2025’s Top HR Challenges in Manufacturing: Reshoring and Compliance

Global Mobility & HR challenges in manufacturing are growing fast, as Trump’s reshoring agenda brews up a supply chain storm. 

Eliot Anthony | 11 February 2025

Our story begins at the closure of the Lordstown Chevy Cruze plant. 

This was in 2019. General Motors (GM) abruptly ceased production in Lordstown, Ohio, laying off 1500 people. It was a tiny town, described by one journalist as “a village with a gas station”—everyone worked there. GM was nearshoring to Mexico. And people were angry. 

This closure was just one in a long line of plant closures across the American Rust Belt, with companies making locals unemployed so that they could nearshore their production lines to cheaper destinations like China or Mexico. The anger at this was the same anger that led to the election of Donald J Trump, who promised to bring blue-collar manufacturing jobs back to US soil. 

Trump criticised the closure at the time. After all, GM had been a beneficiary of investment from Ohio’s state government since 2008, with some $60 million in funding allocated to the factory during the Financial Crisis. But it all came with a price: jobs must be created, said the authorities, and workers retained. 

Deals like this put companies in a bind. When GM closed shop and relocated south of the border, Ohio’s governor demanded back every dime and a judge ordered the car manufacturer to pay $28 million. 

For manufacturing companies, this is as much an HR and People Ops story as an import-export one.

The Risks of Nearshoring Manufacturing

More and more US companies are nearshoring to Mexico, a good low-cost alternative to China, which, in the growing heat of a US-Sino trade war, American manufacturers are anxiously trying to decouple from. 

It’s easy to see why it’s a popular choice. It boasts an enormous labour pool. Cheap workers. And (largely) tariff-free trade under the USMCA. Being just across the border, localised supply chains make it easier for companies to fulfil environmental obligations while catering to consumers accustomed to the speed and seamlessness of Amazon deliveries. 

The interdependence between Mexican manufacturing and the US market cannot be overstated. Everything from auto parts and computer panels to patriotic t-shirts crosses the border multiple times before they’re finally sold in the U.S. 

Workforce considerations are an even bigger part of the story as a liberal customs regime. US companies have been manufacturing in Mexico since 1965, when their southern neighbours launched the Maquila Program. This initiative set up a long string of duty and tariff-free plants or maquiladoras on the Mexican side of the border, owned by U.S. firms taking advantage of lower labur costs. 

But all of this, now, lies in the shadow of a second Trump presidency. US companies will be wary of stoking the ire of the self-proclaimed “greatest job president in history”, whose voter base lies in the forgotten deindustrialised towns and cities of the Rust Belt. 

The Tariff Threat

Companies tasted this sour Trumpian medicine only days ago when the president threatened to impose tariffs on Mexican goods. US companies comprise 40% of foreign investment in the country and many US companies have manufacturing capabilities there. Naturally, this sent a shudder through the USMCA. Tariffs would raise prices and lead to job losses across the board. 

Trump withdrew the threat at the last minute, however, as 10,000 troops, sent by the Mexican president, arrived at the border to stop the illegal crossings. Perhaps he didn’t want to impose tariffs on Mexico; he wanted Mexico to do his bidding. But that doesn’t mean companies shouldn’t be nervous. 

The truth is that Trump wants U.S. companies to make their products in the US from end to end. Not near the US, not on the border of the US; in the US. His thoughts on nearshoring are well known, as are those of his Vice President, JD Vance, who made the very un-GOP-like decision to stand with striking workers on picket lines. 

Trump doesn’t even care if they’re US companies: he wants all companies there, whoever they are. He offered big German and Chinese car manufacturers loose regulations and rock-bottom taxes if they relocated to the U.S.A. He wants manufacturing back on US soil—at any cost. And that’s where things get difficult for HR and Global Mobility professionals in manufacturing. 

Why Anti-Cartel Initiatives Spell HR Risks for Manufacturers 

Trump’s decision to legally designate drug cartels as Specially Designated Global Terrorists (SDGTs) has some tricky second-order effects for your people strategy. 

Let me explain. Mexico is plagued by powerful organised crime gangs, from which U.S. companies are not immune. Plenty of foreign companies with manufacturing hubs in Mexico have reported attempts at extortion, theft, and threats of violence. 

There’s been a rapid rise in gang raids on railway freight lines, particularly in and around the big, manufacturing border cities. Even U.S. workers have been charged with colluding with gangsters. 

If Trump gets his way—and cartels are labelled SDGTs—any company found to pay protection money to powerful and violent gangs will be considered to be providing ‘material support’ to global terrorists. One Mexican business leader called extortion payments “a national sport”. That’s why manufacturing companies must conduct rigorous due diligence on the conduct of their staff in affected countries. 

But it won’t be easy. There is no blacklist of cartels to screen against, and many cartels masquerade as legitimate businesses, selling everything from tortillas to fuel. In short, you may not know who you’re dealing with. This should be a wake-up call. Most companies don’t have a clear map of their end-to-end supply chains. But US companies operating in Mexico will have to smell the coffee soon before it’s too late. 

Are Maquiladoras Uninsurable?

The repercussions could be massive. Insurance companies may stop insuring businesses operating in Mexico altogether. The potential for legal and reputational damage is huge. By inadvertently providing material support to cartels—either through mistaking them for legitimate businesses or paying protection money—companies could be sued by cartel victims under the Anti-Terrorism Act. Companies must significantly scale up their compliance and oversight operations. 

