GM, Ford, BMW, VW, Honda Shift More Production to Mexico. Auto Imports Surge Despite Decline in US Sales

But Mexican exports to other countries plunge, tripped up by global auto slowdown.

By Nick Corbishley, for WOLF STREET:

Automakers continue to shift their production base from the U.S. to Mexico, where labor costs pale in comparison with those in the U.S., despite growing opposition from U.S. auto workers and their unions. U.S. imports of new vehicles from Mexico surged by 8% in the first three quarters of 2019, according to the auto manufacturers association AIMA, released by Mexico’s National Institute of Statistics and Geography (INEGI). This surge has occurred even as total deliveries of vehicles to end-users in the US fell by 1.6%.

Between January and September 2019, 2.03 million new vehicles were dispatched from assembly plants in Mexico to the U.S. market, 158,000 more than during the first three quarters of 2018. In the last eight years, auto imports from Mexico have almost doubled, from 1.3 million in 2011 to 2.57 million last year, at annual growth rates of between 6.3% and 13.9%. Barring any major supply chain hiccups, the U.S. is on track to import over 2.7 million new vehicles from Mexico this year.

The latest figures cement Mexico’s position as number one exporter of automobiles to the US, ahead of Canada in second place. According to AIMA, 16% of the 12.7 million cars and other light vehicles delivered in the U.S. in the first three quarters of 2019 were assembled in Mexico.

General Motors: About 29% of those vehicles were produced by General Motors plants in Mexico. GM imports from Mexico increased by 21% YTD, to 587,569 units. Those GM imports represent 27% of all vehicles GM delivered year-to-date in the US. Over 99% of the vehicles GM produces in Mexico are hot-selling “trucks” — including its Chevrolet Silverado and GMC Sierra 1500 pickups, plus SUVs, and compact SUVs (crossovers).

The Chevy Blazer is a brand-new crossover that GM launched earlier this year as a 2020 model. It is being built exclusively in Mexico, much to the chagrin of the UAW which called for a consumer boycott of the vehicle in the U.S. After the ramp-up period, monthly output now exceed 9,000 vehicles.

When it comes to new vehicles, what most U.S. drivers want are SUVs, compact SUVs, or pick-up trucks. And that is what most car companies catering to the U.S. market are now producing in Mexico. In the first nine months of this year, GM, Chrysler, Audi, Honda, Nissan, Toyota and VW, imported 1.34 million SUVs and pickups from Mexico, up 12% from the same period of last year.

Ford also expanded its production operations in Mexico this year. The company’s total imports from Mexico rose 18.3% in the first three quarters of this year, following years of contraction due largely to the U.S. consumer’s waning appetite for new cars — which is all Ford builds In Mexico.

The other big movers over the last three quarters were:

  • BMW became the 12th major automaker to set up operations in Mexico. Since opening a new state-of–the-art plant in San Luís Potosi this summer, it has imported 8,500 vehicles to the U.S. to Mexico.
  • Volkswagen increased its imports from Mexico to the U.S. by 56% year-over-year, with its car models up 65% to 123,777 units and its Tiguan SUV model up 46% to 86,117.
  • Honda: Total imports from Mexico jumped by 53% year-over-year to 126,000 units, with SUV models up 36% to 92,000 units.
  • But Mazda’s imports from Mexico plunged 71% to just 12,600 vehicles. By comparison, its sales in the US are down 11% year-to-date.
  • Chrysler’s imports from Mexico dropped 12% year-on-year, to 320,000 units. Like its domestic rival GM, Fiat Chrysler has hugely expanded its Mexico operation over the last nine years, increasing its total annual imports from Mexico by over 200%, to 504,793 units in 2018. But this year the trend appears to be reversing.
  • Audi and Nissan imports from Mexico also fell respectively 22% and 4.3%.

The fact that five of the 12 global car manufacturers with operations in Mexico have reduced their exports to the U.S. is a cause for concern for Mexico’s auto industry. Another big worry is the three-week UAW strike that has stalled many of GM’s operations not only in the U.S. but throughout North America. A few days ago, GM idled its plant in Silao, Mexico, that produces its Chevrolet Silverado and GMC Sierra 1500 pickups, which together account for roughly half of its entire Mexican output. Around 6,000 workers were temporarily laid off.

There’s also the continued uncertainty over the USMCA trade agreement, which is still awaiting ratification in the U.S. and Canada. The agreement, unlike NAFTA, includes protections for workers in all three countries and a stipulation that 40% of the cars assembled in the region would have to be made by workers earning at least $16 an hour. These measures should strengthen, at long last, labor standards and rights in Mexico and reduce systematic wage repression in Mexico.

