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| 'Just the beginning': Trump may disrupt 20-year boom for Mexico auto industry | 'Just the beginning': Trump may disrupt 20-year boom for Mexico auto industry |
| (about 9 hours later) | |
| Marisol Galarza floundered after finishing high school, but she eventually found her way to a job on an assembly line at a General Motors plant in the central Mexican state of San Luís Potosí. | Marisol Galarza floundered after finishing high school, but she eventually found her way to a job on an assembly line at a General Motors plant in the central Mexican state of San Luís Potosí. |
| Determined to get ahead, she started studying industrial engineering on Saturdays through a company-sponsored program and currently works in that department. | Determined to get ahead, she started studying industrial engineering on Saturdays through a company-sponsored program and currently works in that department. |
| “I like what I do and I like what I’m studying and what I’m seeing there,” said Galarza, 24. “God willing, I’ll finish my studies this year.” | |
| She had thought her future was secure here, in a state where more than 50,000 jobs depend on the car industry. | She had thought her future was secure here, in a state where more than 50,000 jobs depend on the car industry. |
| But that future suddenly seems much less certain after a tumultuous week in which Mexico’s automobile sector was thrown into disarray – and thousands of manufacturing jobs were threatened – by the US president-elect. | But that future suddenly seems much less certain after a tumultuous week in which Mexico’s automobile sector was thrown into disarray – and thousands of manufacturing jobs were threatened – by the US president-elect. |
| In a string of tweets, Donald Trump chided car companies for operating in Mexico, apparently seeking to bully them into shifting production to the US. | In a string of tweets, Donald Trump chided car companies for operating in Mexico, apparently seeking to bully them into shifting production to the US. |
| On Tuesday, Trump threatened to slap a “big border tax” on General Motors for importing compact cars to the US market from Mexico. | On Tuesday, Trump threatened to slap a “big border tax” on General Motors for importing compact cars to the US market from Mexico. |
| Hours later, Ford announced it had cancelled plans to build a $1.6bn plant in Villa de Reyes, saying that instead it would expand a facility in Michigan. | Hours later, Ford announced it had cancelled plans to build a $1.6bn plant in Villa de Reyes, saying that instead it would expand a facility in Michigan. |
| Trump greeted the move as “just the beginning”. Two days later, he turned his sights on Toyota, again threatening punitive taxes if the Japanese company continues with plans to open a new plant in Baja California. | Trump greeted the move as “just the beginning”. Two days later, he turned his sights on Toyota, again threatening punitive taxes if the Japanese company continues with plans to open a new plant in Baja California. |
| The company already has a facility in the Baja California city of Tijuana and is actually planning to open a facility in the central state of Guanajuato. | The company already has a facility in the Baja California city of Tijuana and is actually planning to open a facility in the central state of Guanajuato. |
| Ford has insisted that its change of plans had nothing to do with Trump, but that has done little to change the perception that – even before he takes office – Trump is already wreaking havoc with an industry which until now had been booming for twenty years. | Ford has insisted that its change of plans had nothing to do with Trump, but that has done little to change the perception that – even before he takes office – Trump is already wreaking havoc with an industry which until now had been booming for twenty years. |
| “There’s real worry over what happened with Ford,” said Galarza. “It could be that one day you’re fired and they say the plant is going close.” | “There’s real worry over what happened with Ford,” said Galarza. “It could be that one day you’re fired and they say the plant is going close.” |
| The looming Trump administration has already sent the Mexican pesos plunging to record lows and threatens to unravel commercial ties so close that more than $1m of merchandise crosses the Mexico-US border every minute. | The looming Trump administration has already sent the Mexican pesos plunging to record lows and threatens to unravel commercial ties so close that more than $1m of merchandise crosses the Mexico-US border every minute. |
| Throughout the election campaign, Trump trashed Mexico mercilessly, and on Friday, the president-elect repeated his pledge to wall off the border, although he said Mexico would repay the construction costs “later”. | Throughout the election campaign, Trump trashed Mexico mercilessly, and on Friday, the president-elect repeated his pledge to wall off the border, although he said Mexico would repay the construction costs “later”. |
