US Targets Wage-Repression Model in Mexico, Demands Inspections, Industry Has a Cow

NAFTA 2.0 gets complicated for US & global manufacturers, particularly automakers.

By Nick Corbishley, for WOLF STREET:

This week, an 11th-hour demand from Democrat members of the U.S. Congress concerning the U.S.-Mexico-Canada Agreement (USMCA), the trade agreement to replace NAFTA, has put Mexico’s government and global manufacturers in a tight spot. The U.S. lawmakers are calling for a program of inspections to enforce the beefed up labor standards included in the new deal, along with meaningful penalties for companies that don’t comply — including the imposition of tariffs on the goods they manufacture.

The proposed trade agreement, unlike NAFTA, includes protections for workers in all three North American countries as well as a stipulation that 40% of the cars assembled in the region would have to be made by workers earning at least $16 an hour, multiples higher than the average hourly wage earned by Mexican auto workers. The protections include “the right to collectively bargain”, “freedom of association,” and the “right to strike.”

Mexican workers will also be freed to challenge so-called “protection” contracts, which lock in low wages as a precondition demanded by many companies to set up shop in the country.

These protection contracts are part of the wage-repression system in Mexico, established between global manufacturers, local unions, and governments. This system has been able to repress wages in auto plants even as wages in other emerging-market auto plants, particularly in China, have surged. And it has induced automakers to shift production from the US to Mexico, at the expense of US workers.

These contracts are particularly prevalent in Mexico’s auto sector, whose exports to the US market continue to grow even as total deliveries of vehicles to end-users in the US have fallen.

It is hoped that the new measures featured in USMCA will go some way to strengthening, at long last, labor standards and rights in Mexico as well as reduce systematic wage repression. But there are major concerns about just how rigorously the new standards will be enforced. Hence, the new demand that inspections be held in Mexican workplaces to ensure they are being implemented.

While the proposal may enjoy strong support among auto workers in the US and the unions that represent them, it faces stiff opposition south of the border.

Mexico’s chief negotiator on the USMCA deal, Jesús Seade, bristled at the idea of what he called “Lone Ranger inspectors” from the U.S. being drafted in to survey Mexican factories. Seade insists that Mexico is working hard to improve workers’ rights, citing a February 2017 constitutional amendment enshrining labor rights.

The proposal has also aroused fits of apoplexy from business lobby groups in Mexico. After meeting with Seade this week, the Business Coordinating Council (CCE) labelled the U.S. lawmaker’s proposal as “extreme” and “totally unacceptable,” arguing that it “could severely affect competitiveness in Mexico and its partners in North America.”

Aha — worried about getting caught cheating and having to raise wages.

Ever since NAFTA, the central plank of Mexico’s economic model has been to attract global manufacturers by keeping wages and other labor costs miserably low. A recent survey by Mexico’s statistical institute INEGI showed that less than 4% of Mexicans earn over $800 a month.

As Moody’s notes, “Mexico has maintained its comparative advantage through negative real wage growth, at the expense of income levels. As a result, instead of converging through trade, wage and productivity gaps with the US have widened.”

This was a feature, not a bug, of NAFTA, which created a template for economic rules in all three of its signatory countries that ensured that the lion’s share of the benefits would flow to capital, and away from labor.

In Mexico, the systemic wage repression, often carried out in connivance with local political and union leaders, has been a major boon for manufacturers, but ultimately a big drag on the Mexican economy, depriving it of the internal demand needed to drive robust, long-term economic growth and development.

But the days of Mexico’s low-cost labor model may already be numbered, as business groups in Mexico come under increasing pressure on wages and labor standards, not only from its NAFTA partners but also at home.

The AMLO government already passed a sweeping major labor reform bill earlier this year and is now pushing for a complete overhaul of the laws governing the outsourcing and subcontracting of jobs in the country.

Millions of jobs have been subcontracted in recent years in order to further depress labor costs, particularly in high-risk sectors such as mining. According to a report by Ernst & Young, subcontracting structures are “commonly used in Mexico by both foreign and Mexican businesses and generally consist of a group of companies establishing one or more operating companies and one or more service companies to provide the labor component of the business activity.”

“Unfortunately”, the report adds (emphasis added), “these structures have been abused” (as opposed to being used in the exact way they were designed to) in order to deprive “employees of their social security, union, and housing benefits, among others.”

