Why Mexico?

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First off, this is an honest question. Let's please not turn this into a flame war. It's a question to which I don't know the answer.

Okay...why are a number of cars built in Mexico? I knew the PT Cruiser was, and the Ford Fusion. I didn't know the Cadillac SRX was also. Is it purely to save cost? Are Mexican plants non-union shops?

I can kind of see the connection between US and Canada, for a few reasons. Canada is real close to Detroit, so spread across the border there is reasonable. The Canadian auto market also seems to be much closer to our domestic one than Mexico's is. Do a lot of the cars made in Mexico stay in Mexico to be sold?
 
It's all about the money. I'm sure there are others but these quickly come to mind.


MAW is nothing like the UAW or CAW.
Shipping's still cheap, no boats required.
Mexico isn't trying to steal your IP like China.
NAFTA reduces some of the other costs.
 
Mexico is a source of low-cost labor. The auto industry has been sourcing parts and building cars in Mexico for as long as I have been an engineer, at least since 1980.

Frankly, I don't see why ALL manufacturing hasn't gone to Mexico or other low-cost labor nations.

Also keep in mind that I work for an automotive suppplier, and the American auto manufacturers dictate that we must source material and manufacturing from places that have low-cost labor.

As I see it, we're still not finished sending manufacturing to low cost nations.

There's pros and cons to sending manufacturing offshore. I won't mention all of them, since they can be touchy and emotional subjects, but I did want to mention that, while it is a real cost savings to source "dumb" parts, which are banged out thousands at a time (e.g., nails, fasteners, etc.), it's still difficult to source complicated parts, which may require multiple design iterations during the year (e.g., ABS units, computer modules). Communications between engineering and manufacturing is difficult over long distances and more so with language difficulties. Those parts are better sourced locally to the company.
 
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Cheap, union-free, labor and read up on NAFTA.


Plus easy and low cost shipping to U.S., especially California and Texas which are a huge part of the total U.S. market.
 
Originally Posted By: Kestas
Also keep in mind that I work for an automotive suppplier. The American auto manufacturers dictate that we must source material and manufacturing from places that have low-cost labor.


This is interesting. If you can answer, is this a specific contractual requirement (that you out-source materials and/or labor), or simply a route you must take to hit a certain end product's low price point?

A friend of mine in Michigan works for a supplier, and he says that any lay person would be amazed at the designed-in compromises to hit extremely challenging price targets set by the client.
 
The automakers are really intrusive and dictatorial in the way suppliers conduct their business. They want to see how you cost everything out to manufacture the part. In years' past they even sent an edict to flat out reduce prices of supplied product by 5% each year... sometimes retroactively. They even tell us where to design out certain features that affect product quality to save money.

This edict of "using low-cost labor" is really a veiled way of saying to send it off-shore. Everybody knows America cannot compete with off-shore labor. It's the automakers way of saying it without really saying it.

We have had to back out of supplying certain parts because we would have produced them at a loss. It pains us to do so, knowing that the business goes to the competitor, but sometimes we have to.

Some concessions, though, included a guarantee that we will get the business for a certain number of years. Though the executives hold their heads high and proudly mention this fact, I personally think these guarantees aren't worth the paper they're written on.
 
Once I was consulting for a trucking company and one of the managers there told ma about a windshield manufacturer that would ship windshields to Mexico where they would put the gasket around it and ship it back to the US. That still sounds crazy but dollar wise it probably made sense then.
 
100% of all steering wheels and wiring harnesses are made in Mexico. These parts require a lot of intensive labor to produce.
 
Getting back to vehicle construction, are auto makers walking a fine line with "patroitism" and unions here as well. For example, the Fusion. I know Ford has many fine plants in the US. So why doesn't it build the Fusion here? If it's cost-savings, why don't they build ALL of their vehicles in Mexico, like the Edge, F-150, etc? I imagine then that they'd get into disputes with labor unions (and fans of the brand in general) for off-sourcing all of its vehicle manufacturing.

Maybe it's just vehicle-specific. I think Ford builds most of its vehicles in the U.S. or in Canada...so why is the Fusion the only one built in Mexico? Same with Cadillac...I didn't know they built ANYTHING in Mexico until I read about the SRX in the other thread.

And again, this isn't about one brand or one vehicle in particlar. I'm more curious about the practice in general. And thank you all so far for the intelligent discussion.
 
some lines are 'tooled up' to produce a certain vehicle and can't easily adapt. some factories are kept open because of negotiations w/ the union and local gov't. incentives and tax breaks all figure into the equation too.
it's all about the dollar. if ford can save a buck by changing mfg location, they'll do it.
 
Originally Posted By: Hokiefyd
I think Ford builds most of its vehicles in the U.S. or in Canada...so why is the Fusion the only one built in Mexico?


In addition to the Fusion, don't forget Lincoln MKZ, Fiesta, F-150 (domestic market Lobo), and until 4th QTR 2010, the Mercury Milan...plus several engine plants.
 
Originally Posted By: Hokiefyd
Getting back to vehicle construction, are auto makers walking a fine line with "patroitism" and unions here as well. For example, the Fusion. I know Ford has many fine plants in the US. So why doesn't it build the Fusion here? If it's cost-savings, why don't they build ALL of their vehicles in Mexico, like the Edge, F-150, etc? I imagine then that they'd get into disputes with labor unions (and fans of the brand in general) for off-sourcing all of its vehicle manufacturing.

