Saturday, January 27, 2018

A post from 2006: Detroit, Mexico and globalization!

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A post from 2006: 

Do you know where they manufacture 2 million vehicles? Do you know where you can find a job making cars?

The answer is not Detroit, Michigan. The answer is south of the border:

"The expansion, being fueled by Mexico’s top five automakers — General Motors, Ford Motor, DaimlerChrysler, Nissan and Volkswagen — stands in contrast to the plans by G.M. and Ford to cut 60,000 jobs in the United States and close two dozen North American plants through 2012.
The reason for Mexico’s new wave of growth is twofold.

First, it is next to the world’s largest auto market, allowing greater production integration because auto companies can easily ship cars and parts by truck and rail.
And second, it is still cheap to operate here compared with the United States, where unionized workers earn at least $27 an hour and benefits can double or even triple the total cost.

By comparison, Mexico’s typical auto industry wage of about $3.50 an hour for an experienced worker — which doubles with benefits — looks like a bargain." 

What about the future:
"New investments could raise Mexico’s production to three million cars by 2012, depending on growth in the United States, Mexico’s main market, according to Emilio Mosso, an official at the Economy Ministry.

In part, the boom is a rebound after sales slumped for aging models made in Mexico, and automakers halted production to prepare for new models.

Exports are up 50 percent in the first six months of the year from the same period last year.

About three-quarters of production goes abroad, mostly to the United States. And analysts say that figure could rise.

“When companies look at where to put a new plant, Mexico is starting to compete a lot more with Detroit South,” said Gabriel Renero, a consultant at Deloitte in Mexico City.

“They are finding a very attractive work force in this country.”
Democrats will jump on these figures to beat up NAFTA and free trade.

NAFTA is not the problem. Our challenge is that we are in a new world economy!




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