Forbes Magazine spotlights Mexico's auto manufacturing boom

[bighatnohorse]

America's Car Capital Will Soon Be Mexico

[moisheh]

au contraire: The quality of Mexican made vehicles is among the best. The Ford plant in HMO has been the #1 in quality many times. But the turnover is great. Ford does not put up with that BS. You don't show up you are terminated. What I cannot understand is once you leave Ford your new will be at half the wages with bad working conditions. Why would anyone give up a good job? Mexico gives the auto plants lots of help. They are treated like royalty and rightly so. These are the types of jobs that Mexico needs. I wonder if the workers in the central and southern states of Mexico have the same attitude? Many in the more industrialized states mock the people in Sonora. Similar to how people from Arkansas or Newfoundland are looked upon NOB.

Moisheh

[briansue]

Is that why the U.S. auto workers lost their jobs and the factories moved to Mexico?

So if Mexicans quit there jobs on a whim, don't show up, call in sick, make petty wages is that why the quality of American cars made in Mexico has gone up?

I think the original post linked article stated it pretty clearly. Mexico now has the most modern up-to-date manufacturing equipment and trade agreements with many countries. Labor costs are certainly a factor but the article indicates this is not the main factor. Here are some selected quotes..........

The reason is simple: Mexico has some of the most liberal free trade arrangements in the world, and it’s making the most of them. While Washington spent a decade obsessed with the War on Terror to the exclusion of economics-based foreign policy, Mexico was busy hammering out deals, and politicians like Lozano were luring investors. Today Mexico has free trade agreements with 44 countries, making it an ideal export base for automakers from Europe, China, Japan and, yes, America. The U.S.? We have agreements with only 20 countries, and Beltway protectionists have helped ensure we haven’t enacted a new one since 2012. Negotiations on the ambitious 12-nation Trans-Pacific Partnership remain pathetically slow.

The result is what you’d expect. Eighty percent of the cars built in Mexico are exported to other countries, about two-thirds of them to the United States. “I can export duty free to North America, South America, Europe and Japan,” says Volkswagen of Mexico Vice President of Corporate Affairs Thomas Karig. “There’s not another country in the world where you can do that.”

Today automakers still like the young (average age: 24) and comparatively cheap (about $40 per day) workforce. But there are plenty of other reasons. European carmakers say Mexico’s dollar-dominated currency gives them a natural hedge against fluctuating exchange rates. For Japanese manufacturers like Mazda, Nissan and Honda, the rise of the yen against the U.S. dollar has made Japan much more expensive than Mexico to produce vehicles.

VW’s luxury unit, Audi, considered the U.S. when it was deciding where to build the hot-selling Q5 sport utility in North America, says Bernd Martens, the company’s board member for procurement. Mexico had a $500-per-car labor cost advantage, but that was offset by higher transportation costs. The clincher was Mexico’s trade policy. Specifically, the U.S. lacks trade agreements with Japan, the European Union and Brazil. Added tariffs mean a car exported from Tennessee to Brazil costs 55% more than one exported from Mexico.

[bighatnohorse]

qtla9111 wrote:
Is that why the U.S. auto workers lost their jobs and the factories moved to Mexico?

So if Mexicans quit there jobs on a whim, don't show up, call in sick, make petty wages is that why the quality of American cars made in Mexico has gone up?

A lot of Mexicans and Central Americans have trained in the US.
My brother has a factory in So. Calif. with a lot of foreign nationals working there.
The "mexicans" are good workers - they show up for work, on time, every day without fail.
It's an equal opportunity shop. Color or ethnicity doesn't make any difference; come to work late, don't show up, drink or drugs and you'll be let go.

His shop, after some 30 or 40 years in business, has trained a lot of men and some women, and trained them well.
Like it or not, these are a big portion of the new American workers. And many have returned to their homeland either to retire, start their own businesses or find work there.

The most valuable asset that a company has is it's workers.

[qtla9111]

Is that why the U.S. auto workers lost their jobs and the factories moved to Mexico?