| His threats could not have come at a worse time for Mexico as the country confronts stalling economic growth and a spate of violent protests over an increase in the government-set gasoline price. | His threats could not have come at a worse time for Mexico as the country confronts stalling economic growth and a spate of violent protests over an increase in the government-set gasoline price. |
| “To @realDonaldTrump : The more jobs you destroy in México, the more immigrants the American people will have. Think a little!” tweeted ex-president Felipe Calderón. | “To @realDonaldTrump : The more jobs you destroy in México, the more immigrants the American people will have. Think a little!” tweeted ex-president Felipe Calderón. |
| President Enrique Peña Nieto has appealed for national unity, but his government has struggled for a coherent response to the many challenges it faces. On Wednesday, he named a former finance minister who arranged Trump’s humiliating pre-election visit to Mexico as the country’s new foreign minister – prompting speculation that the president is pinning his hopes on forging a close relationship with Trump’s inner circle. | President Enrique Peña Nieto has appealed for national unity, but his government has struggled for a coherent response to the many challenges it faces. On Wednesday, he named a former finance minister who arranged Trump’s humiliating pre-election visit to Mexico as the country’s new foreign minister – prompting speculation that the president is pinning his hopes on forging a close relationship with Trump’s inner circle. |
| Meanwhile, economists and Mexican politicians have warned that Trump’s tantrums portend further economic problems as companies shy away from the public shaming that could come with investment in the country. | Meanwhile, economists and Mexican politicians have warned that Trump’s tantrums portend further economic problems as companies shy away from the public shaming that could come with investment in the country. |
| Federico Estévez, a political science professor at the Autonomous Technological Institute of Mexico, said that danger for Mexico was not a potential trade war, but the chilling effect Trump’s words would have on foreign investment. | Federico Estévez, a political science professor at the Autonomous Technological Institute of Mexico, said that danger for Mexico was not a potential trade war, but the chilling effect Trump’s words would have on foreign investment. |
| “They’ll be careful about their capital expansion programs in a place like Mexico because Trump will jawbone them – not in private: in public,” he said. | “They’ll be careful about their capital expansion programs in a place like Mexico because Trump will jawbone them – not in private: in public,” he said. |
| Much of the foreign direct investment in Mexico to gone to the car industry, which took hold in states such as San Luis Potosí and sent GDP growth in the region soaring above five percent per year. | Much of the foreign direct investment in Mexico to gone to the car industry, which took hold in states such as San Luis Potosí and sent GDP growth in the region soaring above five percent per year. |
| The industry’s roots in Mexico date back over decades – for years Volkswagen produced its iconic Beetle in the state of Puebla – but the sector has grown steadily since the 1980s, to the point that most of the world’s major automakers have opened plants in the country. | The industry’s roots in Mexico date back over decades – for years Volkswagen produced its iconic Beetle in the state of Puebla – but the sector has grown steadily since the 1980s, to the point that most of the world’s major automakers have opened plants in the country. |
| “One of the main advantages automakers have in Mexico is high productivity and low wages in these plants. That’s attractive,” said Harley Shaiken a geography professor at the University of California at Berkley, who studies the Mexico auto industry. An average car factory worker in Mexico earns around $8 an hour, compared to the $60 an hour that Ford spends on a US employee, including pay and benefits. | “One of the main advantages automakers have in Mexico is high productivity and low wages in these plants. That’s attractive,” said Harley Shaiken a geography professor at the University of California at Berkley, who studies the Mexico auto industry. An average car factory worker in Mexico earns around $8 an hour, compared to the $60 an hour that Ford spends on a US employee, including pay and benefits. |
| “You have mega transnational companies that are able to earn a lot of their investment in Mexico, in part because productivity is high and wages are depressed.” | “You have mega transnational companies that are able to earn a lot of their investment in Mexico, in part because productivity is high and wages are depressed.” |
