With labor costs rising rapidly in China, the New York Times says that American manufacturers of all sizes are looking south to Mexico with what economists describe as an eagerness not seen since the early years of the North American Free Trade Agreement (NAFTA) in the 1990s. According to Christopher Wilson, an economics scholar at the Mexico Institute of the Woodrow Wilson International Center for Scholars in Washington:
“When you have the wages in China doubling every few years, it changes the whole calculus. Mexico has become the most competitive place to manufacture goods for the North American market, for sure, and it’s also become the most cost-competitive place to manufacture some goods for all over the world.”
The NYT noted that roughly 40% of the parts found in Mexican imports originally came from the United States verses only 4% for Chinese imports.
However and for family-owned, medium-size businesses, Mexico “disappoints as often as it satisfies” with one American company owner saying:
“It’s a lot more convenient to fly to Mexico than to China. But we just couldn’t find a way to get an advantage by moving. It took forever just to get a price quote.”
Many Mexican business owners are also apparently unwilling to take on a surge of new business, either because they could not line up suppliers or credit, or because they feared demands for money from government inspectors or gangs.
To read the whole article, As Ties With China Unravel, U.S. Companies Head to Mexico, go to the website of the NY Times.
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