Partners, where he focuses on acquiring and growing middle market companies. So really happy to have you on the podcast today. I'm really excited to learn more about nearshoring from you as it's very topical, of course. Before we get into what your company does, though, I'd love to hear a little bit more about your personal background. From what I know, you didn't start the Nearshore company. You actually came in later and was part of the acquisition. So I'd love to learn a little bit about that whole process. I mean, you got your MBA from Stern back in 2009, and then it was another 10 years or so before you came to the Nearshore company. So maybe you could just briefly tell me what got you interested in entrepreneurship, specifically entrepreneurship through acquisition, and then how you eventually landed on the Nearshore company as the company that you wanted to run.
00:01:33 JORGE GONZALEZ
sure, Nick. Well, first of all, thank you for having me here. I think it's a great opportunity to get other would-be entrepreneurs interested in the past, specifically ETA. We will talk about that. And on the Nearshore piece, I think it's incredible how this has taken off. Incredible for Mexico, for us, and as a company, and for myself as an entrepreneur. So I'll start way back saying that I studied international relations in college, and this is the first time in my career that I'm able to apply what I learned because when I just graduated from international race I didn't know what it was for all that I studied and all that I read I was like where am I gonna use all these ideas that I learned and that all made sense with the near door company I was born and raised in Mexico City. I went to college in Mexico City. And as I was saying, when I graduated, I said, I need to get a real job. And I don't know if it was the right call, but I went into investment
00:02:38 JORGE GONZALEZ
thing to do if you wanted to do something hardcore. And in my mind, I'll really learn how to work with the big boys here and I actually got what I asked for painfully because I don't know if I would do it again those long nights and weekends and all that stuff and I was there for four years in the investment banking and then I left to get my MBA at NYU Stern,
00:03:05 JORGE GONZALEZ
school. And naturally and unoriginal, I thought of going into private equity or hedge funds as my next step. With entrepreneurship, always in the back of my mind, really, but without a clear idea on what would I do as an entrepreneur. You know, I think this is very common. People are attractive to the potential upside financially of being an entrepreneur, of this perception that you can control your destiny and your time and your resources, but not really clear on the immediate path. What's that great idea? And so that was holding me back. I graduated in 2009 in the middle of the financial meltdown. So
00:03:52 NICK LALL
you can
00:03:52 JORGE GONZALEZ
imagine my plans to go into private equity and hedge funds disintegrated as it for more than half of my graduating class. But the silver lining here is that I went back to Mexico and I got a job at a big group that had a restaurant chain division. And I had studied with one of the members of the family that were their controlling shareholders in graduate school. We met at the MBA at Stern. And he actually told me, well, if you're looking for something more management oriented, but also with finance, we're looking to really turn this business around. It was a company that opened its doors in the 60s. And at that moment, it had about 150 full service restaurants publicly listed in Mexico. But they really wanted to modernize things. And for me, it was in my mind kind of like, well, this is sort of what I was thinking when I thought of private equity. And so I did that and I was there for five years as CFO.
00:04:54 JORGE GONZALEZ
management, real management. You know, investment banks got very little people, highly specialized and technical people like consulting. But this is a company now that had 7 000 employees right and and so i really got a taste of management and i said well you know i i like it i i like management more than financial services and after again five years there i figured well i'm still sort of young. I was my 33 or 34, something
00:05:29 JORGE GONZALEZ
I go out and I look for a smaller company than this one? I get some investors and I apply my newly minted managerial skills and I run it in exchange for some sweat equity, right? And now that I I whenever I say people that's a search fund, think, mean, this, say, well,
00:05:58 JORGE GONZALEZ
still remained pretty clubby, you know, with Harvard and Stanford calling the shot in the industry. And I had never heard of the search fund. So when I started to share with my personal network what I wanted to do, eventually someone told me, well, you want to do a search fund? What's that? Read the primer, the GSB primer. And that happens to 99% of the people that read the primer for the first time. They're like, this is what I want to do. I didn't know this existed. Now that I know, I want to do it.
