• Tuesday, August 07th, 2012

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August 6, 2012 11:39 pm by Adam Thomson

Mexico may not be breaking records at London’s Olympic Games but back home it is racking them up. On Monday, the country’s vehicle manufacturer’s association, Amia, reported that production in July reached 238,146. That is the largest number of vehicles Mexico has ever produced during that month. It is also 17.7 per cent higher than last July’s figure.

Between January and July, meanwhile, total production was 1.7m vehicles, 13.4 per cent higher than during the same period last year, and the highest production figure Mexico has ever reached during those months.

The increase comes as Mexico is quickly turning into one of the world’s most important vehicle manufacturers. Ford, Mazda, Nissan, VW and a host of other world-class names in car production are sinking billions of dollars into Latin America’s second-largest economy in a bet that it will consolidate and expand its role as the region’s manufacturing base for export.

A staggering 84.6 per cent of the July production went for export, about 67 per cent of the total heading north to the US market. There were also important increased of exports to Europe and to Asia – though there was a drop in exports to Latin America, which almost certainly was the product of the trade spat over vehicles with Brazil earlier this year.

Manufacturers see Mexico as a good export base mainly because of its prized geographical location, which includes a 2,000 mile border with the US, but also because of its open economy and trade agreements with more than 40 countries. Even during the worst moments of the financial and economic crisis, and in stark contrast to Brazil and other Latin American nations, Mexico resisted the temptation to adopt protective trade measures.

But they have also understood that the country has a rich heritage in manufacturing and, with its young and skilled labour force, provides good prospects for finding sufficient and trained labour. In large part, that helps to explain why there has been so much stability in wages in Mexico compared with its competitors.

By contrast, manufacturers in China increasingly complain of the difficulty of finding people to fill posts, and wage inflation in that country over the last few years has largely eroded the once-huge advantages it offered over Mexico.

Don’t be surprised to see Mexico smashing quite a few more vehicle manufacturing records between now and the end of this year.

Category: Automotive
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