This archive report was first published on 19 November 2019.
Published on November 19, 2019, General Motors' $5 billion investment in Mexico in 2014 has paid off, with the company becoming the largest vehicle producer in the country, manufacturing 834,000 vehicles by the end of September 2019. Almost all of these vehicles were high-profit pickups and SUVs, with 92% being exported to the United States.
On the same day, Ford Motor Company unveiled its all-electric Mustang Mach-E, which will be assembled at a plant in Cuautitlán, Mexico. Ford's announcement highlighted the Mustang's iconic status, saying, “Ever since the original Mustang took the world by storm in 1964, it quickly came to represent the best of the American spirit.”
However, the reality behind Mexico's automotive industry is far from the American dream. The country's low wages have attracted numerous automakers, including General Motors and Ford, which have taken advantage of the industry's rock-bottom wages. The Mexican auto and auto supply industry now employs 866,000 hourly workers, compared to 778,000 in the United States.
The German automaker BMW recently opened a $1 billion assembly plant for its 3 Series in San Luis Potosí, with starting wages under $2 an hour for workers building this luxury sports sedan. Despite promises of major labor reforms under the previous and current progressive presidents, these reforms seem to exist only on paper, not on the ground.
Powerful forces, including corrupt unions and transnational corporations, are fighting to maintain the industry's low wages. Mexican state institutions are also weak in this area, making it difficult to implement meaningful reforms. President Trump's administration has focused on measures that would purportedly dampen outsourcing and future American investment in Mexico, but these measures are unlikely to have a significant impact.