00:06:34 JORGE GONZALEZ
And that's how I started to knock on doors of the, at the time, and many of them still exist, but the famous or the known investors in search funds, and also the investors in search funds that are already invested in Mexico. So I knew they wanted more Mexico on their portfolio. And so in less than five months, I remember I raised about $450,000 and I had my search fund. At that time, it was called Sabino Equity
00:07:07 JORGE GONZALEZ
own. No search
00:07:11 JORGE GONZALEZ
Everybody says this.
00:07:20 JORGE GONZALEZ
I have a unique
00:07:24 JORGE GONZALEZ
but also because with Sabino Equity
00:07:31 JORGE GONZALEZ
I didn't buy a company. I searched for three years. I still remember the stats. I placed 22 LOIs. I reached out to over 500 companies. I had four due diligence processes and they all fell through. And so at the end, by this time, I was already a father of two kids. And I said, you know what? My wife had been
00:07:53 JORGE GONZALEZ
I said, you know what? I don't know if I want to keep going or I need to take some air. And I decided that I wasn't going to raise more money because some investors wanted it. Like're like, you know what? It happens. Continue. And I you know what? said, I'm not thinking clearly anymore. I need some time. And I took some time off, a couple of weeks, I still remember. And when I came back, I said, I tried and three years is enough. And
00:08:22 JORGE GONZALEZ
work at one of his companies, one of his business units that was starting off. And then he had told you me, know what? I don't want my management team to get distracted by this. This is what I think you like. I liked how you ran Sabino. And I took this job. And again, it had a manufacturing angle. It was building materials. And I was in charge for the first time of a manufacturing facility, plus all the other stuff from production to sales and marketing. And as luck would have it.
00:08:53 NICK LALL
And this was also in Mexico.
00:08:54 JORGE GONZALEZ
This was also in Mexico. And I'm building up to reach the New York company. Don't worry, I'll soon get there. But I think it's important to mention. One of my investors who had seen all the process, he was a junior partner of a private equity fund in Mexico for more than 10 years. He calls me one day and he says, well, you know, I want to start a search fund. I say, well, this is strange though, like your private equity. And like, he got this thesis that, I can talk about that later on the emerging markets part. You know, private equity in Mexico has been extremely challenging, to say the least, and actually unattractive at some point, that he decides to leave the fund and start this project. And he does start it with another partner, also from the fund. But I helped them a lot. And in this process of introducing them to the community of search funds, helping them to vet deals, kind of act as a sounding board, at some point they find this amazing company in northern Mexico on the border because their thesis was border businesses that sell in U.S. dollars but have Mexico costs. And remember, at that time, we had a brand new president in 2018, Lopez Obrador. There was a lot of talk in the country of where is the country going? Where is it? You know, so this was a kind of like defensive play. But one of the two partners didn't want to move to that side of the border with Texas. Right. So they started to have this constant argument and they break up. And one of them kind of keeps the deal and tells me, you know what? I still want to do it, but I want to partner. Do you want to join my fund, which is Acacia Capital Partners? And long story short, I said yes. And that's how I joined my second search fund. But this time already with a deal that was already on the table. So actually it was more about getting the deal closed and running the company. And that's how I joined Acacia. This company used to be International Assemblies, now the Nearshore Company. Yeah. And that, so that's the path from college in Mexico City to the Nearshore Company in Bronzeville, Texas. Sure.
00:11:03 NICK LALL
And how soon after acquisition did you change the name? And what was the thinking behind that rebranding of the company?
