AUG 12 MEXICO IS SIXTH IN WORLD AUTOMOBILE PRODUCTION

AUG 12 MEXICO IS SIXTH IN WORLD AUTOMOBILE PRODUCTION

Last month, the governor of Augascalientes presided over a special event: The opening of a brand-new Nissan production facility in the capital city. Carlos Lozano de la Torre stood shoulder to shoulder with a handful of representatives from Japan and his full-time Spanish / Japanese translator. The plant is enormous...21 million spare feet of factory will produce 175,000 Nissan Sentras in the first year. They'll accomplish this by never closing the plant. Well...okay...it will be open 23 hours a day, six days a week. Sunday is important in Mexico.

It's not just Nissan that's investing in Mexico. In the neighboring state of Jalisco, Honda recently opened a cavernous facility near Guadalajara. To the north, General Motors runs a plant in Guanajuato. You'll find Chrysler in Toluca and Kia in Monterrey. BMW, Mazda, Mercedes, you name it...they have a factory in Mexico. In terms of dollars, auto manufacturers have invested $22 billion in the last two years alone.

Why the sudden gold rush? It's a combination of skilled labor costs and NAFTA. With a low cost of living and an absence of labor unions, Mexican workers earn $8/hour, including benefits. That same worker will cost you $58/hour in Detroit or $42/hour in Tokyo. Next, it is easy to transport completed cars to the auto-obsessed American market. Trains from Central Mexico to Texas are busy these days. At the border, they are nearly exempt from all tariffs, since the cars were made in Mexico, not Japan or Germany.

But that's not to say that all cars made in Mexico are shipped to the US. Nope, many are sold in the domestic market. Just ask Volkswagen. Back in 1964, they were the first company to open a factory in Mexico. Their plant in Puebla remains the largest VW plant outside of Germany, employing over 13,000 workers. For decades, their top model was the ubiquitous Beetle. Mexicans fell in love with this car and bought tens of thousands of them. Even today, you'll see tons of bugs on the streets of any Mexican city.

Back to Augascalientes. People like Carlos are continuing to court the international auto market and enticing them to invest in Mexico. For example, Toyota is opening a plant in Baja California next year. This will thrust Mexico to #6 on the list of car-producing nations, passing Brazil. With South Korean companies also investing, it seems only a matter of time before Mexico captures the #5 spot. But don't look for this story in any American news source. US media is obsessed with only showing gory scenes from the Drug War...continually throwing shade on their industrious friends to the South!