The main goal of the new legislation is to combat these abuses, while setting clear parameters for the legal use of outsourcing and subcontracting. It also seeks to render the profits of the operating companies subject to profit sharing and social benefits.

But that appears to be the last thing that manufacturers in Mexico want. Business lobby groups are furiously lobbying against the proposed law. The bill will now go through extensive consultation with stakeholders, including the business lobbies.

The fact that AMLO’s left-wing Morena party holds solid majorities in both houses suggests the business lobbies may get fewer concessions than they’re used to. One thing that is clear is that Mexico’s low-cost labor economy is in dire need of an upgrade — an upgrade that stimulates internal demand, such as though real wage growth. By Nick Corbishley, for WOLF STREET.

The people voted to scrap the project that was one-third finished, $4 billion over budget, mired in allegations of corruption, and built on an unstable lake-bed. But it has a life of its own. Read…  Mexico’s Cancelled $13-Billion Zombie-Airport Refuses to Die

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  51 comments for “US Targets Wage-Repression Model in Mexico, Demands Inspections, Industry Has a Cow

  1. Lopez
    Dec 5, 2019 at 7:25 pm

    CARAMBA!

    • joe saba
      Dec 6, 2019 at 10:00 am

      the only free trade agreement we should have is FAIR TRADE
      want to sell us $1 billion of stuff – then BUY $1 billion 1st and get trade certificate allowing tariff free sale
      all others subject to 40% tariff
      see SIMPLER THAN SIMPLE

      • RagnarD
        Dec 6, 2019 at 10:33 am

        But what’s fair about being able to print the world’s reserve currency?
        And how are we NOT going to abuse that privelge?

        Looking at it this way, it’s not about them taking advantage of USa, but USa taking advantage of the abilty to literally print money.

      • Prairies
        Dec 6, 2019 at 11:32 am

        The part that messes up the simplicity is $1B in USA/Canadian labour is a fraction of the hours purchased with $1B in Mexican labour. That is what this article is about.

  2. Andrea King
    Dec 5, 2019 at 7:44 pm

    It’s very interesting who/what Congress chooses to selectively “whack”.
    Interesting they would find THIS more worthy of their scrutiny, than monitor, audit, or inspect the NDMA and NDEA (rocket fuel) in generic medications the Chinese allow to be exported to the U.S.
    Note: One can only assume the meds that Congress consumes must be BRAND and made in the USA!

    • Off The Street
      Dec 6, 2019 at 12:12 pm

      The Dems lost their hold on automobile-producing states around the Great Lakes in 2016. It appears that their USMCA posturing is designed to help regain some labor votes for 2020.

  3. Beardawg
    Dec 5, 2019 at 8:00 pm

    Nice article. It would be interesting to see what Mexican citizens in the auto MFG cities are really spending their money on compared to their counterparts in US or Canadian auto MFG cities. Beyond rent and food, I suspect they are not spending much at all at $800/Mo (or less) in wages. No wonder Mexicans come to the US at risk of death to make a living.

    • mexico
      Dec 5, 2019 at 8:05 pm

      Mexicans haven’t come to USA for 10+ years

      What you have coming to USA is Salvadoreans, Guatemalans, and Hondurans, seeking to avoid the death of CIA created wars, and the CIA (“School of Americas”) trained death-squads, now being called ‘gangs’ that have descended north upon Mexico, and on to USA MS-16/13. These gangs have now totally taken over the USA prison system, they own it.

      Make no mistake, that Mexican’s dont’ need to go to USA for a poverty drop, since 2006 in places like Bend its white guys in pickup trucks that are mowing the lawns.

      Now still farmers would prefer mexicans to pick their fruits, especially wine grapes, but Central Americans will do.

      • Happy1
        Dec 6, 2019 at 9:50 am

        The general issues in Central America are extreme poverty, corrupt governance and policing, and drug trade related violence. The CIA was involved in some of these countries internal conflicts, but it was before the majority of the people in any of these countries was born, and the poverty and corruption and civil strife in this area is of much longer duration than the 1980s.

        In Nicaragua, the issue is actually the opposite of what you suggest.