00:11:11 JORGE GONZALEZ
name International Assembly had its own problems in my mind. One of them being because it was
00:11:22 JORGE GONZALEZ
talked about the company as IAI. The company was founded in 1992. So this is 27 years of people saying IAI. But the thing is that it was now an LLC. So when people say, what's IAI? Well, International Assembly LLC. So that was even kind of like a mismatch now. The second part, and this was brought to our attention by a marketing expert, is the word international is really nice when you're looking for an exotic vacation. But it's not something that you want to hear when you're going to send your family business to another country. And the third part was the logo. The logo was IAI in Greek letters, like a fraternity, and with a baby blue color that honestly was pretty vast. And so I would say we bought the company in September of 2019. We still didn't do anything about the name or the logo for about a year. And then starting 2020, so this is a pandemic, one of the things as many companies did was we became more introspective. This was a time to think of our strategy more, of what can we improve. Trade shows were closed. You couldn't visit clients. So it was, again, it was at that
00:12:50 JORGE GONZALEZ
you look back, but, and we hired this marketing firm and we said, well, we need to change the name.
00:13:00 JORGE GONZALEZ
a lot of workshops and interviews with our clients, the name Nearshore hit the
00:13:11 JORGE GONZALEZ
When we first saw
00:13:20 JORGE GONZALEZ
So we really had to kind of dig the Internet and our industry to get comfortable with it. And we did. We took it to the board. They had
00:13:28 JORGE GONZALEZ
well, we're going to trust you guys as the operating partners. And we said, we're going to trust the marketing experts. And we went forward with it. And we were very, very lucky because we never imagined the term nearshore to pick up as strong as it did for
00:13:50 JORGE GONZALEZ
to the point that a lot of times we go to a trade show nowadays and people think, oh, these guys just opened the company three months ago because of the nearshoring buzz. And we have to explain that we're an old company with a new name. And so, yeah, that's the story of the name. And now it really saves a lot of time in explaining
00:14:12 NICK LALL
mean, it's pretty much the perfect name for a company doing what you do these days. So pretty prescient. One question going back to the acquisition from what I know about search funds, it seems that investors typically prefer more asset-light businesses that don't require a lot of technical knowledge just because it minimizes risk, especially if you're bringing in a more inexperienced CEO. I was wondering if it was due to your background in manufacturing that it became a more attractive target or were there already attributes of the business that made it okay for your partner and the investors prior to bringing you into the company? Carlos
00:14:16 JORGE GONZALEZ
days. So pretty
00:14:48 JORGE GONZALEZ
You're right, Nick. Search funds typically have a scorecard of what they're looking for based on experience of successful
00:14:59 JORGE GONZALEZ
include fixed asset companies like a manufacturing firm. And in our case, it's important to mention that 80% of the company is actually a service company and actually manufacturing as many people imagine it with bricks and mortars and fixed assets is really about 20% of our business. And that happens because in 80% of our company, we are signing a service agreement, more like a BPO service to a manufacturing company, let's say in the US. And they send their equipment to a facility in Mexico, a facility that we lease for them with employees that we hire for them with raw material that we import for them. But they are the ones that have the machinery on their books because they are the ones that manufacture. And we lease the building so we don't have real estate either. So we are an asset-light model at our core. The other 20% that we do manufacture, we have equipment, we do purchase inventory. It is really something that a lot of our investors at the beginning didn't like. They were like, what are you going to do with that 20 or 15% of the business? Are you going to sell it or are you going to keep it? And to your point about our profiles, it did help that we were both older and more mature and had managed asset-heavy businesses. That helped, at least in saying, you know what, let's go through with this and we're going to see what we do as we get to know the business better. And you know what, we've kept it because our business is difficult. It's not very easy to differentiate when you're just talking about the service component. I mean, you can do excellent service, but in order to get a higher differentiation, we have capitalized on our manufacturing expertise that other service providers don't have. expertise that other service providers don't have. So we have a team of engineers. We have a team of quality that are doing manufacturing for us. And so when we go out to the market and pitch what we do, it has become an asset to say, well, we are a manufacturing company like you. And if you have any issues, we have engineers, we have people that repair equipment we have certifications in a lot of manufacturing isos iatf for automotive etc and so we have kept that division and it hasn't grown as strong as the service one but it's more of a maintenance type of growth that we have there
00:17:43 NICK LALL
so Sure. Yeah. Given the circumstances, I'm sure there are a lot of these sort of concierge services popping up, but with your technical know-how and being able to point to actually doing work in manufacturing, I'm sure that's a huge value add and differentiator. I'm curious how things have changed. I mean, there's been a lot of talk of nearshoring since US-China trade war. And then ever since then, there's just been more and more talk of that. So I was curious, who are your clients and how do they find you? And has that changed a lot since you took over back in 2019?