| Officials in San Luis Potosí recite a litany of other advantages which fall to companies that relocate to their region: Mexico has free trade deals with more than 40 countries, major highways and railway lines crisscrossing the region and a location in the geographic heart of Mexico, roughly halfway between Mexico City and the Texas border. | Officials in San Luis Potosí recite a litany of other advantages which fall to companies that relocate to their region: Mexico has free trade deals with more than 40 countries, major highways and railway lines crisscrossing the region and a location in the geographic heart of Mexico, roughly halfway between Mexico City and the Texas border. |
| Left unmentioned are incentives from state and national governments, such as a 10-year payroll tax holiday and 60 hectares of land which were given to Ford – the price of which will be returned, the state government says. | Left unmentioned are incentives from state and national governments, such as a 10-year payroll tax holiday and 60 hectares of land which were given to Ford – the price of which will be returned, the state government says. |
| BMW collected incentives worth more than 3.5 billion pesos ($160m) to build in San Luis Potosí, newsweekly Proceso reported. | BMW collected incentives worth more than 3.5 billion pesos ($160m) to build in San Luis Potosí, newsweekly Proceso reported. |
| Critics say that such deals also include arrangements to curb the influence of unions. One arrangement allows companies to strike an agreement with a union – often aligned with the political party in power – prior to hiring any employees, rather than the employees forming a union selecting their representation. | Critics say that such deals also include arrangements to curb the influence of unions. One arrangement allows companies to strike an agreement with a union – often aligned with the political party in power – prior to hiring any employees, rather than the employees forming a union selecting their representation. |
| “All workers that enter the firm have to belong to that union,” says Guillermo Luévano Bustamante, professor at the Autonomous University of San Luis Potosí. | “All workers that enter the firm have to belong to that union,” says Guillermo Luévano Bustamante, professor at the Autonomous University of San Luis Potosí. |
| Local officials chafe at suggestions that the abundance of low-paying jobs has any downside. | Local officials chafe at suggestions that the abundance of low-paying jobs has any downside. |
| “It’s been a total transformation,” said Arturo Bermudez, town treasurer in Villa de Reyes, a municipality where people once survived on subsistence agriculture coaxing corn and beans out of the harsh desert landscape. | “It’s been a total transformation,” said Arturo Bermudez, town treasurer in Villa de Reyes, a municipality where people once survived on subsistence agriculture coaxing corn and beans out of the harsh desert landscape. |
| Before the car plants opened, “maybe five percent of people had a car” he said. “Now, only five percent don’t have a car.” | Before the car plants opened, “maybe five percent of people had a car” he said. “Now, only five percent don’t have a car.” |
| But not everyone expresses such enthusiasm – especially as the plunging peso has reduced purchasing power. | But not everyone expresses such enthusiasm – especially as the plunging peso has reduced purchasing power. |
| “They’re paying the bare minimum, which for me, is misery,” said Salvador Martínez, a long-haul trucker in Villa de Reyes – where most jobs depend on the auto industry either directly or indirectly. “Gasoline, tortillas, everything increasingly costs more. Everything goes up except salaries.” | “They’re paying the bare minimum, which for me, is misery,” said Salvador Martínez, a long-haul trucker in Villa de Reyes – where most jobs depend on the auto industry either directly or indirectly. “Gasoline, tortillas, everything increasingly costs more. Everything goes up except salaries.” |
| And in Villa de Reyes, anger with Trump often appears to be tempered by discontent with Mexico’s politicians. Much of that anger is focussed on Peña Nieto himself, who has the lowest approval ratings of any Mexican president in over two decades and has been been at the centre of string of conflict of interest scandals and pushed through economic reforms popular with foreign investors but unpopular at home. | And in Villa de Reyes, anger with Trump often appears to be tempered by discontent with Mexico’s politicians. Much of that anger is focussed on Peña Nieto himself, who has the lowest approval ratings of any Mexican president in over two decades and has been been at the centre of string of conflict of interest scandals and pushed through economic reforms popular with foreign investors but unpopular at home. |
| “Donald Trump is one thing, but it’s another when your own president is screwing the country,” said Jorge de la Cruz, a mechanic. | “Donald Trump is one thing, but it’s another when your own president is screwing the country,” said Jorge de la Cruz, a mechanic. |