On a global scale, Mexico’s auto industry is tangled up in the current global slowdown in auto demand. Mexico’s overall auto production, despite the surge of exports to the US, is down 0.8% so far this year after notching up five consecutive months of year-on-year declines. While exports to the U.S. continued to rise, they could not compensate for the sharp drop-offs in exports to other countries: Canada (-12%), Brazil (-30%), Chile (-37%), Peru (-34%), Germany (-10%), Spain (-46%), Italy (-12%) and France (-51%). Exports to Europe in total were down by 15% from 194,000 to 163,000, a reflection of the slowdown in auto sales in much of Europe. By Nick Corbishley, for WOLF STREET.

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  86 comments for “GM, Ford, BMW, VW, Honda Shift More Production to Mexico. Auto Imports Surge Despite Decline in US Sales

  1. Cyclops
    Oct 5, 2019 at 8:18 pm

    90% of German cars assembled in Europe are outside of Germany. Most of them are assembled in nearby Slovakia with a few others such as Czech Republic and one other! Dirty VW engines are not made in Germany!

    NAFTA made it much worse in America with Mexican trade!

    • Vespa P200E
      Oct 5, 2019 at 8:41 pm

      Have seen the trailers full of Audi A3s and MB CLAs made in Hungary on expressways heading west. Impressed with well educated Hungarian workforce and Budapest is beautiful and still a bargain.

    • max
      Oct 5, 2019 at 9:23 pm

      yes everyone is no good they cheat american workers

      Chinese,mexican,japanise….

      it is newer american fault it is them foreigners

      • Oct 5, 2019 at 11:12 pm

        max,

        This particular issue is the design of Corporate America and other global automakers, in conjunction with corrupt politicians and union bosses in Mexico, who have collaborated for decades on systematic wage repression in Mexico, to fatten up their profits.

        • Frederick
          Oct 6, 2019 at 3:25 am

          Why do you call it “ wage suppression” Isn’t it what the free market will bear Nobody is forcing Mexicans to work for lower wages Automation “ should” allow more domestic production one would think

        • Oct 6, 2019 at 6:52 am

          Frederick

          The last thing they want is a “free market” for labor. They have purposefully killed the free market for labor. It goes like this: automaker X goes to officials and union bosses in city Y in Mexico and says, I’ll build a plant here, but I need guaranteed starting wages of $2.30/hr for this many years, and here are the incentives for you personally to go along with this. And they all agree, and the plant is built and wages remain repressed. It is done systematically and routinely. Manufacturers call it: locking in your labor cost.

          This is how the free labor market gets killed, and this is why wages in Mexico are STILL so low. I explained this here:

          https://wolfstreet.com/2017/09/29/repression-of-wages-in-auto-manufacturing-in-mexico/

        • Nicko2
          Oct 6, 2019 at 5:51 am

          Manual, low-skilled manufacturing will NEVER return to the US, except in for the form of robot manufacturing….which naturally requires many fewer humans, and those humans will need college degrees.

        • Oct 6, 2019 at 6:59 am

          Nicko2,

          An autoworker in the US will be insulted being called “low-skill.” Auto plants in the US are highly automated and if done right, competitive. And the thousands of people who work at each plant are skilled.

        • Vespa P200E
          Oct 6, 2019 at 1:26 pm

          Use of automation begets higher skills and especially technicians/engineers who can trouble-shoot/program and optimize the automations and robotics. It’s not panacea to efficiency having been involved in assembly automation projects as often semi-automation is more efficient and only fools will try to use complex full automatons to replace operations that require high dexterity.

        • OSP
          Oct 6, 2019 at 1:29 pm

          “those humans will need college degrees”…

          Not true at all. My auto mechanic (never graduated HS), works weekends at a Honda factory maintaining and rebooting robotic production lines.

          The line workers need no extraordinary knowledge to perform the daily line work.

        • max
          Oct 7, 2019 at 7:02 am

          Mr. Wolf, I said it before and i’ll say it again; what other countries do is not problem that should interest American people ( if you are small country you can say: nothing we can do about it ).

          American problems are in America.

          No honest money
          Military empire that sucking you dry
          Welfare state
          Big government:
          (Regulation, Licensing, government Cartels, Subsidies, Tariffs and Quotas, Price Controls, Minimum Wage Laws, Labor Unions, Ethics.)

    • Old-school
      Oct 6, 2019 at 4:34 am

      I saw a chart put out by Goldman Sacs that showed a graph of industries in the order they are off shored. For example, once a society reaches a certain level of wealth it’s nearly impossible to have much of a furniture industry due to high labor content. In my town most of the furniture industry is gone and what is left is been done largely by first generation Mexican immigrants.

      I have noticed on a lot of the new factory openings in the US it’s pretty typical for capital investment to be over a million dollars per person. So to employee 500 takes $500 million.

      I use a rule of thumb that if average salary is $50,000 then that person needs to generate $500,000 in product which usually takes a pretty healthy capital investment.