So if Mexicans quit there jobs on a whim, don't show up, call in sick, make petty wages is that why the quality of American cars made in Mexico has gone up?

[briansue]

This may or may not have any relevance – since there are obvious difference between the US and Mexico.

About 100 years ago Henry Ford more than doubled pay to his main production employees from about $2.30 a day to $5 a day. Doesn’t sound like much. The rest of the titans of business of the day were furious and thought he was crazy. But Henry was actually a genius and had run the numbers before making this momentous decision. There is a long list of reasons Henry added things up. Here are some of them.

Henry was going into mass production. He would be mass marketing. He would be marketing to the masses. If the masses have no money they cannot buy massive amounts of whatever you are making. Workers are also consumers. Consumers with money will consume. Workers without money cannot consume.

Better paying jobs attract the best workers. Better workers produce better products. Better workers cut production costs. If you pay the most you will attract the best workers.

Better paying jobs make for more loyal workers. Loyal workers stay on the job. Training new workers can be extremely expensive. High turnover can be extremely expensive. Experienced workers can be more productive. New workers may not be productive and profitable at all before they decide to quit or move on to another job.

Workers making good pay do not miss work or call in sick – they want to keep that job so they show up and put in a days work. Not meaning this as any kind of anti-union comment but it was many years before Ford had to deal with unions – Henry did not raise pay due to union or any requests or demands made by employees.

There are more factors to Henry’s figuring and he was not 100% correct on all of them – maybe not 100% on any of them. But he became extremely wealthy and many say it was (including Henry) because of this decision. Some economists to this day say Henry create the middle class in the US.

I am not trying to take this thread off topic or start any war of words. Economies are based greatly on the productivity of workers. Labor used to be celebrated. Now labor has somehow become the bad guys. If today’s business leaders would actually become the kind of leaders Henry was we might see some economic improvement in many areas of the world.

[qtla9111]

moisheh wrote:
Employees do not last as they are not used to showing up on time. Or they take off for 3 days because an aunt in Obregon is sick. When you quit your job or get fired after a short time your mortgage becomes due and you lose the house.
Moisheh

That's global. If you don't go to work, don't show up on time, don't pay the bills, it's only logical as to what the outcome will be.

[qtla9111]

People still buy locally, food prices remain low, eggs for 14 pesos a dozen as an example. Housing is very affordable especial under government programs. In Monterrey, the most expensive city, air conditioned buses with wifi are at a high of 10 peso with 50% discounts for students and seniors. (.38 U.S.)

The canasta basica regulates prices on basic food stuffs. You can check prices for the month of July by store here Prices - Canasta Basica July 2014

I'm sure fuel is or will be a major factor soon but the idea is to start eliminating subsidies which in reality are an oxymoron as we all end up paying the price somewhere down the line.

Comparing fuel prices in Mexico to the U.S. isn't very practical because we know the ups and downs of the U.S. oil economy. It won't be long before they go back up creating parity with Mexico. Imagine Canada where prices this summer were between 4.84 and 5.77 per gallon. That would be hard to deal with.

The growth is almost crazy throughout the whole state. Even with drought, the farmers have been able to do well (in Nuevo Leon). Queretaro, Guanajuato, Zacatecas are in a boom. Even the beaten up city of Nuevo Laredo has seen some major changes in infrastructure.

I realize my glass is half full where others, in regards to Mexico, have a glass that's half empty. Different points of view. I know people here in the north are very happy with the economy. My gauge here in the countryside is the tourist area where people from Monterrey come on weekends. The businesses have grown, more have been added, restaurants are packed and they are charging premium prices and people are paying them. The lines are long to get in. There are 15 different buffets on the strip and they charge from 55 pesos to 100 pesos. Good luck getting in. So people are spending money on fuel, eating out, kids are going clubbing (if that's what it is called nowadays), new car sales are at an all time high.