        The Sandanista government that the CIA fought against during the 80s has become a corrupt dynastic dictatorship similar to Venezuela, with political killing and repression of student led protests for a more democratic society. This is the cause of people fleeing Nicaragua,in addition to the above description of the general problem in Central America.

        https://www.worldpoliticsreview.com/insights/26683/fears-of-a-civil-war-have-faded-but-nicaragua-s-crisis-is-far-from-over

        • Happy1
          Dec 6, 2019 at 9:54 am

          And where I live, in Colorado, landscaping and manual labor for construction and food service is still entirely composed of people from Mexico and to a much lesser extent, Central America. And they are a hard working and efficient bunch. Maids and cleaning services are also the same, with some Asian immigrants also included.

  4. HR01
    Dec 5, 2019 at 8:06 pm

    Nick,

    Thanks.

    If labor reform succeeds in Mexico, then surely it must be time to move the factories further south. Guatemala? Belize? Honduras?

    But call this observer a skeptic. Globalization has always been about labor exploitation. Multinationals been gorging on cheap labor for decades now and won’t give it up without a fight.

  5. WES
    Dec 5, 2019 at 8:11 pm

    Every country I have worked in has the same problem.

    Their own countrymen are their worst enemy!

    Mexican’s biggest problem are their fellow Mexican’s!

    • Keeper Hill
      Dec 5, 2019 at 8:45 pm

      Perhaps cartels is the word you are looking for?

    • Paulo
      Dec 6, 2019 at 10:17 am

      Actually Wes, your comment is missing something, imho. The exploited Mexican worker is where he/she is because of the rich overclass controlling all aspects of Govt and military, in cahoots with American multi-nationals and the American consumer. This is exactly what the rich overclass of USA, or Canada would also do here if they could get away with it. They’re closer to it in the US with Citizens United and ‘right to work states’. In Canada, under Harper’s conservatives, they allowed foreign workers to come in and work on Oil Sands construction projects citing the old ‘shortage of skilled workers’ meme. Companies set up welder training schools in the Phillipines, and Polish ironworkers came in. Luckily we still have enough Union membership that helped develop and foster ‘outrage’ and clout, and after a few years the foreign workers disappeared with changes to visa policy.

      If the Cdn Oil Companies could move the Oil Sands to Mexico or Central America, they would have done so. Just like the auto companies did in the ’80s. And the consumer wouldn’t care a whit if reg. gas was thirty cents cheaper just like the US consumer doesn’t care if their Tercel or F-150 with Mexican parts stays affordable.

      This is a result of Reagan’s ‘Morning in America’ NAFTA, and it was accomplished at the behest of the Auto companies. If it doesn’t get fixed now, it will be too late, imho. There won’t be an auto manufacturing site left in the US in 20 years unless it is almost completely automated with robot workers.

      Next up you’ll have to ‘production tax’ the robots, but be prepared to see higher priced goods. It isn’t a stretch to imagine natl Guard units tamping down resistance in aid of corporate friendlies, otherwise known as ‘Job Creators’ by their political minions. Anything and everything is on the table to enrich the upper class. Orwell wrote about 1984 as a dystopian visionary. He was just 40-50 years too soon with his predictions, although it’s closer every day with smart phones and the surveillance of willing subjects.

      Sure, the auto companies might just shut down and move to central America or some other nearby impoverished region. Maybe they’ll come back north to West Virginia coal country in another decade or two of no work mining.

      Thanks for the great article, Nick C.

      regards

      • Wisdom Seeker
        Dec 6, 2019 at 11:25 am

        Minor fact check: NAFTA was signed in 1993 by President Clinton. There was a prior US-Canada trade agreement from 1988 that was Reagan’s baby.

        Just want to make sure that the corrupt elites from both parties get equal credit for their “achievements”.

      • wkevinw
        Dec 6, 2019 at 11:31 am

        The result of the NAFTA agreement is certainly what is called out in the article: wage repression in Mexico; which metastasizes globally and especially regionally, i.e. to the US.

        At first (and still?) globalization sounds good. BUT, there must be certain benchmarks or it doesn’t make sense (for any party!).

        Blaming Reagan seems popular, but that was a long time ago and corrections could have been made.

        This paragraph gets at the main cause(s):
        “often carried out in connivance with local political and union leaders, has been a major boon for manufacturers, but ultimately a big drag on the Mexican economy, depriving it of the internal demand needed to drive robust, long-term economic growth and development.”

        i.e. corruption mostly originating in Mexico, but allowed to continue by powerful US interests.

