Posted on 08/16/2016 8:14:59 AM PDT by Rusty0604
North American auto OEMs and their tier 2 suppliers have been in a race to move auto production across borders to low-cost countries (LCCs) for the past couple of decades as soaring wages, pension and OPEB obligations made production in the U.S. all but impossible. Supporters of minimum wage hikes could learn from the efforts of the United Auto Workers Union which did a masterful job negotiating off-market wage and benefits packages which ultimately only served to provide their members with permanent job losses.
Of course, the groundwork for the shift of auto production to Mexico was laid with the passage of NAFTA in 1993 by former President Bill Clinton (a fairly inconvenient fact that Hillary would prefer to forget). Since then, Mexico has been a huge beneficiary of automotive plant relocations with offsetting closures coming from the U.S. and Canada. A chart from the Wall Street Journal, perfectly illustrates the transition of production capacity to our southern neighbor.
Mexico Production Share
And now, with Detroit unemployment still over 10% (in spite of Obama's stellar jobs "recovery"), newly constructed auto plants in Mexico have only 1 problem, they can't find enough labor.
Per the Wall Street Journal, soaring auto demand (or if you're as cynical as we are, soaring demand for subprime paper backed by loans on brand new $70,000 Escalades made to people with a 550 credit score) and substantial new auto manufacturing capacity in Mexico has resulted in a bit of a labor crisis. To attract workers, OEMs are being forced to pay over 300% more than minimum wage and provide incentives like retention bonuses and "new cowboy boots." Another lesson for minimum wage supporters...labor markets work...when labor demand exceeds supply then wages rise. Unfortunately, the opposite is also true as low-skilled American workers are acutely aware.
Auto-industry investment in the country accelerated in the 1990s after the signing of Nafta. In the lead were Detroit car makers and parts suppliers looking to avoid high labor costs at their unionized plants in the U.S. Today, with an auto-production boom in high gear, those advantages are being chipped away.
Toyota Motor Corp., BMW AG, Ford Motor Co. and several other auto makers have committed to spend a combined $15.8 billion to build new assembly plants or expand existing factories. That is on top of the more than a dozen plants already in operation and billions more being spent by auto-parts suppliers to keep pace.
The competition for employees—both finding and retaining them—is nudging up labor costs. Retention and retraining programs are becoming the norm as are bonuses for employees who agree to stay in place, especially those with valued skills. Some factories are luring recruits with perks such as a new cowboy boots. Vacancies are becoming the norm.
Auto-industry investment in the country accelerated in the 1990s after the signing of Nafta. In the lead were Detroit car makers and parts suppliers looking to avoid high labor costs at their unionized plants in the U.S. Today, with an auto-production boom in high gear, those advantages are being chipped away.
Toyota Motor Corp., BMW AG, Ford Motor Co. and several other auto makers have committed to spend a combined $15.8 billion to build new assembly plants or expand existing factories. That is on top of the more than a dozen plants already in operation and billions more being spent by auto-parts suppliers to keep pace.
The competition for employees—both finding and retaining them—is nudging up labor costs. Retention and retraining programs are becoming the norm as are bonuses for employees who agree to stay in place, especially those with valued skills. Some factories are luring recruits with perks such as a new cowboy boots. Vacancies are becoming the norm.
“We have a huge supply gap in Mexico that needs to be resolved,” says Stephan Keese, a Chicago-based partner at consulting firm Roland Berger, which works with manufacturers in Mexico. “We’ve only seen the tip of the iceberg of this shortage. Labor rates going up will be unavoidable.” Mexico Auto Jobs
Still wages aren't nearly high enough to offset the cost benefits of moving to Mexico which still remains among the cheapest places in the world to build cars.
Ford is scheduled to open a new $1.6 billion small-car assembly factory in San Luis Potosí in 2018 and hire 2,800 workers. People familiar with the matter say Ford will produce its Focus there, which is currently built in Michigan.
A contract reviewed by The Wall Street Journal puts factory wages at the facility at about $1.15 to $2.30 per hour, on par with what other auto-assembly plants currently pay in the region. The move to Mexico will yield cost savings of about $1,300 per vehicle, or about $300 million a year, according to manufacturing experts familiar with the Detroit car maker’s finances.
Labor shortages are regional and are most pronounced in large industrial towns like Juarez, Monterrey and San Jose Chiapa.
The scramble for workers is most pronounced in Mexico’s industrial strongholds—cities such as Juárez in the north of Mexico—and in the central, heartland states of Guanajuato, Aguascalientes and San Luis Potosí. In Guanajuato, manufacturers including Honda and Mazda Motor Corp are busing workers from as many as two hours way, labor recruiters say.
In Juárez, home to nearly 300 factories, large banners around the city advertise openings, new shift work and benefits. To avoid bumping pay, employers are increasingly offering perks such as English classes, use of soccer fields and $200 referral bonuses, or about a month’s pay, for those who recommend new hires. Local officials estimate the city’s manufacturing sector has nearly 15,000 unfilled jobs.
And what better way to close than a short clip from South Park that beautifully portrays the sentiments of all the unemployed UAW workers in Detroit.
Mexico's New Auto Plants Unable To Find Enough Labor... As Detroit Still Suffers Massive Unemployment
Perhaps some millions of illegals here could go back home to take those jobs.
What a mess.
I’ve worked in San Luis Potosi since 2004 and it’s amazing how much has changed. It was a small manufacturing town that’s really begun to grow. Historical city center now surrounded by growing suburbs and more affluent hotels and restaurants. And a 19-1 exchange rate!!! It’s like a vacation from US and China manufacturing.
If Mexico is short of manpower? Call Home Depot.
Hell! They are all here and on welfare. Why work?
Let’s all move to Mexico!
It surely must be close to empty by now!..............
That is understandable. The Mexicans are in the United States.
Why work when you can get USA money for free?
How many folks left in Detroit actually have experience building cars?
Minimum wage in Mexico is $4.25/day.
If we are talking 8 hour days, and we are probably talking 10 or 12, that’s $0.53 an hour.
So auto companies are being forced to offer 3x minimum wage or $1.59/hour plus a pair of boots.
Meanwhile the US will keep losing jobs and industries until our wages fall to $1.59/hour and we can compete.
Thanks open borders crowd.
Becoming a drug gang member is easier and pays a lot more I'd think.
Well. Some of Detroit just doesn’t want to work.
Where I am, about 5-6 hours north, we have a huge and serious labor shortage. Super low cost of living, immense natural beauty and wildlife.
OK - redneck and lotsa snow.
But a short move north would provide plenty of jobs.
In America, we incentivize companies to go overseas through a thousand different tax, insurance, health-care, tort and environmental policies
We also incentivize a good part of the low-skilled population to stay unemployed through various welfare, tax, health-care and insurance policies.
We cover it all up because we have, temporarily, a totally fiat, unbacked dollar, and massive federal debt that can pay for it all.
“Perhaps some millions of illegals here could go back home to take those jobs.”
They’re probably looking for employees with an IQ above 80.
A lie refuted by the fact that somehow Toyota makes the best car in the world, the Camry, in the USA.
Somehow the sticker price never seems to reflect the cheaper labor costs. The bastards.... F them.
Robots don’t donate to the Democrat Party.
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