[moisheh]

The topic of the cost of living comes in many forums about Mexico. It all depends on your lifestyle. If you want to live like those NOB it will be expensive. If you want to live like a Mexican it will be "cheap. Infonavit has many problems. In Hermosillo there are entire districts with abondoned homes. Many are empty because the residents do not know how to handle credit. A common problem in Mexico. Here is a link to some other problems
Infonavit problems The Ford plant in Hermosillo pays about $100 a week. A very good salary for production workers. Lots of good benefits. But Ford has to hold job fairs to attract workers. Employees do not last as they are not used to showing up on time. Or they take off for 3 days because an aunt in Obregon is sick. When you quit your job or get fired after a short time your mortgage becomes due and you lose the house. After working at Ford many of these employees end up working at second class jobs for horrible employers. A real shame!

Moisheh

[rocmoc]

qtla9111, How can cost of living remain cheap if fuel prices are at USA levels? Fuel cost get passed on to almost every product. If labor wages rise also because of education justifying higher wages, cost of living will again take a upward hit. IMHO, With the standard of living coming down in the USA and rising in Mexico, soon we will be very near the same point.

rocmoc n AZ/Mexico

[qtla9111]

After four months in the U.S. (19 states) and Canada 6 provinces) I couldn't imagine living anywhere else than Mexico. Although we no longer have a house payment and living in the most costly city in Mexico, it is way cheaper than anything we found on our trip. Most retired foreigners are living here because of the weather and because it's cheap. I agree that wages are lower, but money goes much further here especially when we are talking about the benefit of a fixed rate government loan and the other benefits provided by a large employer.

$800 a month is almost 11,000 pesos a month. With your Infonavit points, you can get a nice house even here in Monterrey. Mexico still has a large working age pool to draw from, and if you don't have education wages will remain low. We need to raise the minimum to high school. What do you have to offer if you can only read and write? Sometimes I think people treat education like a hobby or a place to send their kid for the day until they are old enough to work.

[Guero]

I was in Aguascalientes and Guadalajara last month. I have extensive middle/upper class family there, and visit biannually. When I open any one of the four print/digital daily newspapers, I am amazed at how many blue collar/manufacturing/professional jobs are available.

Mexico has a young, vibrant, professional class that works just as hard for less. A young friend of mine who worked at Softek in AGS just got a promotion to Atlanta.

Look, it costs just as much to live in AGS/GDL as it does here in Oregon, if you want to keep your present lifestyle. Sure some things are cheaper (fresh food) and some are more expensive (new cars). I have worked and lived in both places, and speak from that experience...

I have also camped in the Sierra Fria, NW of AGS. Incredible forested area full of wildlife and well managed by the state of AGS...

[silversand]

Brian / Sue wrote:
You would have to have our entire military stretched across the entire 1,800+ miles...

....in three shifts (there are 24 hours in a day) :B So, this would mean the entire UK Armed Forces, Canada, and perhaps Germany....its a looooog and winding border :B

...gotta love Forbes, but be critical...we have close friends working therein.

I agree with tepetapan; the true number is very, very difficult to discern...

[bighatnohorse]

tepetapan wrote:
. . .
Interesting is that the USA, as a government, does not like or even hates the fact that Mexico is growing into a world economic power, even stronger than before. It sends a bad message to those who read and understand international business and live NOB.

I disagree with that part.
It is unlikely the the "USA, as a government" is even cognizant of how you perceive it.
The Chinese investments in South America are eating the USA's lunch.
And the government doesn't seem to notice.

"Those who read and understand international business and live NOB" such as myself welcome a country that will enjoy greater prosperity with a stronger economy south of the border.
Canada to the north, and Mexico to the south - equal footing and a better life for all.

[tepetapan]

No one knows how many undocumented people cross in any direction. hence the word "undocumented". How would anyone really ever know? Politics play a guessing game, to use the numbers in favor of their latest, favorite cause.
Facts are facts, the economy is growing in Mexico, Industry is growing, money is flowing and National debt is very, very low. People are returning, investing in business and finding jobs. It is a beautiful thing.
Interesting is that the USA, as a government, does not like or even hates the fact that Mexico is growing into a world economic power, even stronger than before. It sends a bad message to those who read and understand international business and live NOB.