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Mexico to trump Japan as No. 2 car exporter to US

CELAYA, Mexico (AP) - Sayonara, Japan. Mexico is on track to replace the Asian automotive giant as the second-largest exporter of cars to the United States by the end of the year.

An $800 million Honda plant opening Friday in the central state of Guanajuato will produce about 200,000 Fit hatchbacks a year, helping push total Mexican car exports to the U.S. to 1.7 million in 2014, roughly 200,000 more than Japan, consulting firm IHS Automotive says. And, with another big plant starting next week, Mexico is expected to surpass Canada for the top spot by the end of 2015.

"It's a safe bet," said Eduardo Solis, president of the Mexican Automotive Industry Association. "Mexico is now one of the major global players in car manufacturing."

Experts say Mexico's relatively low wages, closeness to the U.S. and free-trade deals with more than three dozen nations have made it one of the favorite locations for international automakers to invest since the 2008 global recession and rising energy and shipping prices forced companies to find ways to cut costs.

Despite Mexico's surge, the vast majority of the cars and trucks made in North America, are still produced in the U.S. for domestic consumption and export to other countries. And many of the vehicles built in Mexico are assembled with parts that are produced in the United States and Canada and cross the border without tariffs under the North American Free Trade Agreement.

"There was a realization that there were some structural issues that had to be resolved in the auto industry to make it more competitive again. Moving parts, not all of the production, to Mexico was a good way to deal with that," said Christopher Wilson, an expert in U.S.-Mexico economic relations for the Woodrow Wilson International Center for Scholars.

When NAFTA was signed two decades ago, Mexico produced 6 percent of the cars built in North America. It now provides 19 percent. Total Mexican car production has risen 39 percent from 2007, to nearly 3 million cars a year. The total value of Mexico's car exports surged from $40 billion to $70.6 billion over that span.

Mexico's government and the car industry say the automotive industry has become the primary source of foreign currency for Mexico, surpassing oil exports and remittances from immigrants in the United States.

Each plant opening is lauded by businessmen and government officials eager to promote international investment in Mexico, which is struggling with stagnant economic growth and widespread, persistent poverty. President Enrique Pena Nieto plans to attend the opening of the plant in the town of Celaya along with the economy minister and top Honda executives.

Some people in Mexico worry that the boost in car production is coming on the back of unfair conditions for the country's roughly 580,000 auto workers, whose numbers have risen by 100,000 since 2008. They are paid about $16 a day, which is about one-fifth of what U.S. autoworkers receive. More than half of all Mexican workers earn less than $15 a day, according to Mexico's census agency.

Car factories in Mexico operate with pro-company captive unions and many workers have fought without success to form independent unions that could bargain for higher pay and better pensions, like the United Automobile Workers union that represents employees at U.S. factories owned by U.S. automakers. Foreign-owned car plants in the U.S. are largely non-union, including a Volkswagen factory in Tennessee where the workers last week narrowly voted against representation by the UAW.

"It's one of the most modern industries that is generating the most money for the country," said Huberto Juarez, an auto industry expert at the Autonomous University of Puebla. "It's not right that these workers are making so little."

Solis, the president of the auto industry association, says wages are low compared to the U.S. and Canada, but says the boom is creating a new generation of young engineers and funding automotive research in Mexico.

"It's not only about lower salaries. That's short-sighted. It is a component of a larger equation that has to do with the expertise we are developing," Solis said.

Much of the new production is by Japanese companies drawn by the ability to move parts into Mexico without tariffs. Local governments have been competing for new plants by offering tax exemptions, employee training and improved highways connecting the plants to the U.S. border and Mexican ports.

Just 25 miles from the new Honda plant, Mazda is set to open a factory next week to produce 230,000 cars a year. Nissan is expected to turn out 175,000 cars annually at a $2 billion plant it opened late last year in the nearby state of Aguascalientes. And Audi will be producing luxury models at a plant in the state of Puebla that is slated to open in 2016.

"We have gained momentum throughout the years," Economy Secretary Ildefonso Guajuardo said. "Now Mexico is attracting international attention because it has proven to have quality of production and a friendly investment climate."