      • Petunia
        Oct 6, 2019 at 9:14 am

        My first job out of college was at a computer consulting firm and every year the firm would put out a number telling us how much revenue was generated per employee. I found this invaluable because it allowed employees to gauge how valuable they were to the company. If you are working in a company where this number is declining in relation to the cost of labor, you are in a dying company.

      • Zantetsu
        Oct 6, 2019 at 10:01 am

        Does that mean that the CEO making $25,000,000 needs to generate $250,000,000 in product?

        The entire C-Suite probably needs to generate billions by that metric. Once they have done that, the workers probably have to generate pennies each for the company to be profitable.

        • Petunia
          Oct 6, 2019 at 10:17 am

          No it doesn’t mean that at all, but if the group is earning 10X or more that is a very good measure. If you calculate it by employee the lowest paid(lowest producer) earns a higher multiple than the CEO. The point is to show the value of every member of the group to the whole, and to track revenue to head count.

        • alex in San Jose AKA Digital Detroit
          Oct 6, 2019 at 10:00 pm

          That’s a great idea. Show how much every employee is making for the company from the janitor right up to the CEO, and make it public – put it on a big board in the lunchroom etc.

          When the employees see the CEO is not really bringing in 1000X what the average line worker does, maybe it will shake things up a little.

  2. weinerdog43
    Oct 5, 2019 at 8:26 pm

    Thanks Nick. Always enjoy the auto stories.

    Completely off topic; Do you and Wolf have some favorite cervezas that you prefer? I’m just wondering if the “beer money” idea is just cash or if you guys would ever prefer the real thing? I found a really delicious pale ale at the Minneapolis airport the other day called “The Fuzz” from Inbound Brewing.

    Thanks again, and feel free to delete if I’m hijacking the thread too soon.

    • Oct 5, 2019 at 11:01 pm

      I’m always open to a good pale ale or IPA, but I’m not a huge fan of Mexican-branded Big Beer. Nick lives in Spain, so shipping and customs might be a problem. But I live in San Francisco, which is practically next door to Minneapolis, with modern-day shipping :-]

      • alex in San Jose AKA Digital Detroit
        Oct 6, 2019 at 3:53 am

        We’re in a golden age of craft beers here in the US and I like to think especially here in the Bay Area. Hemp beers, sours, foggy this and spicy that, what a time to have quit drinking.

        • Zantetsu
          Oct 6, 2019 at 10:04 am

          In my opinion most of them are terrible quality. Anyone can create a cool name and slap a cool looking label on a bottle, and many, many companies do this without any fundamental idea of how to make good beer.

          Well of course, ‘good’ is a subjective term, but I prefer beer makers who have been doing it for a century or two to those who just started pumping out funky tasting crap in their garage two years ago.

        • Dan Romig
          Oct 6, 2019 at 11:07 am

          Speaking of beer and Minneapolis, which are two things I know quite well, compare two breweries:

          Schell’s was founded by a German immigrant in New Ulm along the Cottonwood River (which feeds into the Minnesota River & the Mississippi) in 1860. They make damn good beers.

          Utepils was founded on the west side of Minneapolis using water from Glenwood Springs just three years ago. They make damn good beers.

          I no longer drink beer with alcohol in it, but it’s a great time for NA craft beer. Bravus makes a tasty IPA in Santa Ana, CA. Have you tried one Wolf?

          On the subject of cars, I watched a bit of the Mecum Auction in Vegas yesterday, and was amazed at the prices nice older Corvettes still bring – even with the drum brakes that were stock before 1965.

          Small sporty cars like the Mazda Miata are a dying breed in the USA as we all load into a pickup truck or SUV.

        • Saltcreep
          Oct 7, 2019 at 3:31 am

          Hey Dan, in my corner of the world ‘Utepils’ means ‘outdoor lager’, and in a place with cold winters the ability to enjoy a cold, refreshing lager in an outdoor setting is something that is worthy of its own term. When spring finally comes around, the first ‘utepils’ of the year is almost a special occasion. I guess that fits Minneapolis quite well, too…

        • Morty Mc Mort
          Oct 7, 2019 at 11:49 am

          Alex and Wolf – Maybe it is time to switch to Craft Cannabis etc :)

  3. roddy6667
    Oct 5, 2019 at 8:30 pm

    America is getting too expensive a place to be a manufacturer. Toyota workers in Kentucky were making noises about more pay a few months ago. The company pointed out that they can make cars in Japan and ship them 6000 miles to Georgetown, KY cheaper than they can produce them there. The noises subsided.
    It’s not over for Georgetown. Toyota is shipping lots of robots and other machinery to Kentucky to upgrade this plant. In the end it will need less humans.

