Toymaker Mattel to 'nearshore' key production to Mexico from Asia

The U.S. company behind Barbie, Hot Wheels and Mega Blocks announced that it is expanding production in Mexico in order to move its supply chain closer to home, reports Reuters.

In mid-March, Mattel said that it spent around one billion pesos ($50 million) to expand its Mexican plant in Monterrey, about 140 miles (227 kilometers) from the Texas border.

Covering 200,000 square meters (2.25 million square feet), the plant is now the company’s largest, overtaking Asian hubs in China, Vietnam and Malaysia. It employs close to 3,500 workers.

"Being able to have products close to your consumer and not having to transport it from Asia, that's going to be more profitable and more competitive when you take costs into account," Gabriel Galvan, Mattel's Latin America managing director, told Reuters.

The COVID-19 pandemic revealed how over-extended global supply chains could be, increasing interest in “nearshoring” across industries like textiles and automaking.

"It's a big opportunity (for Mattel)," Galvan said, due to the plant's proximity to the company's Dallas-Fort Worth distribution center, its second-largest in the United States. "We can be there in 24 hours, so for us it's really convenient."

Mexican officials have been promoting the new movement and celebrating its rewards for the country. Mexico’s finance minister recently said that demand for industry parks in northern Mexico was booming.

A Mattel spokeswoman said that the expansion began four years ago, calling it a “consolidation.” The toymaker closed two plants in Asia, one in Canada and one in Mexico ahead of the expansion.

Mattel plans to double its investment in the plant over the next five years, according to Reuters, citing media in Nuevo Leon, the state where the plant is located.