  6. FDR Liberal
    Dec 5, 2019 at 8:41 pm

    So Ross Perot was and is correct. Shame on you Bill Clinton and every president repressing Mexican wages and by proxy US wages by exporting jobs to Mexico, etc.

    • Craig
      Dec 6, 2019 at 1:55 am

      @FDR

      Reminds me of the emperor’s obsession with lowering grain prices. In the last days of the Roman Empire.

    • Frederick
      Dec 6, 2019 at 3:16 am

      Of course Perot was right That was very obvious to me when I voted for him Anyone with any common sense could figure out that globalization would hurt the developed worlds economies not lift all boats as the PTB claimed

      • rhodium
        Dec 6, 2019 at 10:56 am

        In theory when labor has access to capital it makes them far more productive and in theory they get paid more because the marginal value of labor increases with a higher capital stock (real wages then driven up by the marginal increase in demand for labor and overall higher output of g&s). When you move factories to other countries you reduce the capital stock in the original country, lowering the value of labor, and in the new country where the market price of labor is low you massively increase the relative value of that capital. Which means it’s slightly good for the poor workers in the new country, very good for the rich capital owners, and bad for the workers in the old country. Pricing effects with regards to real income surely do not fully offset the net loss in wages and it is outrageous to suggest they will unless there was a raging boom in the market for workers in other sectors that workers were refusing to migrate to despite higher wages (in the U.S. this was not the case, just look at the labor force participation rate since 2000, I rest my case). This is all in theory but the economists who actually believe their own models would never suggest outsourcing is somehow good for workers. They were all paid shills or otherwise just operating under the premise that trade theory suggests that free trade boosts the economy, but what they didn’t mention or failed to include in their analysis is that the gains would primarily or entirely go to the already rich. America gave its workers labor protections and standards that improved quality of life but raised labor costs and increased the value of its currency as the economy grew, then turned it’s back on workers saying you’re all too expensive!

        • Wisdom Seeker
          Dec 6, 2019 at 11:30 am

          Rhodium, nice analysis.

          How will the process work now that the labor oversupply has been worked out of the system?

          What I am seeing is that China’s labor capacity is tight, so their growth is slowing and inflation (plus corruption) has brought costs up, so the marginal value of outsourcing there is going away.

          Are there any other “untapped labor markets” that can move the needle?

          If not, then labor scarcity could become a thing, balanced only by automation, robotics, and AI continuing to displace low-skilled workers.

        • rhodium
          Dec 6, 2019 at 2:34 pm

          I don’t profess to be an expert on what’s going on currently in labor markets especially in other countries. I have no idea if wage inflation in China has more to do with actual labor shortage or just the insane stimulus pushed by their government and you can’t believe their data is accurate at all so who knows other than anecdotally from people directly familiar with business in China.

          I do know that there are poor people all over the world who would jump at the chance to make better than subsistence wages though and that is a massive supply of labor just based on substitution effect rather than whether or not someone has a job or not. Generally to survive, people have to do something at least, it’s not like you could have a globe full of unemployed people without ubi/charity (ie robots do all the work) unless they’re all starving and homeless.

          So with that being said, from an American perspective, with regards to labor shortage I still defer to wage growth. Wages still are not growing much despite truly massive inflationary stimulus and that is my main sticking point for why I believe there is truly something broken in labor demand to this day. Either the lack of need for labor altogether or that only technical skills are increasingly needed (which many do not have) I do not know.

        • lisa
          Dec 7, 2019 at 10:50 am

          Very pretty. Great wrapping!

        • lisa
          Dec 7, 2019 at 11:45 am

          Again- to Rhodium-
          Rhodium is a very valuable commodity!
          https://en.wikipedia.org/wiki/Rhodium

          RE: your-“Wages still are not growing much despite truly massive inflationary stimulus and that is my main sticking point for why I believe there is truly something broken in labor demand to this day.”