    • char
      Oct 5, 2019 at 9:42 pm

      beside the point that it is cheaper to build &ship than it is to build locally. It is not build locally for cost but for speed. Not having a boat trip of months and the time risks intaled with that is the main reason to produce local.

    • Old-school
      Oct 6, 2019 at 4:15 am

      I was surprised to meet a guy that works at a relatively new cotton mill in my hometown in NC. I thought all of that had gone off shore. He said starting wages were around $11.00 and they scraped the bottom of the barrel as far as labor market.

      I see a lot of cotton being grown but had no idea it was processed here.

      • sc7
        Oct 6, 2019 at 6:23 am

        I’d imagine the cost of transporting it offshore to process, then shipping the finished product back onshore would probably exceed the cost of minimum wage for American employees.

        Not to mention the supply chain risk associated with a long time in pipeline.

      • Petunia
        Oct 6, 2019 at 10:21 am

        I’m really glad to hear this because the quality of the sheets I am buying, mostly from India, is awful. In the 90’s I could still buy American sheets that lasted for years, now if they make a year that’s great.

      • Rowen
        Oct 6, 2019 at 2:45 pm

        Of course, it’s the Chinese that have been reopening shuttered textile mills here in SC. Because of automation, the labor costs differential has been minimized, especially factoring transportation and tariff costs.

        • Petunia
          Oct 7, 2019 at 9:31 am

          I hope they are not insisting all employees speak Mandarin like they did with the mines they bought in Canada.

    • Petunia
      Oct 6, 2019 at 9:18 am

      I rather have robot here than no manufacturing at all. At least you can hire people to repair the robots and clean the factory.

    • Paulo
      Oct 6, 2019 at 11:04 am

      Sheeee*t. Might as well just bring back slavery. Then we’re talkin’ real value for your money. Seriously, I think we ought to call these CEOs, shareholders, and supporting politicans for what they are. And, the purchasing consumers of course.

      In the golden days of the ascending middle class, family values, and endless opportunity…the US Labour force was 34% Union. Then came Reagan and the meme of “Morning in America” while simultaneously calling in the military controlers to break the civilian atc strike. The rest, as they say, is history. Nowadays, the US labour force is 7% unionized, wages (real earnings) have declined and the family is breaking down helped along by obesity (due to cheaper high carb foods), addictions, and lack of opportunity.

      $11 per hour for an auto worker? I’m trying to think back when I last made $11 per hour and I’m pretty sure it was in the middle/late ’70s? Think about it, full time at $11 is 22 K per year. That doesn’t pay rent in most commentor’s locations.

      I remember working as a 3rd year carpenter apprentice in 1974 and our union business agent came around and checked our pay stubs to make sure we were correctly paid. He was astounded to see many of us were being paid 10% more than the negotiated rate. He talked to the owner and was informed that, “These guys are working hard for me and I don’t want them to quit and move on. They are worth it.” He paid all of us more and got what he paid for. Oh by the way, the company owner was also the property owner and developer. He was building his own apartments.

      The slow slow drip of capitalist exploitation and corruption starts with disinformation and propaganda. Memes such as, Union’s fault, trimming the fat, capital flows to….., protect the ‘wealth creators’, and if Wall Street thinks Warren will be elected, then God help us all. Oh, and don’t forget the attacks on Public Education, scapegoating others, and everyone else is corrupt while allowing the domestic banking system to flourish as the World’s money laundering institution.

      This trajectory is either heading for a total crackup or civil war, imho. I often remark on this site that if a company cannot afford to pay a liveable wage to their employees (who create the product value), then that company should not exist. I would think a business owner or CEO would be ashamed of what they are doing in and to the auto sector. So many are playing into that “us or them”, mentality and forgetting we are all in the same boat and would be better off pulling together.

      regards

      • alex in San Jose AKA Digital Detroit
        Oct 6, 2019 at 10:04 pm

        Paulo – This is why the powers-that-be are just asking for a revolution. I’m not sure if they really think they can win; they must. What they don’t seem to realize is that for every loyal US military member, there are many friends, family, and relatives who have been utterly f*cked over, died for lack of insulin, were given opiates like candy and told they’re harmless, got foreclosed out of their house, etc.

        Russia had this problem. The Czars thought the military would be loyal but the rank and file and a good number of the officer corps had had enough.

      • sierra7
        Oct 7, 2019 at 11:35 am

        Paulo:
        Hit the nail on the head!
        “This trajectory is either heading for a total crackup or civil war…”
        Unless “Citizens United” is overturned and we level the justice playing field between ordinary citizens and the “monied classes” we will become what we have so many times accused other countries of: Dictatorship.
        It was obvious that the trend to “globalization” would lead to a race to the bottom for labor rates. (“Labor” is hardly ever invited to the negotiating tables in “globalization”)
        It had taken more than 750 years for the Roman Empire to fall apart; it will take the US less than half of that time, in my opinion.
        Both “free markets” (globalization) and “free flows of capital” will eventually strangle the middle class(es) of the world.
        I am a “capitalist” of the class that declares there must be a “fire wall” between free flows of capital and the survival of labor to build those “middle classes”. That fire-wall was regulatory disciplines. We have almost totally destroyed those and here we are.
        Greed is good and alive and well in the US.
        “Efficiencies” is like a salami; pretty soon the slices get so thin there is nothing left but thin air.