00:18:14 JORGE GONZALEZ
Our investment thesis has not changed. So even when we were raising money to close the deal, our pitch was centered around there should be more manufacturing coming from Asia to Mexico because China is not what it used to be.
00:18:38 JORGE GONZALEZ
U.S. companies that when they're thinking of where do I go for the first time, they're probably going to think of Mexico more than the past 20 years when it
00:18:52 JORGE GONZALEZ
was also we were looking at trends. We were looking at reports by consulting firms. I remember a BCG report talking about this with a lot of data, why Mexico and the U.S. together would be the champions going forward in manufacturing. You already start to hear Trump with the discourse that China had not been playing by the rules. In fact, this is something that even since Clinton, he was already saying that. This is something that even since he was already Clinton, saying right? that, And since I it was it's one of those things then, that everybody mean, says, everybody, someone do something about it. like, well,
00:19:37 JORGE GONZALEZ
you Like, everybody know, knew the Chinese
00:19:43 JORGE GONZALEZ
heavily impacting the FX rate to make their exports more attractive. Like
00:19:51 JORGE GONZALEZ
What we never because if we we wouldn't be where we are. imagined, had, We would be having a coffee with Warren Buffett.
00:20:25 JORGE GONZALEZ
I mean, the pandemic is what really made our investment thesis. It put us on a rocket. And that's something that we never thought. But the thesis is the same. It's just the speed and that happened at the same time. It's one of those very academic correlation versus causation discussions that I probably don't want to get into, but when you look at it from what I call a cocktail perspective, it is incredible. I mean,
00:20:42 JORGE GONZALEZ
and China fighting. And I'm bundling there the Trump tariffs as part of that fight. And as a result of that fight, they're starting to talk about decoupling. You know, let's decouple these countries that are so connected. But then you cut the pandemic at the same time in which everybody said like, oh my God, supply chains are not as rock solid as I thought they were because I just put buy and I get my Amazon product today. Nobody really thinks what's behind that. And now people were starting to think because you go to the supermarket and you don't have things there. So this fear of these long supply chains and the just-in-time model. of these
00:21:26 JORGE GONZALEZ
But then
00:21:35 JORGE GONZALEZ
and suddenly the world seems not as friendly and as flat as that. I forgot the name of the author. The world is flat. And suddenly this regionalization of the world starts to come back with a vengeance after so many years of only global and global and global and global. And then you had that Suez Canal boat that got stuck, I remember, at that time.
00:22:06 JORGE GONZALEZ
whole thing even exploded, is the labor shortages in the U.S. That is really a demographic issue that is not going to get fixed from one day to the next, because the only way to get hundreds of thousands of 25-year-olds is to wait 25 years. So there's no way. We haven't figured out how to clone people yet. And so you had all this at the same time.