          The labor demand is based on laborers that are primarily the young software programmers, and application developers. They are basically short-term rotational laborers performing piece-work, with no benefits, and no rights. They are working under privately owned short-term business operational platforms. Average tenure is 1 year. Short-term high wage, if they actually ever receive the “promised” not-signed contract agreed wages, and “carrot-dangling-just-out-of-reach”. If they keep their mouths shut, do what they are told, get in with the first round, and out quick enough to pocket any upfront rewards, they are ok, for the very short term. Provided they have no illness, no children, no assets. They can do fine if Mom and Dad don’t deplete their savings, and leave the piece-workers some asset, like a roof over their heads, and taxes don’t go sky-high, or hyper-inflation in the next 10 years. After the age of 50 good luck. For anyone else scrapping the barrel at $20 per hour or substantially less- the line is very abruptly and rudely- “don’t let the door hit you….”. If you wind up laying in a gutter somewhere, you did all kinds of work, and look what it got you. Nowhere, nohow, and you are not a friend of mine. Then you get the proverbial- kick, get out of my way, I don’t want to look at you, and the hypocritical- I’m on my way to Church, Synagogue, or Mosque, if they’re on their way anywhere at all.

          The new short-term operations platforms are withdrawing monies from the internal national monies. More dollar cycling occurs outside of the US, so without any “pricing” really being set based on demand within the economy, pricing is set outside of the slowing internal economy. Asset pricing increases as sales for assets are not being based on internal local demand, any sales of any assets occur by private capital exchange of closed external small groups or “cartels”.

          Presently, in the US, there have been strategic regional price setting/controls of certain essential commodities like gas, and food, once those escalate, and affect prices of essentially strategically depressed wages, new piece -workers, and workers at the $20/hr scale, the underlying concern, if it exists at all, is how long can these people keep running, and struggling to stay alive before they collapse. They may have emotional, physical breakdowns. They may kill one another. The incidents of young people committing suicide, adults killing one another, poor or not, drop in longevity etc. are all indicators of the cumulative effects of the real- no demand. The human psyche en-mass is being affected. Any crisis for workers is really the crisis in consciousness and inability to apply good principles, and goodwill effectively.

          …”then turned it’s back on workers saying you’re all too expensive! ”

          The inherent problem is even acknowledging that a human being is “priced”, that hypocritical thinking, is exactly what is so bad, and is presently the basis for all the drama, and the show.

          Should a human being being priced? Do you realize the significance of a price for your head, body or any specific part of your body?

          What used to be played out over longer time cycles just ain’t cutting it anymore, thanks or no thanks to AI. The hypocrisy is getting to the Show-and-Tell time. What you see is what you get is in reality,the fact that: you have been sold a bad message, and a bad bill of not goods.

          The new operational platforms are predatory platforms, they produce no product. Subscriptions based on personal-interest is not going to establish enough financial media transactions to support the growth economy cycles based on material good production of the past, unless there is some material good production in the present and for the future. Or maybe subscription is the new business paradigm, but for whom? What subscriptions are establishing revenue flows to you?

          If the premise of a business operating system is based on lies and bad-will, it corrupts itself, eventually. Presently, the time-frame of the corrupting process has become exceedingly short. The possibility is that it may not be as corrupt as some people lead some others to believe, or to not believe. Short is relative, the present debate is how long can the financialization continue without a total collapse due to limited demand, with no production of material goods.

          On average across the US, my generalization is that a house WITH a garage is hitting the $200,000 mark even in supposed depressed local economies. How many people right now can still come up with a 20% down, etc. etc. etc. Are there still a bunch out there, that would even be interested in buying one of the little shacks, that haven’t even had a quick-flip paint-job at least?

          It is getting very tricky to determine who is telling the truth and who is lying, and why, and how.

  7. Dec 5, 2019 at 8:54 pm

    A swing to the left, globally,
    means more inflation ( greater demand ),
    and with it, rising interest rates and
    over-leveraged companies going under ( less supply ).

    • nicko2
      Dec 6, 2019 at 3:34 am

      In that case, state supported corporations will fare the best.

      • Dec 6, 2019 at 10:49 am

        And we’ll all get free gasoline/healthcare,
        like in Venezuela, so long as you pay someone
        to wait in line all day for you, Nicko2.

        • Harrold
          Dec 6, 2019 at 11:32 am

          I am tired of the Venezuela diatribes.

          Can we talk instead about the capitalistic paradise of Somalia?

  8. Dec 5, 2019 at 9:00 pm

    Not much about how low-wage workers who can’t make a living in Mexico cut holes in the president’s impregnable border wall w/ cheap, Chinese made Sawzalls and ‘invade’ the US, looking for bread-and-butter dishwashing and lawn mowing jobs.

    All of it to support the auto industry. Add it all up: NAFTA-lite, wage repression, walls, Mexicans, governments are all dependencies of an industry whose products offer negative value or real returns for users.