      • GirlInOC
        Oct 7, 2019 at 11:44 am

        Paulo,

        We need more people like you that can speak the truth in an intelligent and thought-provoking manner, especially in regard to the economy. So many people have been sold the Koch brothers’ message of elitism/plutocracy and trickle-down economics while simultaneously creating a class war against the working poor. Personally, I’m ready to burn the MF to the ground and get on with something more equitable. Bring back power to the people.
        SNL did an Elizabeth Warren skit this weekend and they had EW react perfectly with over-the-top sarcastic surprise when she found out billionaires weren’t going to support her candidacy. ha!

      • Prairies
        Oct 7, 2019 at 4:24 pm

        Now you see it Paulo, based on $11 in 1971 a 2% growth rate in wages should be at $29 for that same job. Most job ads don’t even show wages anymore, in hopes candidates might come in below average. From the few I have seen listing wages they are just entry level jobs, but I have seen general labour priced between $11.32(min wage) to $14. Hard to believe they will offer triple the wages once these employees put in the time to be J-man status.

  4. Dan
    Oct 5, 2019 at 8:31 pm

    Free Trade Agreements are anything but Free. End these agreements. Drove thru north part of NM recentl and towns looked bombed out. They were NAFTA’d I was told then WTO’d.

  5. Willy2
    Oct 5, 2019 at 8:33 pm

    – Some people have argued that, as a result of those cheaper imported cars from Mexico, living standards have gone up in the US. Because now an average worker/family can buy a cheaper car.
    – These folks overlook that with more and more car manufacturing jobs going abroad total INCOME for US workers and families have gone down as well, leading to lower demand in the US. The only way to increase US demand is to increase the debt load even more. But the US is already “up to its chin” in debt.
    – I would argue that the total world economy is suffering as well. Because now the same amount of cars are being produced at a lower cost. and lower costs mean lower demand.

    • max
      Oct 5, 2019 at 9:31 pm

      there is nothing wrong with 5% tariff on everything imported or exported.

      But no one want like one law for all of us — every one want his trade to be protected.

    • Brant Lee
      Oct 6, 2019 at 7:17 am

      Where is the cheaper car??

      • R2D2
        Oct 6, 2019 at 7:38 am

        If Americans demand a giant “macho man” truck for tiny money, the only way to supply it profitably is via cheap countries like Mexico or China. You cannot make a $20k truck when everyone on the production line is taking $50k a year…

        • Lisa_Hooker
          Oct 6, 2019 at 10:16 am

          Hired a software engineer in the Midwest for $65k/year. Six months later hired same quality-level and productivity engineer in Russia for $22.5k/year (perfect spoken/written English). Corporate mandate. Cheaper in Romania. Dirt cheap in India – but no quality. This is the future of our highly-touted STEM graduates.

          On the Internet it doesn’t matter where you are.

        • Dave Chapman
          Oct 6, 2019 at 8:00 pm

          Lisa_Hooker? Great name.

          If one is doing board bring-up, first silicon, and that sort of thing, then being physically present matters a lot.
          This represents maybe 5-10% of the software industry, but it is not zero. . .
          and those Indian guys are cheap all right, but you have to ask Boeing about their quality. The 737 software costs $9/hour for the programmers and $13 Billion for the lawyers.

      • Willy2
        Oct 6, 2019 at 10:02 am

        – The car doesn’t get cheaper because the car manufacturer wants to increase his profit margin.

    • alex in San Jose AKA Digital Detroit
      Oct 6, 2019 at 10:06 pm

      People can’t afford cars any more. Not even a “cheaper” car.

      The average Joe can’t get hired or keep their job unless they’re supporting a car, never mind supporting humans like a spouse or kids, bosses won’t hire you unless you have a car. Lose your car, and they’ll find a way for you to lose your job. So you’re required to have this shiny, expensive, thing and hope that after paying to support it, you can feed your wife and kids.

      • Oct 6, 2019 at 11:41 pm

        “People can’t afford cars any more. Not even a “cheaper” car.” That’s true for some people, not all people: 17 million new cars will be sold this year. A little over 17 million sold last year. About 17 million sold in 2017, etc. Add it all up, and lots of people can afford a new car when they need a car.

        • nicko2
          Oct 7, 2019 at 6:29 am

          The US middle class is shrinking, there’s your answer.

