Posted on 09/21/2012 11:00:32 AM PDT by JerseyanExile
At Siemens’ high-voltage equipment plant about two hours’ drive from Mexico City, workers move about the polished floor, assembling and testing parts of circuit breakers for use in electrical substations.
Until a few months ago, the 160 parts for these enormous devices, with protruding poles that give them the appearance of stage props from a set of Frankenstein’s workshop, were assembled in India or China.
But today, the assembly is carried out in Mexico. By March next year, most of those 160 parts, which currently come from Germany and Asia, will be produced there too. The company has also chosen Mexico as the location for a new surge-arrester project instead of investing to expand production in China.
The shift in production at Siemens is part of a little publicised manufacturing revolution in Mexico taking place across a range of industries from cars and aircraft to refrigerators and computers. For the first time in a decade, Latin America’s second-largest economy has become a credible competitor to China.
During the first half of this year, Mexico accounted for 14.2 per cent of manufactured imports into the US, the world’s largest importer. In 2005, Mexico’s share was just 11 per cent. Surprisingly, China, which gained huge chunks of the US import market for many years, has started to lose ground. From a high of 29.3 per cent of the total at the end of 2009, it has now shrunk to 26.4 per cent.
While winning a bigger slice of the US market, Mexico has diversified its customers. A decade ago, about 90 per cent of the country’s exports went to the US. Last year, that figure fell to less than 80 per cent. Suddenly, it seems, Mexico has become the preferred centre of manufacturing for multinational companies looking to supply the Americas...
(Excerpt) Read more at ft.com ...
Mexico has always been the obvious and logical place to “offshore” your manufacturing, for reasons of geographical and cultural closeness.
It didn’t happen, simply due to security threats and corruption. You can’t manufacture there if your execs are being kidnapped and your trucks are being hijacked (and you’re being squeezed for money for the party).
So a lot of the manufacturers who were first to go in there shifted to China. If they are going back to Mexico, it must mean that security has become less of an issue. That surprises me, with the veritable mafia war up on the border.
Maybe someone here at FR can comment; has security improved in the last few years there? That isn’t my impression from press reports at least.
Wages in China are going up to the point where other places are more economical, and Mexico can gain, especially considering Mexico’s proximity to the US and sharing timezones with us.
The recent riots in China, targeting the Japanese embassy, and Japanese businesses, certainly aren't helping matters.
No, Mexico shoots illegal immigrants and is an incredibly xenophobic country. Immigration to Mexico is microscopic, and they hate immigrants, especially Americans.
Look's like China is hemorrhaging money, jobs, manufacturing.. what is going on there ?
"Chasing Poverty"...that's what multinationals do.
The USA could be getting those jobs down south, and could do more to bring more jobs back to the USA if only the unions would get out of the way and die like the dinosaurs, and less taxes and regulations
It will never be cheap enough here even without all of that. Mexico will always be a hellhole, because it's people and culture make it that way. Wages will always be lower then the United States unless our standard of living descends to theirs.
And when that happens, who will be the customers for cheap crap from Mexico and China? Them?
Hasn't worked out that way.
Isn’t this what NAFTA was supposed to do ?
We ship a lot of lumber into Monterrey. Business there seems to be very good. I think most US citizens are sick of buying products made in China. If I had a choice Mexico vs. China, I would always pick Mexico. OF Course, I pick Taiwan, Malaysia, South Korea, Japan and even Vietnam over China.
Good, on several counts.
First, we should WANT to have our neighbors be prosperous, and this would help a lot.
Second, if Mexico is prosperous, less of them will come here - which is really what anyone normal would want. Who WANTS to leave the land of your birth, all other things being roughly equal? This would help it come closer to being roughly equal.
Third, more prosperity in Mexico makes it less likely that it will go more Socialist, let alone full Commie like Cuba. More of them will say "I built it" and give the finger to those saying otherwise.
Finally, it'll take money out of the hands of the Red Chinese. They have NEVER been our friend, and every day that passes reinforces this point. Manufacturing needs to be diversified anyway, and even if we had perfect relations with China it would still be in our interest to have yet another source for manufactured goods (though I'd like a lot more to be located within our own borders, but that's a whole other issue).
This is unadulterated good news.
Also, international shipping has exploded so much that port facilities are strained, and there are limits to how much ports can handle. Trade has dropped off somewhat recently, but it is an advantage that Mexico does not need to ship through a port facility in order to ship to the US and Canada.
A lot of companies that left the US for Mexico when NAFTA started....ended up going to Communist China.
Commie China is not the cheap labor place anymore. Its population is starting to decline
Mexico is not much of an option. The Mexican Drug Cartels run most of the Mexican states, and, Mexican population is now at the threshold of declining...its birthrate dropped to less than replacement (less than 1.7 children per woman)
The days of Liberal Free Trade Globalism are over. There is nowhere to run for cheap labor
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