[Video] Charting a New Course Part 1: U.S.-Mexico Economic Interdependence

The Wilson Center’s Mexico Institute has released a series of new essays covering a range of important bilateral issues. We kick off our companion video series, “Charting a New Course,” with a focus on economic interdependence. Mexico Institute Deputy Director, Chris Wilson provides an overview of the scope and depth of U.S.-Mexico economic cooperation and also talks about what can be done to make the alliance stronger. That’s the focus of this edition of Wilson Center NOW.

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Mexico’s president asks central bank head Carstens to stay through November

2/20/2017 Reuters
carstensMexico’s central bank chief, Agustin Carstens, will remain in office until the end of November, a spokesman for the president said on Monday, amid uncertainty about the impact of U.S. President Donald Trump’s policies on Latin America’s No. 2 economy.

Mexican President Enrique Pena Nieto asked Carstens to stay until Nov. 30, according to the spokesman at the president’s office, who asked not to be identified. Carstens was set to step down at the end of June to take the top post at the Bank for International Settlements in October.

A source at the central bank said Carstens had accepted, adding that the widely respected governor had offered to stay longer.

Mexico’s peso sank to a record low following the November election of Trump, who has threatened to slap tariffs on Mexican-made goods and renegotiate the North American Free Trade Agreement among the United States, Mexico and Canada.

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Mexico Is Moving Forward on a Plan to Hit U.S. Farmers Where It Hurts

2/17/2017 Fortune 

corn farmMexico’s attempts to diversify its supplies of corn could threaten a crucial market for U.S. farmers who are increasingly dependent on exports to unload record stockpiles that are depressing prices.

Mexico buys nearly all its corn imports from the United States – shipments that totaled 13.603 million tonnes in the year ending Aug. 31, 2016. The sales account for about 28% of total U.S. corn exports, according to the U.S. Department of Agriculture.

But now Mexico wants to lessen that dependence as U.S. President Donald Trump threatens to upend trade between the countries. On Thursday, Mexico’s agriculture minister revealed plans to visit Argentina and Brazil to buy yellow corn.

A grain buyer at a corn mill in Mexico told Reuters in an email on Thursday he had already asked for price quotes from Brazilian and Argentine exporters for corn shipments to Mexico.

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Why Ditching NAFTA Could Hurt America’s Farmers More Than Mexico’s

2/16/2017 NPR

15131653951_2f45cb9011_h.jpg
via Flickr – Mike Mozart

Garland Reiter is one of the people behind the rise in imported food from Mexico.

His family has been growing strawberries in California for generations and selling them under the name Driscoll’s. Today, it’s the biggest berry producer in the world.

In the early 1990s, the Reiter family started growing strawberries and raspberries in Mexico, in addition to California. It found regions in Mexico where the climate allowed them to grow the fruit — especially raspberries — during seasons of the year when it hadn’t been feasible back home. “Our move really was for year-round product, and quality,” says Reiter, who is executive chairman of Reiter Associated Cos.

The North American Free Trade Agreement went into effect at that same time, in 1994. But that’s coincidence, Reiter says; NAFTA had very little to do with the move into Mexico. “To tell you the truth, we paid minimal attention to that,” he says.

Silver lining in weaker peso for Mexican miners

2/16/2017 Reuters

MiningInvestors are picking up on the benefits for Mexican silver miners of one of the biggest foreign exchange stories since November’s U.S. election, with the slide in the peso pushing costs lower while silver prices are ramping up.

The peso hit a record low last month at 22.03 to the dollar, pressured by concern over a potential trade war between the United States and Mexico in the wake of Donald Trump’s U.S. election victory.

While some say the worst of the currency’s slide may be over, the peso is expected to remain weak throughout this year, a Reuters poll showed this month.

Between 60 percent and 70 percent of silver miners’ costs in Mexico — from labor to power — are priced in pesos, an industry analyst estimates. For a company that sells its output in dollars, that suggests a significant benefit to cost margins.

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Mexico’s Banks: Customer Problems

2/10/2017 Gallup

piggy bank with coinsWith the prospects for loan growth and asset quality less certain in 2017, Mexico’s banks need to make engaging their customers a priority. In fact, their future health may depend on it.

Gallup surveys of banking customers in Mexico in 2016 show they have a lot of work to do. For every one banking customer in Mexico who is fully engaged, another three are indifferent or disengaged — and potentially hurting a bank’s revenue.

Customers who are fully engaged bring 37% more annual revenue to their primary bank than customers who are disengaged do. They use more of the bank’s products and have higher deposit balances in their accounts.

However, Mexico’s banks have the power to change their engagement ratio — and help their bottom line — if they provide better customer service.

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Messing With Mexico Is A Mistake

2/9/2017 Forbes

mexican-flag1For every supply chain executive adding jobs in Mexico, 2.4 are also creating jobs in the United States. In fact, among 129 managers who said Mexico was one of their top three countries for planned hiring over the next three years, 81 said their top overall country for new job creation was the US – Mexico was second or third. As for those who are actually shifting work southward, this group is less than 5% of our total sample of 1,179 supply chain executives worldwide.

Mexico is the second largest exporter to the US. It’s also the second largest importer from the US. Michigan, which shares a border with Canada, is the third-ranked state in terms of exports to Mexico. This is mostly auto parts bound for assembly into finished vehicles.

A huge portion of everything we produce and consume – from natural gas and food to cars and computers – makes its way across the border, often more than once. The North American supply chain ecosystem is so intertwined that simplistic efforts to force business to alter hiring plans will almost certainly end badly.

Costs will go up, supply availability will suffer and companies will respond with even faster moves to robotics and automation.

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