        • alex in San Jose AKA Digital Detroit
          Oct 7, 2019 at 7:29 pm

          It’s been gone over before here, but for a lot of average Joes, if they can get approved for the loan, a new car works out best because with a new car you don’t get surprises like the transmission blowing up etc. (Unless you bought a PT Cruiser, then GM keeps you in loaners through the many transmission replacements).

          I’m sure per-capita car ownership is down.

        • Prairies
          Oct 7, 2019 at 7:33 pm

          I am curious if the ratio of fleet purchases has stayed the same much like the sales or if it has fallen due to Uber/Lyft disruption or if the fleet ratio is higher as people get priced out.

          Fleets really keep the machine moving

        • Oct 7, 2019 at 7:54 pm

          Prairies,

          The interesting thing with Uber drivers is that if the driver buys the car as an individual, it’s a retail sale, though in fact, they’re part of a fleet. If the driver rents it, or leases it, from a specialized company that purchases the car, it counts as a fleet sale.

          Uber was doing this a while back. I think it had a deal with Toyota, and bought those units directly from Toyota, if I recall correctly. When Uber figured out that it lost about $500 million on this enterprise, it got rid of it. But those were all fleet sales.

        • nick kelly
          Oct 14, 2019 at 10:56 am

          Is financing over 7 years without ever creating positive equity affordable?
          And how many of the 17 mil that are leased (i.e. rented) because the drivers can’t afford to buy?
          Sorry but ‘auto-subprime’ and ‘affordable’ are contradictions.
          Isn’t the whole credit bubble a consequence of people taking on debt they can’t really afford?

  6. Duane
    Oct 5, 2019 at 9:55 pm

    I’m thankful that this site takes the time to report valuable info like this, even if it is incredibly disheartening. Usually all you get is don’t worry about outsourcing, robots are taking your jobs anyway. Just go back to school or speculate in financial securities you dope.

  7. Ridgetop
    Oct 5, 2019 at 10:06 pm

    Even though some of the components come from outside Mexico, for the trucks a least, the ones coming from Mexico are some of the least reliable. Hmm?
    https://www.youtube.com/watch?v=gAXLObMsIBg
    https://www.youtube.com/watch?v=3DMZfDWOT6k

    It seems the bigger the grill gets the worse the reliability gets. Even BMW 7 series grills look like a truck grill. LOL!

    • Petunia
      Oct 6, 2019 at 9:24 am

      Don’t buy any hardware items made in Mexico, the screws will break apart and so will the hammer the first time you use it.

    • Ridgetop
      Oct 6, 2019 at 1:08 pm

      Another piece of anecdotal evidence. I sent this article to a friend, he worked for Honda for 15 years, this was his reply:
      “When I was working with Honda there were major concerns of quality when Honda started building cars in Ohio and then went on to build in Mexico and Canada. Honda methodically monitored the quality of each assembly plant through the warranty system and provided dealers with data showing the quality level coming out of each plant (Japan – USA – Mexico and Canada). The report reflected the number of rejects in key areas like paint, body and interior fit etc. There were no doubt issues when USA, Mexico and Canada first started building cars, however as time went on the quality was no different from either of the plants.”

      • nicko2
        Oct 7, 2019 at 6:30 am

        No kidding, quality control is still paramount, no matter what the wages are.

  8. David Hall
    Oct 6, 2019 at 4:03 am

    The Mexican minimum wage is close to $5.00 an hour. Factories are not returning to the USA.

    The minimum wage in China is less than $4.00 an hour. That is why US companies moved to China. Not so good when the Chinese steal their tech and try to put them out of business.

    The US trade deficit with China increased in spite of tariffs that were supposed to make companies return to the rust belt.

    The minimum wage in Haiti is about $6.00 a day.

    • Oct 6, 2019 at 7:07 am

      David Hall,

      “The Mexican minimum wage is close to $5.00 an hour.” NO, not per hour, but per DAY. The minimum wage was raised for 2019 to 102.68 Mexican pesos per day (about US $5.20 per day). This is for the bottom of the skill scale, maybe out in the country. It’s not a relevant wage in urban Mexico. And manufacturers pay a lot more.

      • wkevinw
        Oct 6, 2019 at 12:32 pm

        Thanks Wolf for you data on this important subject.

        The whole labor cost/practice structure is corrupt in Mexico, as you have documented. This is why the “free trade” argument is so ridiculous.

        I saw a “conservative economist” saying how the American workers’ problem is that they don’t have high enough skills for the modern economy. It means: “we have exported those jobs, where standards for safety, pay, welfare benefits, etc. are lower, so Americans all need to be coders, get good at calculus, etc.” As I said ridiculous.

        If the US is going to have OSHA, EPA, Social Security, Medicare, etc. costs, it can’t have the current version of a “global economy”. It’s actually a mathematical fact.

