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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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1000|Char. 1000  Char.
eddieboyeddie.gibson February 21 2014 at 11:30 AM

I don't know, I see vehicles with a sticker assembled in Mexico and assembled in Japan, there is no difference in the sticker price of the car, like the
BMW's that come from Germany and the ones assembled here, price is the same.

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1 reply
lalalexm1 eddieboyeddie.gibson February 21 2014 at 11:48 AM

No difference in sticker prices but more profit in the company's pocket. Honda is in it for the money, not for the interest in helping people work

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Rap Scallion February 21 2014 at 10:42 AM

Funny how the NAFTA is being rebopped into the greatest trade deal ever in the USSA. PBS News Hour had a smidge of the coming debate, I would assume all for the benefit of Mrs Clinton, whose husband signed the Bush I deal. She will need all of the NON Obama help she can get to override his failed or NON policys for the economy. The NAFTA trade deal will be respun as her idea and she will get some kind of disjointed credit for it!

The fact of the matter, according to the governments own numbers, is that Ross Perot was right and the great ******* sound was jobs leaving the USSA. The pact has been huge for Canada and Mexico but the Americans took it in the neck!

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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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carlucn February 21 2014 at 11:39 AM

Yea thats great--the auto industry was essentially built in the US--now only to see those jobs
exported to Mexico killing the middle class. Great! Way to go.

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2 replies
lalalexm1 carlucn February 21 2014 at 11:43 AM

They are Japanese cars carl. Not American. Japan decided to built the plant there because wages in America are too high and Honda wants more profit.

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aesdsgn carlucn February 21 2014 at 12:10 PM

Oh! Come off it. We'd have to adopt to the new digital, and virtual economy to earn the dollars in our forthcoming paperless monetary system. How do you expect us to pay workers on Mars? O' so you think that's funny----------

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1 reply
Jim aesdsgn February 21 2014 at 12:49 PM

Until they get rid of hackers (and they wont till they totally rewrite the internet (TCP/IP)) all virtual economies will fail. Put your virtual money wherever you want. Daily (make that hourly), there are thousands of kids learning that the tools to hack anybody on any network are free for anybody to download. However, there are NOT thousands of security techs jumping on-board everyday. Even if there were, it would do no good. Security MUST be introduced at design time... not as an afterthought, as the present day internet is. Those poor saps on mars are going to have their pay intercepted, just like the rest of us poor saps.

BTW, the lowest bottom feeder on the internet are the grammar and spelling police. I seen where you corrected some person for a spelling error. You are not perfect, and you make mistakes too. Since your 'rule' is to scold people for spelling mistakes, your bad karma has huge backlog.

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usapaydirt February 21 2014 at 9:05 AM

Hopefully the Mexican labor force will become enlightened as to how badly they are being screwed over and taken advantage of. They should be paid the same wages as their American counterparts, for the exact same work.

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1 reply
joewash22 usapaydirt February 21 2014 at 10:41 AM

Isn't it ironic that South Carolina politicians did everything legally and illegally to fight the UAW. North of the border Mexico.

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John February 21 2014 at 8:39 AM

Can't understand why the article says that US auto workers make $80/ day, (16/day in Mexico times 5). That's only $10/ hour. I thought the US auto workers made an average of $34/hour. Something is wrong with these figures

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1 reply
ALEX TURNBULL John February 21 2014 at 8:56 AM

There is a two tear system in the US auto pay. For the last 10 years a new hire makes $14 an hour. Older longer term employees still make $28 and hour. The rest of your figures are the cost of retirement and healthcare. You have seen for some time buy outs in US auto manufacturing of the older employees whom the companies want to replace with the lower pay scale employees.

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edwardnieter February 21 2014 at 10:56 AM

I liked the Henry Ford philosophy on wages paid to employees. He paid three times what the others did. They called him crazy, but he said he wanted his people to be able to buy what they spent their lives producing. We could use that kind of thinking again. Keep the jobs and the prosperity here in the US.

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jesuaphn February 21 2014 at 8:20 AM

This is such a crock of crap report. A Ford Fiesta is basically an import. Close to most of it is made in Brazil and Mexico.....like that many other cars are made outside the US and shipped in. I wonder how much they save and make in profits;yet, the price os cars has not gone down....hmmm...Crooks

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pdbliz February 21 2014 at 8:03 AM

..UP DATE TO NEWS FLASH...........CHECK YOUR AMERICAN CAR OUT..........MOST OF THE ELECTRONICS COME FROM MEXICO ........CHECK OUT RUNNING GEAR AND TRANSMITIONS....France.......or Canada...
Steel,,,imported from China ,,,,that we sold them as scrap metal........so...just what part of our vehicles is made in ,,,U.S.A. ????

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pdbliz February 21 2014 at 8:01 AM

Nothing is going to make me have a bad day,,,,,,,I love each day I live.......Bad news,,,,no problem,,,,,good news....no problem,,
I have a number,,,when it is reached,,,,,,poof.!!!!! THAT IS IT.!!!!

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