    I’m wrong! How come the world is saddled with hundreds of trillions of dollars worth of debt?

    We’re burning the world on the installment plan and the best we can do about it is lie to ourselves.

    • nicko2
      Dec 6, 2019 at 3:35 am

      Technological innovation will solve the problem, an industrial robot is now cheaper than a worker.

      • Harrold
        Dec 6, 2019 at 11:33 am

        How are they going to get those industrial robots to purchase automobiles?

  9. WES
    Dec 5, 2019 at 10:36 pm

    Keeper: Cartels are still people! Just to give you a real life example of what I mean by people being the problem everywhere.

    I was working in a Moroccan phosphate mine building a bunch of electric mining shovels.

    I was talking to the number 2 mining company guy, while the French contractor was lifting the lower section of the boom to pin to a shovel’s revolving frame. The lifted boom wasn’t rigged quite right. Rather than set it back down and re-rig it properly, the French contractor had about a dozen Moroccans climb up and stand on one end of the boom to balance it correctly.

    The number 2 mining guys says to me. “Is this safe what they are doing?”

    I replied. “Hell No! That is why I am standing here with you! I want nothing to do with this! I said “One little bump and all the people standing on the boom will fall off and break their necks!”

    The number 2 mining guy says to me “No, no! I meant could they damage the boom! I can get another bus load of people tomorrow but I can’t replace that boom if they break it!”

    Now this guy is university educated in France, spoke 3 languages, so he was not stupid! And I knew him fairly well, or so I thought! But this was the last dam thing in the world I would have ever expected him to say!

    • WES
      Dec 5, 2019 at 10:39 pm

      In reply to Keeper Hill above.

    • MCH
      Dec 6, 2019 at 1:42 am

      I think the key point was in your last paragraph… university educated, in France, that should’ve set off all the alarm bells immediately. He has his priorities, and it isn’t the replaceables in the mine.

    • Frederick
      Dec 6, 2019 at 3:19 am

      There are lots of very high IQ sociopaths you know and no I’m not talking about US politicians

    • Paulo
      Dec 6, 2019 at 10:28 am

      Geez Wes, great comment. Very illuminating. My son helps build the giant mining shovels in the Cdn Oil Sands. They have a safety meeting at the start of every shift. They are not allowed to lift heavy parts that might hurt the worker, instead use whatever device needed. Disregarding a safety directive means instant suspension and possible/probable banning from the jobsite. He earns 200K+ per year with full benefits including a 7% from gross earnings pension contribution. His company understands that his knowledge and continued health is important and not easily replaced. His union makes sure it stays that way.

      • lisa
        Dec 7, 2019 at 12:13 pm

        Back in the 80’s I supervised crews in High Rockies, and in US desert assemble, and repair 25yard bucket P&H Shovels, similar equitable work environment. Safety very important for everyone, including keeping the mine operational, with minimal fatalities.

        Today in the US, because of subcontracting, that circumvents all legal responsibilities of local top contract awardees- we have electricians falling through roofs, and building falling down even at initial construction stages, then buildings like in San Fran, that are slowly collapsing. Global MNE’s, and I am being discreet in not mentioning any of the top names know what they are getting away with. The workers on the ground don’t the risks, the jeopardized, and compromised positions of the present subjugations. It is extremely bad in the US. Have you checked out any of the local workers as you drive by working for the subcontractors for your State Highway projects? Union or non-union? Long-term, short-term, or temporary employment? Citizens or non-citizens???

    • lisa
      Dec 7, 2019 at 11:57 am

      Great example- reality in 2019. The new global working corporate model.

  10. raxadian
    Dec 5, 2019 at 11:07 pm

    So? Just make sure 40% of the workforce ears the minimun wage by firing as much people as you can and replacing them by industrial robots. automatization started on cars factories after all.

    • MC01
      Dec 6, 2019 at 4:06 am

      Between 1984 and 1988 Ford and GM sank an authentic fortune into industrial robots and other hi-tech production methods to “beat the Japanese at their own game””.
      Then they discovered that, surprise surprise, Toyota and Honda were pretty low-tech when it came to the assembly line. For example the famed system that allowed Japanese car manufacturers to change dies for bodywork parts in under 2 minutes relied solely on solid teamwork and well designed mechanical parts most machine shops could easily manufacture in 1980: it had been patented by a Mazda assembly line technician in 1978 after he had fiddled with the system in his spare time to win a cash prize from JAMA.
      As GM was sinking $12 million (in 1984 money!) into a complicated andon system that relied on computers, Toyota was still using big colored lights over the workstations to alert assembly line supervisors of problems.