        The problem with a lot of these economic issues is that they are like smoking. Nothing seems bad until the patient/economy is sick many years after starting down that path.

        Here we are.

        • Dave Chapman
          Oct 6, 2019 at 8:03 pm

          wkevinw:

          Agree. America can either have a Middle Class or it can have Free Trade with the Third World, but not both.

        • nicko2
          Oct 7, 2019 at 6:34 am

          Compared to other developed economies, the US is falling behind in college/post-secondary graduation rates. The reality is, without healthy immigration rates, the US will only fall further behind at an accelerated rate.

  9. Lance Manly
    Oct 6, 2019 at 4:58 am

    >The agreement, unlike NAFTA, includes protections for workers in all three countries and a stipulation that 40% of the cars assembled in the region would have to be made by workers earning at least $16 an hour.

    From what I understand the enforcement provisions for this are nearly non-existent. What good is a protection if there is no way to enforce it?

  10. MD
    Oct 6, 2019 at 6:08 am

    August’s Twitter-based diktat by the USA’s wannabe absolute supremo and no.1 generalissimo, ordering (no less) manufacturers to return their factories to the US (a tacit admission of the failure of 40 years of neoliberal economics and its monomaniacal focus on short-term stockholder gains) obviously not going too well, then..?

  11. Helmut
    Oct 6, 2019 at 6:49 am

    So whats new about that,when it comes to PROFIT who cares about your own Country.

  12. Sporkfed
    Oct 6, 2019 at 7:07 am

    Well, we could apply a tariff on manufacture
    goods and use the proceeds to fund healthcare.
    That would make employing American labor cheaper right ?

  13. Endeavor
    Oct 6, 2019 at 9:13 am

    Read the handwriting on the wall for Americans. Except for the protected sectors (Insurance, finance, public sector workers and the rest who serve the elites) an American future will encompass apartment living, bus travel, extreme debt levels and 60 hour work weeks.

    • DanR
      Oct 6, 2019 at 11:28 am

      Many of us have this in the New York City area already, though we have subways too. I think the “extreme debt levels” is not a given though.

  14. QuadQ
    Oct 6, 2019 at 11:14 am

    I would love to see a study where automation/robotics actually lowers the US workforce. It might in a plant that installs them but how many more people are working to design, fabricate, transport and install the bots. You also need skilled labor to maintain them. Henry Ford started “automation” about 100 years ago, has that dampened the automotive workforce? If my suspensions are correct, we may have higher net employment.

    • Oct 6, 2019 at 1:20 pm

      QuadQ,

      Automation is the great equalizer. A robot costs the same in China and Mexico as it does in the US. And no one can stop the progress of automation. That’s going to happen whether we want to or not. And the US is very competitive with plants that rely largely on robotics. But the problem here isn’t automation — it’s offshoring production to countries with cheap labor.

  15. Oct 6, 2019 at 11:44 am

    We should be giving some credit to AMLO. He’s the nearest thing to FDR in today’s world. Unlike faker Trump, AMLO works consistently and effectively to advance the interests of the working class in his country. He sounds like a socialist, but he doesn’t really follow any ideology except improving the conditions of his people.

    • alex in San Jose AKA Digital Detroit
      Oct 6, 2019 at 10:09 pm

      Ahh, dear old AMLO no wonder he’s not been in the news, he’s doing actual good!

  16. sunny129
    Oct 6, 2019 at 1:32 pm

    Bottom line is American labor wages cannot compete with the ‘very low wages’ available to US Multi-Nationals since globalization started since 2000. Remember the ‘China’ price!? If it is NOT China now, it will be some one else there lined up to get their share!

    Capital is ‘mobile’ and keeps on winning. Labor is ‘home bound’ keeps on losing! Rest is moot!

  17. breamrod
    Oct 6, 2019 at 1:34 pm

    we sure don’t need another FDR! Thomas Jefferson yes!

    • alex in San Jose AKA Digital Detroit
      Oct 6, 2019 at 10:10 pm

      You spelled Eugene Debs wrong.

  18. unit472
    Oct 6, 2019 at 1:53 pm

    That employee healthcare is a major cost ( and issue) in the GM/UAW negotiations is significant. Free traders tend to leave this employee benefit and employer cost off the table in their op-ed on the benefits of free trade but if European governments subsidize their workers healthcare and the US doesn’t this is as valuable to an auto company as Airbus getting government financing to develop a new jet. I assume Mexican workers get neither employer nor government financed healthcare. The sickest ones might just show up in San Diego and go to a US hospital knowing they can’t be turned away. In fact, after that horrific gasoline pipeline explosion that killed and burned close to 200 people stealing gas, the most badly burned were flown to Houston, Texas for treatment! i doubt the Mexican government paid for their care.

