Thread: U.S. Auto Woes Hurt Mexico

My heart bleeds..

http://www.detnews.com/apps/pbcs.dll/ar ... /812250386

Thursday, December 25, 2008
U.S. auto woes hurt industry in Mexico
Alexandra Olson / Associated Press

MEXICO CITY -- The U.S. auto bailout lifts the threat of imminent collapse from plants that have been a steady source of jobs in Mexico. But the rescue, backed by American taxpayers, is likely to slow investment in Mexico's auto industry, one of the fastest growing in the world.

Lured by low labor costs [and No enviromental laws and just plain GREED] , Detroit's automakers have been critical to an industry that now makes up 3 percent of Mexico's gross domestic production and accounts for a fifth of its exports. The 13 plants run by Ford, Chrysler and GM account for more than 50 percent of Mexico's auto production.

While nothing in the $17.4 billion U.S. government loan package prohibits it, expansion outside of the United States using taxpayer money would most likely lead to a huge backlash. [No Sh*T Sherlock!]

"They really need this money, so my guess is that they will try to stay away from making new investments in Mexico in the short term," said Juan Pablo Fuentes, an economist with Moody's Economy.com.

Lawmakers have made clear they expect U.S. carmakers to keep jobs at home. And they have leverage: $4 billion of the auto loan package will only be made available if Congress votes to release $350 billion in the financial industry bailout fund.

Mexico is heavily reliant on exports to the U.S. Three-quarters of vehicles produced in the country are exported, 70 percent of them to the U.S. As U.S. car sales plummeted, Mexican auto exports fell nearly 8 percent in November and production declined 2.1 percent.

General Motors, which employs some 12,700 people in Mexico, released more than 600 workers when it stopped making the Suburban at its plant in Silao. Chrysler, which employs about 5,000, laid off 800. Both companies said they will idle several Mexican plants in January.

Sorry.....can't muster a tear here.

I would not be surprised to see a Mexican presence in sub compact production sold in the United States. Ricardo Salinas Pliego of Grupo Elektra has already cut a deal with FAW of China. The cost of production is too high in the United States but given enough quantity it is possible for the Mexicans to do assembly economically for the Chinese. With so many laid off by American plants in Mexico it will be easy to hire experienced workers.

Lured by low labor costs, Detroit's automakers have been critical to an industry that now makes up 3 percent of Mexico's gross domestic production and accounts for a fifth of its exports. The 13 plants run by Ford, Chrysler and GM account for more than 50 percent of Mexico's auto production.
While nothing in the $17.4 billion U.S. government loan package prohibits it, expansion outside of the United States using taxpayer money would most likely lead to a huge backlash.

If those car companies even think about building a plant in another country like Mexico,
with AMERICAN Taxpayer money, people will surely revolt.

I expect to see Mexican companies become active in production of sub compacts sold in the United States. Ricardo Salinas Pliego the Mexican electronics tycoon who has bought the control of Circuit City has set up arrangements to assemble autos for FAW of China for the Mexican market. The majors based in the United States have production costs too high especially for that sector. With so many lay offs on the part of the Americans in Mexico it will be easy to recruit experienced assemblers.

I tried really hard to be sympathetic, but I failed. I couldn't even manage a sigh for them.

IF the US did not outsource our jobs to Mexico and India, I doubt the financial crisis would be as bad as it is now. The very fact that these three traitors have outsourced to Mexico is reason enough for me to be against helping them out. Let Mexico do it!!!

I am sick and tired of hearing how we owe Mexico something because their illegal criminal emigrants have destroyed our economy and therefore can not send any of their ill gotten money back down to that cess pool. If it was not for the drain of illegals in California, that state would not be near bankruptcy now. IF banks were not "encouraged" to make bad loans to illegals, whose identity is anybody's guess, they would not be in the situation they are in. The housing price bubble was built on the demand of the easy loans given to people who never should have gotten them. It is the responsible American citizens who will be paying the price for decades to come.

No I can't manage even the smallest grain of sympathy. Now contempt for the automakers and anger are another story all together.

"cayla99"

IF banks were not "encouraged" to make bad loans to illegals, whose identity is anybody's guess, they would not be in the situation they are in. The housing price bubble was built on the demand of the easy loans given to people who never should have gotten them. It is the responsible American citizens who will be paying the price for decades to come.

YUP! I say our Depression started with ACORN and their ilk.
They were demanding house loans for people that couldn't make the first payment???
Then it was the greedy mortgage people, then Wallstreet.
Now everything is collapsing around us.
Until we kick out illegals and bring jobs back here, we are SCREWED!

And how many hundreds of thousands of American consumers have been laid off from jobs because of cheaper labor across the borders? These guys have done it to themselves, pulling the rug out from the workers that are most likely to consume all those nifty products imported here. If I kept my job because of taxpayer bailout of my employer, would I be as likely to go out and buy a new car, not knowing if the employer would still be there in a month or two? I would spend my money stockpiling food to be getting through the hard times.

If people want to bail out auto manufacturers then they should personally go out and buy a new car. With the exception of Ford who only needs to be able to borrow money if and when they need it, the others made bad marketing decisions. They kept building huge SUVs and cars people were not interested in. What other business beisdes them and banks can even realistically consider asking the government for money after making poor business decisions. I don't have a MBA but my BSc in Criminal Justice and could have easily turned the Chrsyler and GM around. The first thing for GM is to get rid of some of the brands and models they make that are not selling. You don't have to be a rocket scientist to figure that one out. As for Chrysler they have got ugly cars now. They focused too much on the African American market and lost others in the process. They got rid of the neon which was a mistake as it was a nice car with good fuel economy. The Magnum looks like a cofffin on wheels. They have the Jeep line up so why do they need to make similar Dodges? That would have to go.

On the basis of per centage sales by sector in the car market Mexico has stronger sales of sub compacts and SUVs than the United States. The reason for sub compacts being that fewer Mexicans can afford a new full size car. The reason for SUVs is that Mexicans have larger families and can use an SUV to transport them and also use them for commercial purposes. Mexico currently has gasoline subsidy which it is now slowly removing so that is less of a consideration.

If Calderon and the Mexican Congress institute the right policies Mexico will experience a boom that will make the Celtic Tiger look meek there is much potential in Mexico. I know that Mexico and the Mexicans do not get much respect on this board it is a result of not seeing the whole picture. Sure the country has problems but I am still seeing reasons for being optimistic.