10 votes

Japanese auto companies triple Mexican pay rather than move to US

4 comments

  1. [2]
    skybrian
    Link
    This seems to effectively be setting a high minimum wage for some Mexican workers, which could have interesting effects on labor markets in the surrounding area? (As well as encouraging more...

    This seems to effectively be setting a high minimum wage for some Mexican workers, which could have interesting effects on labor markets in the surrounding area? (As well as encouraging more automation than would normally happen.)

    3 votes
    1. KapteinB
      Link Parent
      I did find it interesting at the time how labour-friendly the new trade agreement seemed. I'm guessing it was to ease negotiations. The intention was of course to move production to the US, but if...

      I did find it interesting at the time how labour-friendly the new trade agreement seemed. I'm guessing it was to ease negotiations. The intention was of course to move production to the US, but if the agreement had flat out said "40% of car parts need to be made in the USA", it would have made negotiations more antagonistic.

      3 votes
  2. KapteinB
    Link
    Of course they weren't going to change their supply chains overnight. I don't doubt that Trump himself and many of his cultists believed so, but Nikkei really should know better. I do think the...

    The ratio of US-Canada parts among Mexican-assembled vehicles sold in the U.S. was 13.5% in 2018, according to the U.S. Department of Transportation Highway Traffic Safety Administration. Trump's theory was that U.S. production would inevitably increase to meet the 40% requirement, but Japanese automakers, which had already positioned their production bases according to the old NAFTA regime, are not simply willing to pull up stakes and redeploy.

    Of course they weren't going to change their supply chains overnight. I don't doubt that Trump himself and many of his cultists believed so, but Nikkei really should know better. I do think the percentage of US/Canadian parts in Mexico-built cars will increase though, and I wouldn't be surprised if it already has since the deal was signed.

    2 votes
  3. grungegun
    Link
    An unexpected boon for Mexico?

    An unexpected boon for Mexico?

    1 vote