    Putting countervailing tariffs on foreign companies to offset US companies health insurance costs seems fair to me. In fact, using tariffs in lieu of monetary policy ought to be examined. Tariffs are revenue for the US government whereas Fed rate cuts are taxes on savers and rate increases punish US exporters. Stop manipulating the dollar via monetary policy and use tariffs instead.

  19. Michael Engel
    Oct 6, 2019 at 4:06 pm

    1) Trump wants production back from China. He has no issues with Canada & Mexico. Let them get rich !
    2) NAFTA didn’t help Mexico financially, but emerge as an industrial powerhouse.
    Their current account was negative for many years, never above zero, until 2019, when it jumped to : $ +5.143B, an all time high, the first positive year.
    3) Mexico GDP was $1,224 in 2018 / official foreign reserves @ $180B on March 2016. $USDMXN is in a trading range, after falling sharply in Jan 2017 (following the unknown after Nov 2016 election), until mid 2017(L).
    4) $USDMXN long term trend is up. It means : production in Mexico will become even cheaper when the uptrend will resume.
    5) The uptrend will resume in the next global “correction”.
    6) A combination of highly sophisticated mfg in US and cheaper labor north and south, will emerge in the next few years. New factories are being built all over US. When they will be in production phase. US will need a lot of energy.
    7) Amazon will ship Canadian oil, but charge for delivery….

  20. Unamused
    Oct 6, 2019 at 4:12 pm

    @Old-school

    In my town most of the furniture industry is gone and what is left is been done largely by first generation Mexican immigrants.

    And yet, you can still get top-quality Amish furniture, reasonably priced, right there in the USA, from dozens of makers. You can even get top-quality Amish cabinetry from Grabill in Indiana, among dozens of others. Yes, they’re highly-skilled. In fact, you can get custom-made top-quality stuff just about anywhere in the US. And yes, they’re highly-skilled.

    We make our own and don’t have to go to the Anabaptists, but do not sell to any market.

    If you want to go cheap with overpriced stuff made by Mexicans, try the Furniture Barn or Art Van. If you want something well-crafted from good hardwoods by expert makers, just pay a little more for it and don’t expect discounts, close-out sales, or bargain-basement rates. That way you’ll only have to buy it once.

  21. Michael Engel
    Oct 6, 2019 at 4:14 pm

    Moderation : China celebrate 70Y victory thanks to FDR

    • Unamused
      Oct 6, 2019 at 5:09 pm

      FDR passed in 1945 and had his hands full with the Great Depression and WWII, messes created by US capitalists. The Peoples Republic of China was founded in 1949 and FDR, perhaps obviously, was in no position to do much about it.

      If you’re haunted by the ghost of McCarthy it could be because your home is loaded with stuff made by Chinese commies.

      • nicko2
        Oct 7, 2019 at 6:39 am

        The 21st century belongs to China.

  22. Unamused
    Oct 6, 2019 at 5:16 pm

    Earlier this week, the Wall Street Journal published an article titled “The Seven-Year Auto Loan: America’s Middle Class Can’t Afford Their Cars.”

    Wall St. would know, wouldn’t they?

  23. Vic
    Oct 6, 2019 at 9:52 pm

    My opinion is that cars aren’t increasingly expensive. Rather it’s that our so-called “money” (FRN currency) is fast becoming worthless. Nixon’s closing the gold window on 8/15/1971 sent the horses out of the barn. “We’re all Keynesians now” was his quote at the time.

    • Nicko2
      Oct 7, 2019 at 9:08 am

      The Dollar index is very high. No….the problem is middle class (and lower) wages have not kept pace with inflation. Only the top 20% have seen salary and stock market gains in the past generation. Skyrocketing healthcare costs and the student loan crisis are also factors.

  24. CreditGB
    Oct 7, 2019 at 2:46 pm

    Didn’t India recently tell Lockheed that they would only buy F 16 military jets if Lockheed built them in India? Now Lockheed is moving production from Carolina to India. F.Y. Carolina!

    Should the US adopt the same “it has to be built here to be sold here” for cars, trucks, electronics, and all kinds of clothes and plastic junk.

    It only be “fair trade”

  25. CreditGB
    Oct 7, 2019 at 2:56 pm

    GM says we are keeping open the US Plants to help the US workers and placate the UAW and US useful idiots. Yes, they have dedicated US plants to produce, Spark, Volt, Saturns, Oldsmobiles, and Pontiacs, and Chevettes.

    Isn’t it great how GM supports the country that buys is products!!!

    None of them are any different, check out what is being produced in US vs over the borders.

  26. IronForge
    Oct 7, 2019 at 3:09 pm

    Too bad POTUS didn’t End NAFTA/US.M.CAN.

    This also may be an argument for more Public/Non-Profit Healthcare Svs and Insurance. Separate the SocialNet from Corporations.

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