00:22:28 JORGE GONZALEZ
happened is that
00:22:36 JORGE GONZALEZ
to the U.S., that had always been there, but nobody was paying attention. And now all of a sudden they're like, hey, why don't we manufacture in Mexico then? Because that way we're going to get rid of a lot of this risk. And by the way, Mexico has a young population and most of it pretty skilled, at least at the labor-intensive manufacturing jobs. And they're willing to work. And by the way, it's cheaper than China now, you know. And so Mexico, since NAFTA, had been doing its homework. We have signed something around 14 free trade agreements. We already had a very strong automotive industry and aerospace and medical devices. a very strong automotive industry and aerospace and medical devices. Mexico had moved from an oil-dependent economy to a manufacturing one in this since the time, early 90s. And so suddenly when the U.S. looks at Mexico, it's like, hey, these guys are not that bad. Like we were so focused on China. And so, yeah, addressing your specific question, we did start to hear the phone ring a lot. And it also, I mean, we also got better marketing and new website sales. And so we're also doing all this stuff. So all of a sudden we were getting a lot of calls from Asia that at the beginning, they weren't that many. From Europe, because again, with everybody with different mix of drivers, but all of them wanting to reduce
00:24:10 JORGE GONZALEZ
to the US. Right. And so, yeah, it has been an incredible opportunity. It's a huge wave that we're riding right now. And I think we're going to ride it for the next 15, 20 years. I don't see it being very short lived. Speaker
00:24:25 NICK LALL
short-lived. Yeah. I think that all the factors you mentioned are definitely right there. I mean, you have the young population more highly skilled than China. Costs at this point are probably lower than China and also the less political risk. Just out of curiosity, I was wondering if you could talk about some of the industries your clients come from. Has that shifted at all since this rise in nearshoring and do you have any anecdotes of clients talking to you about they used to outsource to China but now they outsource in Mexico rather and how if there's anything like that feel free to share
00:24:57 JORGE GONZALEZ
industries, I would say they're the same. You have automotive, which is number one on the list. There's a history of that. The USMCA, as part
00:25:10 JORGE GONZALEZ
some criteria embedded there, some regulation that in 2023, I believe, or 2022, the threshold of regional content had to be raised
00:25:25 JORGE GONZALEZ
So that even created another big pool. You want to sell to you want to sell to GM, Ford, well, you have to be in North America to make even matters more intense on nearshoring. And so automotive is a big, big part of this continued growth in nearshoring. And with the EV trend and the U.S. subsidies on EV with the CHIPS Act and the Inflation Reduction Act, and when I say not just the automotive subsidies, but all the clean energy that is promoted there and subsidized there, there are a lot of companies that seeking to access those subsidies want to become North American. And so, again, you have automotive. And again, I'm putting the EV there. You have all these energy companies that in Matamoros, for example, which is close to where we have the majority of our operation. You have companies that do the wind farms, the equipment, that it's very convenient to do it close to the border. We have clients that are in the electrical industry with transformers. You have medical devices has really grown a lot because a lot of the things that are sensitive and they don't want them to be done so far away as happened with the pandemic. People got scared of all these medical equipment being done in Asia and in China specifically. So we've seen a lot of growth there, mainly in Tijuana region and Chihuahua, which are the two clusters. Aerospace continues to grow in the center of Mexico. And we have in our clients, we have clients that are exposed to automotive and they have seen a lot of growth, the 2EVs. We have clients that are in the appliance industry and appliances has also taken off. Again, it's not a new industry, but it has taken off.
00:27:22 JORGE GONZALEZ
surprising findings that we had, now it's not making the headlines because everybody knows about it, but when we started to notice that a lot of Chinese companies were coming to Mexico so that they could circumvent the tariff and they could continue to sell to U.S. clients as a Mexico company now. We started to see a lot of Chinese OEMs come to Mexico. And when an OEM comes, it starts to attract all of these smaller
00:28:00 JORGE GONZALEZ
need other suppliers. And so it creates these very positive externalities. And we have seen a lot of that. For example, we have a client that does pole transformers. And they've been with us since 2019. And suddenly we got this call from one of their main suppliers. They say, hey, these guys gave me your number. They want us to be in Mexico. Can you help us? Because we've never been to Mexico. Like we need your help. And so we helped them. We set them up right across the street from their OEM. And now they have opened a distribution center in Monterrey. And now they're going to open their second manufacturing facility. Because once they were there, they started to say, well, why don't we sell to other clients here in Mexico, other maquiladoras? And so, wow, it's all these ripple effects that when a big player makes the move, it attracts a lot of other companies. And we've seen that in our company.
