Why Mexico?

[Glockenspieler]

I think that there is alot of knee jerk responses to this that aren't justified. Look, UAW adds costs to labor that contributes to production but not all work is union work. But, for US factories, all of the work is still done in the US, and hence, people need/expect to get paid in wages that allow one to earn a living in the US. In general, cost of living, worker expectations, and the labor market yield lower labor costs in Mexico. It is not the unions because many nonunion shops still decide to relocate some aspects of production to Mexico.

I do also think it is important to understand that both union and nonunion shops in the US incur fairly significant costs with respect to health care expenses. I think this is one thing that is vastly underappreciated. European and Asian have employment costs that typically do not include significant health care costs because those costs are off the shops books and on the government provided health care system. You can complain until you are blue in the face about government sponsored healthcare, but for firms located in countries where such care is available (or perhaps not required, I am not sure of the situation in Mexico) this is a significant cost savings.

So, US located shops have several disadvantages that are not due to their tax burden, government regulation, nor union specific demands. One would hope that those cost disadvantages are offset by greater expertise of the workforce, but then that is always an open question in the world that we live in.

 

[rclint]

I don't want to keep drugging up this post, but a lot of varied opinion, with a few possible facts.

Mexico can also be an import place as well, they can ship about anything into Mexico from china, then do little to no assembly etc calling it made in Mexico. I myself do think Mexico is used as a port for other countries to ship to get the badge made in Mexico especially when talking about cars etc. I wouldn't say the cars are made in china, but I would say many of the parts come from china... but just as well that may be the same thing that happens in the US with assembly ?

I don't think wages, and such run the automotive industry into Mexico, if so someone is making some HUGE profits because I for one have not seen the price come down any on new vehicles. That may be the best fact I come come up with at this time is profit combined with regulations.. and of course lawsuits, taxes, EPA.

As far as wages the automotive industry (along with any high tech) should be making a good healthy wage... The fought for it back when Henry Ford was fighting the union tooth, and nail.. as well look at the manpower replaced by robots, and other types of automated work done by machines reducing the number of people working.

Another thing we are an assembly line country when it comes to automobiles etc, any large assembly type work after the R&D has been done we are an outstanding people for assembly line work, it has worked great for many many years.. in the world wars, and on assembly line is our kind of work.. we can/could out produce anyone in the world... BUT here is a problem the government started taxing all the parts etc in stock for a company, and they come up with just in time which has hurt this countries workforce, economy, manufactures from any standpoint I can think of the most.

The government is looking for a place to tax, someone is going to pay taxes somehow.. and it looks like it will be our job as the countries workforce/working class to do so more, and more in the future as we have less, and less things being produced in the US

 

[mechanicx]

Originally Posted By: Glockenspieler
I think that there is alot of knee jerk responses to this that aren't justified. Look, UAW adds costs to labor that contributes to production but not all work is union work. But, for US factories, all of the work is still done in the US, and hence, people need/expect to get paid in wages that allow one to earn a living in the US. In general, cost of living, worker expectations, and the labor market yield lower labor costs in Mexico. It is not the unions because many nonunion shops still decide to relocate some aspects of production to Mexico.

I do also think it is important to understand that both union and nonunion shops in the US incur fairly significant costs with respect to health care expenses. I think this is one thing that is vastly underappreciated. European and Asian have employment costs that typically do not include significant health care costs because those costs are off the shops books and on the government provided health care system. You can complain until you are blue in the face about government sponsored healthcare, but for firms located in countries where such care is available (or perhaps not required, I am not sure of the situation in Mexico) this is a significant cost savings.

So, US located shops have several disadvantages that are not due to their tax burden, government regulation, nor union specific demands. One would hope that those cost disadvantages are offset by greater expertise of the workforce, but then that is always an open question in the world that we live in.


I agree. It's not just union or high paying jobs that were outsourced because they were too "expensive" for the US market. Manufacturing and production jobs have been outsourced that were previously profitable in the US, non-union, low paying sometimes $8/hr, no benefits or retirement, using temporary workers etc. But that wasn't good enough for the outsourcers. Hypocritically they claim the US market is too expensive to produce in, but they all want to turn around and sell the outsourced production in the high priced US market and not just in the low cost market they outsourced too.

That's not to say that taxes and regulations couldn't be trimmed somewhat, but there were higher taxes and regulations in the past. It's just a red herring and anything much more than free is too much for the modern day extremists. If highly productive, educated, local ~$8/hr and no benefits production workers is too expensive for the US market, then who isn't too expensive to be outsourced?