December 4, 2013
Financial Times, 12/2/2013
It would be easy looking at the border between San Diego, in the US state of California, and Tijuana, in the Mexican state of Baja California, to conclude that the formidable fence was a barrier to all cross-border interactions. The fence and other defences against unauthorised border crossings have only grown since the September 11 2001 attacks on the United States sharply increased concerns about the US’s border security.
Yet it is a tribute to the power of the North American Free Trade Agreement that companies have continued in the years since 2001 to move goods freely across the heavily policed frontier.
December 2, 2013
The Los Angeles Times, 11/29/2013
Faced with rising wages in China and high shipping costs, many businesses are finding manufacturing close to home more appealing. But despite its advantages, Mexico has problems.
September 20, 2013
by Christohper Wilson
For full article press here
Five years ago, the United States and China launched the Strategic and Economic Dialogue, a reflection of the growing complexity and enormous importance of US-China relations. Earlier this year at their meeting in Mexico City, President Obama and President Peña Nieto agreed to a similar initiative, the US-Mexico High Level Economic Dialogue (HLED), for much the same reasons, and Vice President Biden is in Mexico today to officially launch the initiative.
Before looking at the content of the Dialogue, let’s take a quick look at why this matters:
Mexico is the United States’ second largest export market (Canada is first), and since 2009, exports to Mexico have grown faster than exports to any of our other top trading partners. Some six million US jobs depend on trade with Mexico. Investment and financial flows between the two countries are also important, but the massive trade relationship is still the centerpiece of the economic relationship.
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July 8, 2013
U-T San Diego, 7/3/2013
An effort to dramatically increase spending on U.S. border enforcement was a key reason for Senate passage of immigration reform and will be key to bipartisan support in the House. The debate has focused on walling off the border rather than thinking of it as a conduit. Yet border states such as California, and cities such as San Diego, have the unique opportunity to leverage proximity to Mexico to generate jobs and bolster economic growth for the themselves and the United States as a whole. By further integrating with its Mexican sister city, Tijuana, San Diego could become an international trade hub of more than 5 million people in a binational, regional metropolis.
The economic challenges of recent years have aroused fear and skepticism in the United States around global trade and outsourcing. While moving manufacturing outside the United States can cost American jobs, not all trade and outsourcing is equal. Mexico’s shared border with the United States mitigates the costs associated with trade and maximizes the benefits. Many goods imported from Mexico are actually coproduced on both sides of the border, creating jobs for American workers. In fact, according to a report from the Woodrow Wilson International Center for Scholars, 40 percent of the value of imports from Mexico was actually created in the United States by American workers — about 10 times the level of value created in the United States for goods imported from China. Coproduction keeps jobs in North America that might otherwise be lost altogether overseas.
July 3, 2013
The shale gas boom has done a lot to boost the US economy. It’s such a big deal you can see it from space. All that new natural gas has lowered energy costs, which has led analysts to wonder if it could help make America’s energy-heavy manufacturing businesses more competitive with countries that have low labor costs but over-burdened energy infrastructure. But there’s a lot standing in the way of that vision, including the potential for gas exports to affect the value of the dollar, and the observation that maybe energy costs aren’t such a big deal.
But where the US is faltering, Mexico is taking advantage of all that cheap natural gas to boost factories; last year, pipelines brought more natural gas across the border than ever before. Mexico is already successfully competing with places like China on labor prices, but its energy costs are lower, too. Combine that with its proximity to the United States and deep integration into the American supply chain, and you’ve got a recipe for export-oriented success. Pemex, the country’s state-owned oil company, is spending $3.3 billion to build a new, 750-mile pipeline from Los Ramones, Mexico, near the country’s industrial heartland, to Agua Dulce, near Texas’ shale oil fields.
July 3, 2013
Appliance Magazine, 7/3/2013
Manufacturing in Mexico will increasingly offer cost advantages over manufacturing in China and other major economies, according to new research by The Boston Consulting Group (BCG), which foresees manufacturing adding $20 billion to $60 billion in output to Mexico’s economy annually within the next five years.
The group said that, with the North America Free Trade Agreement (NAFTA), U.S. manufacturers of components for finished goods assembled in Mexico also stand to benefit. The group said Mexico’s improving competitive edge is driven by relatively low labor costs and shorter supply chains, which results from Mexico’s closer proximity to U.S. markets.
July 2, 2013
Financial Times, 7/1/2013
The US shale gas boom is shaping up to be an important competitive advantage for manufacturers – in Mexico. US natural gas exports to Mexico hit a record last year, helping hold down the country’s energy costs as its industry grew rapidly. Planned new pipelines that will enable further rapid growth in imports from the US will strengthen and lock in that advantage, and help to give Mexico a competitive edge over other emerging economies for as long as North American shale production remains strong.
China’s manufacturing labour costs overtook Mexico’s last year because of its high rates of wage inflation, and its energy costs are also significantly higher. By 2015, China’s total manufacturing costs will be about 95 per cent of US levels, with gas contributing about 4 percentage points of that, while Mexico’s will be just 89 per cent, with gas at just 1 percentage point, according to new research from the Boston Consulting Group. Mexico’s industrial output has been falling this year, but its lower costs and proximity to the US, which reduces transport costs and increases flexibility, will make it increasingly competitive as a manufacturing location, analysts say.
June 28, 2013
Mexico is beginning to beat China as a manufacturing base for many companies despite its higher crime rate, according to a new report from Boston Consulting Group. Mexico’s gain is a plus for the U.S. because Mexican factories use four times as many American-made components as Chinese factories do, says the consulting firm. Here are Mexico’s four key advantages:
1. Manufacturing wages, adjusted for Mexico’s superior worker productivity, are likely to be 30 percent lower than in China by 2015. China’s wages have soared. They were about one-quarter as high as Mexico’s in 2000 but are catching up rapidly and will be slightly higher by 2015. And labor productivity remains higher in Mexico, even though the gap is narrowing. The crossover point was 2012, when unit labor costs in China (i.e., wages adjusted for productivity) grew to equal those in Mexico. By 2015, Mexico will be around 29 percent less expensive.
June 28, 2013
The Wall Street Journal, 6/28/2013
Within five years, higher manufacturing exports due to a widening cost advantage over China and other major economies could add $20 billion to $60 billion in output to Mexico’s economy annually. And thanks to the North America Free Trade Agreement (NAFTA), U.S. manufacturers of components for everything from automobiles to computers assembled in Mexico also stand to benefit, according to new research by The Boston Consulting Group (BCG).
The key drivers of Mexico’s improving competitive edge are relatively low labor costs and shorter supply chains due to the country’s proximity to markets in the U.S. Another important advantage is that Mexico has 44 free-trade agreements — more than any other nation — allowing many of its exports to enter major economies with few or no duties.