Maybe it's just vehicle-specific. I think Ford builds most of its vehicles in the U.S. or in Canada...so why is the Fusion the only one built in Mexico? Same with Cadillac...I didn't know they built ANYTHING in Mexico until I read about the SRX in the other thread.

And again, this isn't about one brand or one vehicle in particlar. I'm more curious about the practice in general. And thank you all so far for the intelligent discussion.


Ford has been producing cars in foreign markets since 1905. They operate plants all over the globe and hopefully always will. I think what the big change has been over the last thirty or so years is, that it used to be a consumption question. IE, you produced cars where the raw materials were available and the product would be consumed. Today, as you point out, the economic questions involved have become the determining factor. And yes, it is a balancing act. It is in the companies best interest to maintain a strong workforce in the US and Canada, but the flip side of that coin is that Ford historically has also sold a lot of cars in South America and Europe...so they have always had a strong manufacturing base there as well.

Moving forward, I think that the best way to view the world markets and the competition between them as more regional based. The NA hemisphere will be in competition for market share vs the SE Asian and Chinese producers when they get onboard. From that perspective, I would rather see a small share of our jobs go to Mexico, before they go to China. But then again, as the Chinese market expands for buyers of cars, and it is growing exponentially. Then it will be smart for GM and Ford to invest there heavily, which they are. Somebody is going to be selling them cars, might as well be us. The big question is, will the production in China remain "for Chinese consumption"...like in the past, from the very beginning, build em where you sell em makes sense.
But if they lay off all the workers here and start producing in China for export to the US/Canada, that would be a huge problem in my book. Dont see that happening though.

For the next few years at least, the auto job outlook will be fairly good. After the huge layoffs of the last few years, it has to be, it couldn't get any worse. They are going to need people going forward, the last ten months has seen at least ten thousand either brought back or new hire for example.
 
The Problem isn't Mexico, Its the USA. Government, Taxes, and what not has made it [censored] near impossible to keep a business running in these United States of Ours. Lawsuits, Unions, I mean, dang, its amazing any business makes any money here.

America is to blame for their own shortcommings. When a Communist Country owns 7 Billion (at last count) of our National Debt??? Something is SERIOUSLY wrong!!

Just my ten cents.
 
Originally Posted By: Jeffs2006EvoIX
Just my ten cents.


That would be approx. 0.5 Yuan.

On a more serious note, Buick sells more cars in China than in the U.S. I was amazed at how many of them crowd the streets in the largest cities.
 
Quote:
Do a lot of the cars made in Mexico stay in Mexico to be sold?


Yes.

And they are sometimes better than our versions.

Mexico had a Dodge Stratus with the same turbocharged 2.4 as the Neon SRT/4 and PT Cruiser GT. All of the US Stratuses (Strata?) were naturally aspirated. Mexico City is at an altitude of something like 7000 feet so maybe that's why.

The Ford Crown Victoria and F-150 are very popular in Mexico. I see F-150s with Mexican plates (badged LOBO)on a regular basis. I thought all Crown Vics were built in Canada.
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Went all the way across the USA to get to them.

And Volkswagen? I've talked to a lot of Mexican nationals that had a Golf at one point or another.
 
I used to own a Mexican built Ford Escort and the quality was excellent. I had absolutely zero problems with the car--the most glitch free auto I've ever owned. Similarly I was rebuilding some boat alternators and I ended up purchasing parts made in Mexico and they have been more reliable than the previous U.S. parts. Made in Mexico does not have negative connotations in my mind. I like Corona too...
 
Originally Posted By: Jeffs2006EvoIX
The Problem isn't Mexico, Its the USA. Government, Taxes, and what not has made it [censored] near impossible to keep a business running in these United States of Ours. Lawsuits, Unions, I mean, dang, its amazing any business makes any money here.

America is to blame for their own shortcommings. When a Communist Country owns 7 Billion (at last count) of our National Debt??? Something is SERIOUSLY wrong!!

Just my ten cents.


I think that about sums it up!!! the national debt is what?? 14 trillion? when our dollar has les and less value, fuel prices will go up!! Basically this is not a suprise our president said this will happen.
 
As a textile worker myself I despise the outsourcing to mexico, china etc.. Textiles are cutting edge technology, and people may scuff at hat, however the very foundation of textiles is cost, and the only way we can compete within or outside of this country is by technology, and of course in house changes, modifications etc...

I see many textile finishing operations sent to mexico because of EPA, and I would also assume the EPA plays an important role in many thing sent to mexico other than just cost.

One thing about sending anything to mexico for finishing, or production is that if the finished product is bad, or does not meet the required specifications your just lost double the money that of an in house produced product.. when things are outsourced to other countries one criteria is in mas quantity.. and for some reason as of yet it seems noone has learned to have someone to check in between production stages... as far as I have seen from the lost money in out of spec finished products compared to the money saved it's a wash...

Now that's mexico, when it comes to china it seems they produce complete finished products, and the consumers either accept the inferior products, or find another source... if they want to attain a better product it cost about the same, maybe more when purchasing quality made items from china or other foreign countries than to be made here in the US
 
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