A new report published by Brookings Institute on North American automotive manufacturing, with a focus on the industry in Tennessee, also reveals that since the signing of the NAFTA in 1994, Mexico has expanded its share of regional production on a massive scale.
Mexico has emerged as a hub for North American automotive manufacturing such that several major passenger vehicle manufacturers that include Nissan, Chrysler, Mazda, GM, Honda, BMW, Audi, Volkswagen and others have invested large amounts of capital in plant and equipment into the country in recent years.
These companies view Mexico as a competitive place to manufacture their products given the combination of its attractive wages, and the existence of the formidable automotive industry clusters that have developed in the country since the early 1980s. Due to these factors, industry analysts conclude that: “the United States will have to find new sources of competitive advantage,” to maintain its position as the preeminent North American automotive manufacturing location. This is particularly true with regard to the U.S. industry cluster that is found in the State of Michigan, but is also the case with respect to the vibrant automotive manufacturing activity that has the State of Tennessee as its focal point. Brookings says that no U.S. state “can compete with Mexico on labor costs alone.”
The Brookings Report concludes that, in addition to Mexico’s challenge to the United States’ predominant position with respect to North American automotive manufacturing, there is another factor that is occurring within the industry that is creating a “striking” trend. Despite the rebound in the U.S. automotive industry that has occurred over the last two years, the number of jobs being created by the OEMs and domestic supply chain partners has not tracked with the number of positions which would have been generated during similar growth spurts in the past. More and more, automation is making its way into U.S. factories. According to Brookings, overall North American automotive industry employment has declined from two million to one and a half million since the turn of the millennium until the present. Over that same period, however, automotive industry jobs in Mexico have increased from from five hundred and fifty-four thousand to five hundred and seventy-nine thousand.
Today, forty percent of all North American automotive industry jobs reside in Mexico.
Read the primary source for this post at the Washington Post.