00:29:04 NICK LALL
companies. And we've seen that in our Sure. company. it's really interesting how geopolitical Yeah, changes can drive these shifts. I was talking to a Chinese friend recently who told me they're all moving to Monterrey now because they have to get around the tariffs and they all are moving to Mexico now. So it's pretty interesting. I would like to circle back to something you said earlier in the conversation about their challenges of private equity in Mexico. And I guess also in your own search, it took you three years and had some trouble finding a business. So I was curious if those are the same challenges you faced when you were searching and then also just what are the challenges of PE in Mexico in general?
00:29:40 JORGE GONZALEZ
me start with the search part. So I remember at one point, one of my
00:29:48 JORGE GONZALEZ
happening in Mexico? Because I have 10 searchers in Mexico. And a lot of them are sending you the same deal.
00:30:09 JORGE GONZALEZ
could you be sending me the same deal? And I'm sharing this story because, yes, Mexico is the 14th, if I'm not mistaken, economy in the world by size. Yes, we're 150 or 180 million.
00:30:27 JORGE GONZALEZ
80 But million. the
00:30:36 JORGE GONZALEZ
and in Querétaro. And so the companies that are search fund candidates are all really concentrated in these cities. And the searchers also all want to find companies in these cities, right? So it's not like in the U.S. I mean, you can be in Chicago, New York, in Miami, in Houston, like really any city has the volume and the depth of the markets are incredible. Right. And in Mexico, you don't have the same dynamic. And a lot of businesses in Mexico, unfortunately, when you start to look at them, there's a lot of skeletons
00:31:10 JORGE GONZALEZ
tax code is very complicated. So a lot of companies to survive go around it. But by going around it, they do some shady stuff, which is not search fund material. You know, you're like, I'm not going to I'm not going to buy this. This is going to come and bite me. A lot of these companies are like a one-man show, which is the owner, when the owner leaves, where's the team, where's the company. And so at the end of the day, my experience in Mexico was that it was a challenge to find quality companies to acquire. And also the most quality ones were coming through investment bankers. And one of the reasons was that these bankers would talk to the owners and tell them like, if you want to sell your company, you got to get the house in order. So they would work probably like 12 months or more to get the information, to get everything in order, to get rid of liabilities. And so those were the companies that probably were worth looking at. And that's why search funders were hitting on the same ones because they were really the ones that make sense. But then I remember talking to my U.S. investors, and they would say, well, no, we don't want to go through bankers. I would say, well, but the thing is in Mexico, it has a purpose.
00:32:29 JORGE GONZALEZ
that.
00:32:33 JORGE GONZALEZ
And tying it to private equity, the private equity industry has seen horrible return in Mexico. And I think one of the biggest issues is that there is not a sufficiently big and deep capital market to sell the company. Few companies can go public. And so the exit is very small for these funds that grow these companies. And so some of these funds have bought companies, they've grown them, and then they can't sell them. They can't realize the gain. And so they're selling them between funds, one fund to another fund. And so when you compare to how it works in the U.S., it's day and night, you know. And the capital markets in Mexico have not grown because we have legal constraints. And the legal constraints are also, they're tied to economic constraints. So it's a very complicated picture that has not allowed the economy to thrive. And tying it to what I see in nearshoring, unfortunately, this nearshoring window
00:33:37 JORGE GONZALEZ
federal government that is not business friendly.
00:33:46 JORGE GONZALEZ
federal government that is not business friendly right so the tax regime is complicated there's no promotion of business of mexico outside of the country and so managing a company in mexico is very very complicated no it's uh unfortunately it is difficult and if you add the fx risk at the very top from the point of view of an international investor, it's like, oh, my God. Well, honestly, I would rather invest in the U.S. because I don't have the FX risk. I don't have the complexity to run the business with an unfriendly government that is not really pro-business. And the market is not that deep. The middle class had been growing steadily in the past, but if you look at the numbers with this government, the middle class growth is really basically zero or negative. And so there's no purchasing power growth. And so unfortunately, it's one of those things that academics have tried to understand and have debates all
00:34:44 JORGE GONZALEZ
market in Mexico, but we have grown at levels of an industrialized economy for a very long
00:34:56 JORGE GONZALEZ
be discussed maybe because we're so tied to the US economy, maybe structural of our, but the reality is when you look at returns for private equity, they have been very, very bad.
