Mexican Workers Assemble North American Automobiles In Mexico For $3.00/HR

NYTimes | “Everybody who sources from China understands that there’s no way to get around that Pacific Ocean — there’s no technology for that,” said Raine Mahdi, founder of Zipfox, a San Diego-based company that links factories in Mexico with American companies seeking alternatives to Asia. “There’s always this push from customers: ‘Can you get it here faster?’”

During the first 10 months of last year, Mexico exported $382 billion of goods to the United States, an increase of more than 20 percent over the same period in 2021, according to U.S. census data. Since 2019, American imports of Mexican goods have swelled by more than one-fourth.

In 2021, American investors put more money into Mexico — buying companies and financing projects — than into China, according to an analysis by the McKinsey Global Institute.

China will almost certainly remain a central component of manufacturing for years to come, say trade experts. But the shift toward Mexico represents a marginal reapportionment of the world’s manufacturing capacity amid recognition of volatile hazards — from geopolitical realignments to the intensifying challenges of climate change.

“It’s not about deglobalization,” said Michael Burns, managing partner at Murray Hill Group, an investment firm focused on the supply chain. “It’s the next stage of globalization that is focused on regional networks.”

That Mexico looms as a potential means of cushioning Americans from the pitfalls of globalization amounts to a development rich in historical irony.

Three decades ago, Ross Perot, the business magnate then running for president, warned of “a giant sucking sound going south” in depicting Mexico as a job-capturing threat to American livelihoods.

“The reality is that Mexico is the solution to some of our challenges,” said Shannon K. O’Neil, a Latin America specialist at the Council on Foreign Relations in New York. “Trade that is closer by from Canada or Mexico is much more likely to create and protect U.S. jobs.”

Given that the United States, Mexico and Canada operate within an expansive trade zone, their supply chains are often intertwined. Each contributes parts and raw materials used in finished goods by the others. Cars assembled in Mexico, for example, draw heavily on parts produced at factories in the United States.

Overall, some 40 percent of the value of Mexico’s exports to the United States consists of parts and components made at American plants, according to a seminal research paper. Yet only 4 percent of imports from China are American-made.