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soaplove February 21 2014 at 2:39 PM

Nobody has anything to say. Gee, I guess nobody cares that we are IMPORTING things we use to make money from having made here. If you don't want Mexicans in the country, why would anyone want these cars. Just sayin'. None of this is helping our economy

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'57mad February 21 2014 at 1:48 PM

now you know why americans cant afford a new car or truck made in America by any of the big three. mr president Obama has really did a number on our economy.

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Patty Du February 21 2014 at 2:03 PM

Part of what you say is true ... foreign countries are causing problems here due to how much cheaper their employees paid but blaiming it all on our President is wrong ... this all started many years ago when our government, Democrats and Republicans, decided to create leagle and what they named 'free trade' between countries ... please don't jump on our current Preside just because you think he's to blame for everything because he isn't ... read a little bit and learn more ... Please

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mulligun February 21 2014 at 1:02 PM

Ford is now manufacturing Cars in Mexico. I will not purchase a Car manufactured in a Foreign Country.

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amblc888 February 21 2014 at 1:06 PM

have fun walking then

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senfoghorn1 February 21 2014 at 12:59 PM

Honda initially sent their cars from Japan but their product became so successful during the 70's, (when American auto workers were sabotaging assembly line American cars because they were denied a raise from $28.00 per hour) that they started building plants in the U.S. The rest is history. Detroit-made junk went out of business because of greed from top to bottom. In my own experience with a 74 Dodge, it had sand in the radiator, bottles in the side panels (to rattle), and a carb that died on left turns. Repair service was the poorest in the world. I have owned Honda's ever since that time.

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Patty Du February 21 2014 at 2:15 PM

In addition to all of these negative remarks, it would be an honest gesture to also explain exactly how you really know all of this ... share your research with us regarding the dishonestly of the Ford company don't just express your hurt feelings!!

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spforc February 21 2014 at 12:43 PM

Yup, lets send all our manufacturing jobs to different countries, let there people work, while we build more and more jails, to warehouse our poor slobs that have no work... Great, we have the market cornered on inmates, soft and hard core.

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sadiemae1214 February 21 2014 at 12:26 PM

I have an issue with any vehicle made in Mexico. When the Volkswagon Beetle was assembled there, they used some kind of chemical cleaner on the leather seats, armrests, dash and anything made of leather. Every time I sat in one (which was frequently), my skin blistered, even thru my clothes. I found out that I wasn't the only person this happened to. I had several hospital bills that the company refused to pay unless I could prove the blisters came from their cars but they wouldn't give me a swatch of the leather to have tested. Just be really careful what you sit on.

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aesdsgn February 21 2014 at 11:55 AM

Soon we'll being to notice that our neighborly Mexican guest workers here are disappearing, and don't like us anymore. After all, they've been slanted and smeared for a job well done under disrespectful conditions while being unappreciated.

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senfoghorn1 February 21 2014 at 1:06 PM

Will Mexico and Mexicans willingly and happily accept Americans who sneak into their country to get those car jobs? Just asking - that would be a "fair trade" in my opinion.

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debnaert February 21 2014 at 11:46 AM

Japan can send their work to whom ever they want.......... NOT OUR BUSINESS.

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aesdsgn February 21 2014 at 11:59 AM

By the way "whomever" is one word. What are you implying by your comment in the context of global competitiveness?

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fjjackson3 February 21 2014 at 11:43 AM

If it was not for the Corporate greed that is strangling the US we would all still be buying made in America. The Board Room takes a huge percentage of the profits not the production line.Buy made in America and put Americans to work

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lalalexm1 February 21 2014 at 11:46 AM

Once again. Honda is a Japanese car, not American. Honda can built a plant anywhere in the world they want without our permission.

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deebeedonny February 21 2014 at 12:35 PM

How patriotic......Yes, they can build a plant anywhere they want, but if it's not made in the USA i won't buy it...I got fooled once while purchasing a Ford Taurus. I wanted to buy an American made car, only to find out that the car was manufactured in Mexico. That's the last time I will be fooled....

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lalalexm1 February 21 2014 at 11:40 AM

And yet these people still live in poverty. This will be a great way for the drug cartel to smuggle drugs out of Mexico.

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