00:35:09 NICK LALL
to see how it all ties together, government and legal and all of that leads to situations like this, which I guess you have to look at at any emerging market you're considering. I guess just a couple more questions. One would be if there are companies right now considering nearshoring their manufacturing, what advice would you have for them? Or what message would you want to send to them?
00:35:29 JORGE GONZALEZ
about nearshoring, it's important to mention that we're not talking to the Procter & Gamble of the world, right? Or 3M, or these big, huge conglomerates. I mean, these guys, I mean, many of them have 10, 15 plants in Mexico since the 80s. You know, it's like, this is not what we're talking And by the about. those for way, many guys, of them them, have 15 plants in Mexico 10, since the You it's 80s. like this know, is not what we're talking about. And by the way, those guys, for them, nearshoring has been, and I've heard it from many sources, they keep bringing assembly lines from Asia to Mexico slowly under the radar. And that's how they've been nearshoring. But that's another game. When we talk about nearshoring, it's these companies when we talk about nearshoring it's these companies that sell up to a billion dollars per year a lot of them are family owned family-run or private equity backed and there's a lot of them in the u.s and these companies they many times have never manufactured in Mexico, right? And so my first advice is don't go at it by yourself. Mexico has a lot of virtues, like cultural affinity, especially on the north, on the border. It's very Americanized in many ways, same time zone, all that. But it remains a complex place to do business. So having a river guide, like the nearest company, at least for the first five years, because that's what we signed for companies for five years, is the money better spent because we have heard stories and we have seen companies that come like, you know what? We underestimated this. And we went out there and thought like we were in Texas. And oh my God, we're not getting our tax return funds back or their closing is the labor union is not letting us run the company. And all these nuances that obviously in five years, we've seen it many
00:37:23 JORGE GONZALEZ
I mean, and they can then, as we say, graduate and get their own maquila permit and New York store on their own. But at the beginning, as with anything that you've never done, it's very, very useful to have a river guide that has your back,
00:37:40 NICK LALL
I think that's definitely important. If someone's trying to move such an important part of their business operations to a totally different country. It would make sense to have
00:37:55 JORGE GONZALEZ
who they can trust and can kind of smooth the process out for them. Was there anything else that I'm going to quote in an event that's not mine, but this person was saying the near-shoring opportunity is so strong that even if Mexico does a very poor job, it's going to be great. And yes, it could be
00:38:27 JORGE GONZALEZ
if, and if, but really the downside protection to use a financial term is still pretty high. No. So it's a unique opportunity that I do encourage search funders to look at models that are related to this thesis because maybe I drank the Kool-Aid too much. I think that this is a structural trend and we have seen it with our own eyes and in our own balance sheet and financial statements and it's happening because I know there's a lot of that on the street like is nearshoring just a hype buzz or is it happening? We've seen it happening. We hear it all the time. And it's going to be here for a while. So I do encourage some searches to happen on both sides of the border where most of this activity is going on.
00:39:18 NICK LALL
comfortable sharing it, how much has your business grown in the past five years?
00:39:24 JORGE GONZALEZ
I can share sort of a very high level statistic. We've doubled the size of the company. And we've doubled the size of the company, not only in revenues, but also in number of employees. We have close to 2,000 employees now. When we started, we had seven facilities. Now we have 15 and clients and revenue. So yeah, in four years, we've doubled the size of the company.
00:39:50 NICK LALL
yeah, super fascinating conversation. Thanks so much for joining Jorge. I think a lot of people may be aware of nearshoring, but after they hear this, they're going to get even more excited. So thanks so much for joining and wish you the best of luck with your company. Hope it continues to grow 10X or even more. Thank
00:40:06 JORGE GONZALEZ
Thank you so much, Nick. And I do hope that that 10X that you mentioned does become a reality.
00:40:12 NICK LALL
Sure.
00:40:13 JORGE GONZALEZ
Sounds good.