      One of underlying principles of any production system worth his salt is that computers and machines must serve humans, never replace them, otherwise you’ll just end up propagating the original errors, as small as they may be.

      • raxadian
        Dec 6, 2019 at 5:50 am

        The trick is using industrial robots that can last, be modified and reprogrammed, since it takes at least a decade to get more than you invested in and that if the factory stays in the same place.

        Unfortunately the tech industry ideal of planned obsolescence goes both ways.

        And despite what you said robots, and programs, are still replacing human jobs anyway, even picking up fruit.

        The problem is that car factories still need humans to look over things, fix problems, do finishing touches and so on.

        Banks plan to teduce their workforce by 40% in the next five years to give a recent example.

        • MC01
          Dec 6, 2019 at 1:56 pm

          Industrial robots were born to do dirty and dangerous jobs. Read: machine the highly enriched uranium that went into nuclear weapons to exacting standards of precision.
          That’s what they keep on doing these days in all industries, at least those worth their salt.

          Since you mentioned agri machinery, Braud has been manufacturing grape harvesters since 1975 and was bought by Fiatagri, which later became CNH, in 1984. It’s hardly new technology, and the top models sold by CNH nowadays can also be used to defoliate and prune grapevines and apply biocides.
          Yet go to Italy, even in the wealthiest areas of the North, and you won’t see a single grape harvester at work. It’s all done by hand, invariably by illegal immigrants. Why? Simple: men are still cheaper than machines, especially when control are either inexistent or phoned in days beforehand.

      • Off The Street
        Dec 6, 2019 at 12:16 pm

        Not as many consulting fees in that Mazda approach, so obviously got de-emphasized. Platinum is specified even when steel will do.

    • fajensen
      Dec 7, 2019 at 4:38 pm

      If your robots breaks down, you still have to pay for the financing, if your workers break you just get another one!

      Taxpayers pick up the tab fixing the workers (or the workers family) not you.

      That is why everywhere with the proverbial dangerous and dirty work, they use people not expensive robots.

  11. Satya Mardelli
    Dec 6, 2019 at 12:08 am

    What’s the difference between capitalism and socialism? In a capitalist society, man exploits man, and in a socialist one it’s the other way around.
    Therefore, poor Pedro is screwed no matter what the outcome.

    • Briny
      Dec 6, 2019 at 3:16 am

      That was the thought I had even before I started to read the comments. Good thing I waited on posting that.

    • Wisdom Seeker
      Dec 6, 2019 at 11:43 am

      Human’s are tribal-hierarchical by nature, so that’s endemic to all human systems. The practical difference is that in the better human systems, Pedro now has a parking problem, whereas in the worse systems Pedro is so poor that he can’t even afford his own wheels.

  12. sierra7
    Dec 6, 2019 at 12:39 pm

    Having had been involved for decades in business and organized labor it didn’t take a genius to see what would happen within NAFTA (globalization in general) to labor. The destruction of “rules of the game” for labor will continue unless the common workers fight like hell to re-organize and demand some dignity with their efforts. “Capital” is blind and has no conscience. The monied classes should be careful what they wish for; it could be soon that there will be no-one left to “consume” the junk they wish to produce with “cheap” labor.

  13. IronForge
    Dec 8, 2019 at 6:47 pm

    Bad Deal.

    This is why NAFTA and its derivative USMCA FTA need to be scrapped.

    USA Mkt Auto Jobs belong in the USA.

    The

    • IronForge
      Dec 8, 2019 at 9:22 pm

      Sorry,
      The Wage Suppression Scheme works not only against Workers in MEX – it also indirectly suppresses USA Worker Wages as well.

  14. BlueCat49
    Dec 15, 2019 at 9:59 am

    The entire USMCA is unConstitutional and should be rejected by the Senate. There is NOTHING that can be done to make it even remotely Constitutional.

    Of course, the Senate will authorize it and no one has the money to waste challenging it.

    While it is probably a generally positive agreement for America, I wonder if Trump knows it is unConstitutional.

    Start with KrisAnne Hall’s Oct. 16, 2019, podcast and then do your own research from there.

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