A Bit More Detail

Assorted Personal Notations, Essays, and Other Jottings

[LINK] “‘Just the beginning’: Trump may disrupt 20-year boom for Mexico auto industry”

The Guardian‘s David Agren describes how Donald Trump’s opposition to American trade with Mexico is likely to hurt this smaller but quickly developing country’s industrial sector.

[E]conomists and Mexican politicians have warned that Trump’s tantrums portend further economic problems as companies shy away from the public shaming that could come with investment in the country.

Federico Estévez, a political science professor at the Autonomous Technological Institute of Mexico, said that danger for Mexico was not a potential trade war, but the chilling effect Trump’s words would have on foreign investment.

“They’ll be careful about their capital expansion programs in a place like Mexico because Trump will jawbone them – not in private: in public,” he said.

Much of the foreign direct investment in Mexico has gone to the car industry, which took hold in states such as San Luis Potosí and sent GDP growth in the region soaring above 5% per year.

The industry’s roots in Mexico date back over decades – for years Volkswagen produced the Beetle in the state of Puebla – but the sector has grown steadily since the 1980s, to the point that most of the world’s major automakers have opened plants in the country.

“One of the main advantages automakers have in Mexico is high productivity and low wages in these plants. That’s attractive,” said Harley Shaiken, a geography professor at the University of California at Berkley, who studies the Mexican auto industry. An average car factory worker in Mexico earns around $8 an hour, compared to the $60 an hour that Ford spends on a US employee, including pay and benefits.

“You have mega transnational companies that are able to earn a lot of their investment in Mexico, in part because productivity is high and wages are depressed.”

Advertisements

Written by Randy McDonald

January 8, 2017 at 5:00 pm

%d bloggers like this: