Contested Countries and Uncontested Suppliers: Rethinking Productivity

By: Luis Manuel Hernández G.

We see a standardized pattern across nations: everyone wants greater cash inflows, everyone wants more power. But instead of seeking balanced growth, most aim to dominate and impose tariffs as their strongest selling point. This shift is pulling us away from globalization and into a new era of prioritization, where reciprocity is expected yet dependence on others is rejected. And this is dangerous.

The source of risk lies in protectionism: trying to secure present advantages without knowing what the future will bring. In Baja California, we must ask ourselves: are we ready to rethink our alliances? For us, that means protecting the assets we already have, fostering talent, and reframing our know-how.

The Hidden Risks of Protectionism and Productivity

Why is productivity so often left unmeasured? Some avoid it because they dislike the results, others out of fear, and many because productivity does not capture the “effort–emotion” ratio we often use to justify time spent. Yet the productivity index remains a metric that can be used against us or in our favor.

In 2024, I published that Tijuana’s CAGR between 2010 and 2022 was 12.5%. That number matters. It demonstrates real productivity and gives us leverage when negotiating with investors. It shows them they are joining a proven wave of growth that has consistently outperformed the standard CAGR.

A few weeks ago, I attended a meeting where we discussed “uncontested suppliers in key zones.” This applies to our state as well: many suppliers have not been challenged, yet they have ridden the wave, creating jobs, maintaining trade flows, and sustaining that 12.5% CAGR. Still, gaps remain: several suppliers have stalled in effectiveness. Many sit on boards of directors, but instead of providing insights, most simply consume them. The consensus in that meeting with participants from Vietnam, India, Türkiye, Canada, South America, and the United States, was a shared concern: “Do I have the right supplier to expand in this market?”

Suppliers, Tariffs, and the Future of Global Trust

Today, tariffs are applied to goods, not services, for now. But this makes it critical to track our service suppliers. As tariffs increase, we will need stronger partners to protect value in our supply chains. Tariffs have forced a ruthless dissection of who truly adds value.

This is why we must remind ourselves: investors trust the business, not the market. Baja California offers a wide diversity of suppliers and businesses with proven experience in product introduction and effective market penetration. Market penetration is simply about increasing output from existing operations, whether through marketing campaigns, adjusted pricing, or bundling, to boost sales. Local companies, even across different industries, create combined advantages that increase capacity, reach, profitability, and resilience in the market.

The challenge is to accept that companies must implement and build boards of directors that are apolitical, responsible, and scalable. Yet in Tijuana, we are seeing lower investment in assets and reduced spending on services. If this trend continues, the picture of the future may reveal a weaker CAGR and lower talent demand which, while sometimes justified by tariff shifts, does not support the broader economy.

In Baja California, we are seeing a faster segmentation of companies. The triple-A firms, the ones we hear from the least, are those focused on excellence rather than visibility on social media. These companies must be strengthened, and we should ask ourselves whether they are overregulated—most of the time, the answer is yes.

If you are a supplier engaged in critical supply chains, I challenge you to reflect:

• Which of your suppliers has the best CAGR?
• How do you retain and coach the best talent to serve that client?
• Where should you save, and where should you invest?

Tariffs often appear to be permanent changes. But many are temporary, recycled versions of old policies. In a few years, we will likely see less decoupling and greater diversification.

As new policies emerge, such as reduced working hours in Mexico, we must be prepared to readjust and brace for massive short-term changes. This means committing today to relevant productivity measures, implementing effective boards, and filtering responsibilities. The changes ahead will be significant, and with them, we can expect greater regulatory demands.