The Mattel company logo is pictured at the entrance of the Montoi plant in the municipality of Escobedo, Mexico March 15, 2022.
The Mattel company logo is pictured at the entrance of the Montoi plant in the municipality of Escobedo, Mexico March 15, 2022. Reuters / DANIEL BECERRIL

Mattel Inc top-selling toys like Mega Bloks will now be made in Mexico, as the U.S. toymaker becomes the latest company to move its supply chain closer to home.

Mattel announced in mid-March it had spent around a billion pesos, or $50 million, to expand a plant in the northern Mexican state of Nuevo Leon, which is now the company's largest plant, overtaking other hubs in China, Vietnam and Malaysia.

The plant in Monterrey, close to the U.S. border, sprawls across 200,000 square meters (2.25 million square feet), employing close to 3,500 workers.

"Being able to have product 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," Mattel's Latin America managing director, Gabriel Galvan, told Reuters.

The expansion was first pitched in 2020, Galvan said. Mattel closed two factories in Asia in 2019 and more recently shuttered a plant in Canada and another in Mexico ahead of expansion of the mega-factory.

"This consolidation and plant expansion was in line with the company's transformation/turnaround strategy and a manufacturing footprint consolidation we called 'Capital Light,'" spokeswoman Catherine Frymark told Reuters in an email, saying that the strategy was four years in the making.

Galvan said Mattel's move was just the latest instance of how worries about over-extended supply global chains are generating fresh interest in "nearshoring" from industries like textiles and even automaking - already a mainstay of Mexican manufacturing.

Mexico's finance minister told local media recently that the demand for industry parks in northern Mexico was booming.

Mattel plans to double its investment in the plant over the next five years, Nuevo Leon state said in a press release.

"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."