Public authorities aren’t immune either. Mexico is ranked 126/180 of the world’s most corrupt countries, and officials are notoriously amenable to bribes in exchange for licenses, approvals and permits. It’s statistically improbable your employees won’t face this at some point. Without strong compliance programs—particularly those aimed at anti-bribery policies—companies may fall foul of the US’s Foreign Corrupt Practices Act (FCPA). 

The Compliance & HR Challenges of Reshoring Manufacturing

Anxious not to risk presidential ire, some US companies are already reconsidering their options. But Mexico isn’t an easy country to leave. Notifying the Secretaría del Trabajo of proposed mass layoffs can trigger compliance audits. 

You’ll have other obligations too. Mexican workers are entitled to three months’ salary plus 20 days’ pay per year of service and all accrued benefits, like vacations. Workers can even sue for higher severance. Everything must be handled with the utmost care. 

Of course, most US companies are reshoring production from China. But if Trump gets his way, more will follow suit from Mexico in the coming years. 

The same is true for UK companies: some 58% are reshoring from places like Eastern Europe, aiming to de-risk their supply chains from EU customs delays and the rapidly changing regulatory environment. 

And reshoring works. In one survey, 90% of UK manufacturers said they had successfully relocated to British soil, citing lower costs, increased security and enhanced value. But how? Because reshoring goes hand-in-hand with the automation of production lines. 

Reshoring and Automation

US workers are sometimes 50% more expensive than their Mexican counterparts. Unsurprisingly, companies like Apple and Dell invested heavily in advanced manufacturing capabilities as soon as they took production back to the USA. It’s the only way to make domestic production remotely profitable. 

Take Adidas. They reshored to Arizona, building a ‘speed factory’ employing only 160 workers compared to the usual 1,000 in a typical Asian plant. The workers themselves are of different stock too. They’re not manual labourers; they’re engineers. 

Foxconn discovered this too when they reshored their iPhone production to the US in 2017. Trump was excited: this was proof that he was returning jobs to America. The state even gave them $4 billion in taxpayer subsidies to build a factory in Wisconsin on the basis that they would create at least 2,000 jobs. Within a year, however, only 520 jobs had been created, most of them in R&D. 

Why am I saying this? There is a real risk of companies making promises they can ill afford in the name of reshoring. 

Manufacturing has changed across the West. Plants operate more at lights-out than ever before. But the new US administration—with its large voter base in the blue-collar Rust Belt—doesn’t see the upside. JD Vance lambasted advanced technology makers like Tesla as employing “a fraction of the workers at a fraction of the cost”. 

Why Reshoring Still Requires Immigration and Relocation

The US doesn’t have the talent pool to operate advanced manufacturing capabilities. Foxconn’s factories in Indiana and Texas recruited H-1B visa holders not because they wanted to deprive Americans of their livelihoods but because Americans didn’t know how to work the machines. 

The US and UK have chronic shortages of STEM-skills graduates and engineers. To hire at scale, you’ll have to look beyond national borders. 

This is one of the most difficult HR challenges in manufacturing. A US semiconductor company was forced to temporarily relocate their Taiwanese senior engineers for equipment setup to Arizona. Considering the staggeringly long H-1B visa wait times, a transition will not be smooth. 

Finding and retaining talent is the biggest bottleneck Western manufacturing companies face when reshoring. In the UK, 36% of vacancies are unfilled because domestic workers lack the necessary qualifications. The demand for skilled engineers—like semiconductor workers—is at an all-time high. But the domestic supply of STEM graduates is low, and draconian immigration rules make procurement a nightmare for HR and Global Mobility professionals. 

The H-1B visa cap hasn’t changed since it was introduced thirty years ago. But the needs of the economy are markedly different to what they were. 

The UK is doing something similar. The government is making extraordinary demands for economic growth fuelled by AI-driven advanced manufacturing, while still making hiring skilled foreign workers prohibitively expensive and time-consuming. 

But there’s hope. The UK government has suggested an ‘action plan’ that would make it easier for UK employers to bring in overseas AI talent. The H-1B visa scheme has Elon Musk, DOGE-in-chief and Trump’s close advisor, as its great cheerleader. If Western economies want reshoring to work, their governments surely see it can’t be done without making it easier to hire talented foreign workers. 

The Bottom Line for Manufacturers’ Global HR Strategy

2025 is a risky year for manufacturing, with companies caught between the devil and the deep blue sea. Decoupling from China is obviously a must in the shadow of a US-Sino trade war, but the question is, where do you go—and how do you bring it about? 

Nearshoring to Mexico may bring low labour costs but it cannot be done without robust compliance systems in place. Reshoring, whether to the UK, US or any other high-income country. must go hand-in-hand with automation and a judicious use of the visa system to bring in foreign engineering talent. 

If you need a partner to walk this tightrope, Centuro Global’s end-to-end HR services are tailor-made for companies with international workforces. Our blend of human expertise and cutting-edge software will help you meet complex compliance obligations in any jurisdiction without bloating your costs. 

Find out more about how our AI-powered HR and Global Mobility services help manufacturers balance regulatory and efficiency pressures to match these challenges.