As Ties With China Unravel, U.S. Companies Head to Mexico

June 2, 2014

New York Times, 06/02/14

mexico-chinaSALTILLO, Mexico — Jason Sauey calls them lemmings — all the American companies that rushed to China to make things like toys and toilet brushes, only to be searching now for alternatives in Mexico and the United States. His own family-owned plastics company, Flambeau, nearly made the same mistake around 2004, he said, when competitors contracting with China undercut prices and seized market share.

Flambeau resisted, turning instead to its factory here in central Mexico. And now the company — which makes Duncan yo-yos, hunting decoys, plastic cases and an array of industrial items — is reaping the rewards, Mr. Sauey (pronounced SOW-ee) said.

Revenues at its Mexican plant have grown by 80 percent since 2010, according to company records, prompting a search for a second location near Mexico City. And in the past year, a dozen corporations have come to Flambeau and requested bids on projects worth tens of millions of dollars for things like smartphone cases and car parts.

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NAFTA key to economic, social growth in Mexico

May 14, 2012

The Washington Times, 5/14/12

The North American Free Trade Agreement, which went into effect in 1994, has been the key driver of Mexico’s economic and social transformation of the past 20 years, analysts say. NAFTA at first brought an explosion of low-skill-labor factories to the Mexican side of the U.S. border. By the mid-2000s, the trade pact had triggered an increasingly sophisticated manufacturing base that now reaches across Mexico’s 31 states.

“What we’re seeing now is a growth of industry in Mexico that requires more engineers,” said Christopher Wilson, an associate with the Mexico Institute at the Washington-based Woodrow Wilson International Center for Scholars. “To put a name on it, specifically, we’re talking about automobiles and aerospace,” Mr. Wilson said. “Mexico is now graduating more engineers than Germany every year.”

A 40 percent jump in Mexico’s per capita gross domestic product since the inception of NAFTA has brought with it an increasingly robust middle class. “What that means is Mexicans are becoming more educated, and there is more investment in children, which is why you are able to see the development of an aerospace sector,” Mr. Wilson said.

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Chihuahua City is big dog in Mexico aerospace

May 14, 2012

The Washington Times, 5/14/12

When a jumbo jetliner touches down almost anywhere in the world, the last thing on the pilot’s mind is that the plane’s brakes likely were made in the capital of one of the most crime-riddled states in Mexico. Behind the headlines of warring drug gangs and a soaring murder rate in Mexico, a fast-growing high-tech economy centered on the aerospace industry has sprung up in recent years.

In Chihuahua City alone, 36 aerospace plants have opened since 2007 as a growing number of international parts makers use the city as a base for tapping a massive airplane-production market in the United States. “Our first objective was to get into the U.S. market and get a deal with U.S. customers,” said Nicolas Maillard, director of the French-owned Manoir Aerospace plant in Chihuahua City, 235 miles south of El Paso, Texas.

Shiny, precision-shaped steel discs produced by the plant are shipped to companies in Ohio and Kentucky, where they are added into the assembly line for brake systems on the Boeing Co.’s commercial airplanes. With the average cost of manufacturing labor running about $6 per hour in the city, a new era of high-tech growth is taking root. “The real advantage is the cost of labor,” Mr. Maillard said. “In France, labor would account for about 30 percent of the cost of production on an item like this. Here, it’s roughly 10 percent, and we’re closer to the market we’re trying to reach.”

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Mexico Says U.S. Stalling on Adding Nation to Pacific Trade Deal

April 23, 2012

Bloomberg-Businessweek, 4/23/12

Mexico’s Economy Minister expressed frustration over what he said was the Obama administration’s delay in adding the nation to Pacific trade talks.

Mexico’s entry to the Trans-Pacific Partnership, a sweeping deal that seeks to boost trade links between the Americas and Asia, is already supported by the private sector in all nine countries involved in the talks, Economy Minister Bruno Ferrari said in an interview. Mexico is closer to winning approval than Japan and Canada, who are also seeking to join negotiations, Ferrari said. U.S. Trade Representative Ron Kirk met with officials from Mexico and Canada this month in Washington during a visit by Mexican President Felipe Calderon and Canadian Prime Minister Stephen Harper.

The three nations are already bound together by the North American Free Trade Agreement that took effect in 1994. Standing beside his Nafta partners in the Rose Garden, President Barack Obama said the Pacific deal’s current partners are discussing how new members can meet the accord’s standards.

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Charismatic front-runner in Mexican presidential race vows shift on drugs, trade

April 17, 2012

The Washington Times, 4/17/12

The front-runner in Mexico’s presidential race has attracted throngs of supporters among elite and ordinary citizens alike with his calls to boost his country’s trade relationships with Canada and the U.S. — a refocusing effort his staffers call “NAFTA 2.0” — and to tamp down the drug violence that has muddied Mexico’s reputation.

For Enrique Pena Nieto of the Institutional Revolutionary Party — and apparently the majority of the Mexican electorate — the economic ties that bind the U.S. and Mexico “need to grow.” “If we take into consideration what’s happening in the world and the way that competition among countries today is being built by blocs, I believe we have a great opportunity to make a very strong bloc in North America,” he said in an exclusive interview with The Washington Times. “I will work on building infrastructure that can make the whole region of North America more competitive.”

His message may sound unusual, if not naive, in a country where the news is dominated by reports about drug gangs, corrupt cops and the deaths of nearly 50,000 people in drug-related violence during recent years.

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Nafta should look beyond its borders to the world

April 16, 2012

Financial Times, 4/16/12

International trade is under attack. Recession has tested commitments to keeping borders open as politicians beholden to domestic audiences have succumbed to the temptation of throwing up barriers for short-term economic benefit. But policymakers should remind themselves how important trade is for economic development. They need look no further than North America.

In the almost 20 years since the North American Free Trade Agreement (Nafta), the benefits are clear. Trade volumes are much larger than expected. Mexico is the second-largest supplier of non-oil goods to the US. It buys 13.3 per cent of US exports, more than Germany, the UK, Netherlands, France and Italy combined.

Nafta also produced convergence in quality, variety, price and availability of goods; convergence in investment in technologies and environmental standards in manufacturing in Mexico; and macroeconomic convergence so Canada and Mexico boast low debt and deficit, low inflation and sound monetary policies.

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FMCSA Approves Another Mexican Carrier for U.S. Operation

April 10, 2012

Transport Topics, 4/10/12

Baja Express Transportes, Tijuana, Mexico, has been granted authority to operate throughout the United States, the third carrier to get authority under the cross-border trucking pilot program with Mexico.

The company has had one driver and one truck — a 2004 Freightliner — approved for driving in the interior of the United States, Federal Motor Carrier Safety Administration records show.

Transportes Olympic and Moises Alvarez Perez, an owner-operator, are the other two carriers approved for the Mexican truck cross-border program, but as of this week, Alvarez and Baja Express had not yet used their U.S. operating authority.

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