Mexico Might Be the New Detroit
Ford's $1.6B bet on the Southland is the latest sign.
Donald Trump has failed to acknowledge many things this campaign season, among them his love of Lamborghini Diablos and London’s radicalization at the hands of treacherous, Pagani-driving young bucks. We know, however, which side of the proverbial fence he's on when it comes to American automakers building plants in Mexico.
“An absolute disgrace,” is how he recently described Ford’s plan to construct a plant in the central Mexican state of San Luis Potosí. The facility, representing a $1.6 billion investment, would assume production of the Focus from the automaker’s underutilized Wayne, Mich., plant, which would retool to build crossovers and SUVs, including a reborn Bronco. The Republican presidential frontrunner also has criticized NAFTA, the trade agreement brokered by the U.S., Mexico, and Canada in the early Nineties, as being unfair to American workers.
Trump’s fixation with Mexico has largely clung to the banks of the Río Grande, so the candidate’s acknowledgement of industry—let alone a country—south of Juaréz, Tijuana, Reynosa, and other Mexican border cities marks a shift. The bigger shift, though, has been in Mexico’s car industry, which has deftly heel-toed away from the border and planted itself deep in the country’s colonial heartland. Indeed, Mexico’s interior states of Guanajuato, Aguascalientes, and San Luis Potosí are newly building Hondas, Mazdas, and Nissans for North America and export markets, with Fords and BMWs not far behind. Further southeast, in Puebla, Audi’s first Mexico-produced Q5 SUVs will soon begin shipping from a $1.3 billion plant. Strong university systems funnel skilled grads to higher positions at these facilities, too. The border mythologies of Trump are reading about five years behind the times. Mexico is retooling to be a new Detroit.
“Maquiladora,” a term that once bundled hope, enterprise, and prosperity in its five syllables, is something of a dirty word now in Mexico. The signing of the North American Free Trade Agreement sent U.S. automakers sprinting to border states to assemble cars at a fraction of the cost of their U.S.-built equivalents. In the resulting maquiladora zones, assembly workers were housed in cookie-cutter Levittowns that the automakers helped build. The border boom created a fledgling middle class, but also wreaked environmental and societal havoc. Water dried up. Murders of female maquiladora workers went unsolved. The drug trade exploded. And when U.S. demand for new cars dropped off in the early Aughts and during the financial crisis, some plants shuttered for good.
But the recent investments in Mexico’s colonial heartland seem better suited to handle future economic tempests. For one, carmakers aren’t setting up shop on bare ground and awaiting a flood of workers. Guanajuato’s university system is particularly robust, and its engineers will graduate into a market where their skills are in demand. Automakers are filling more mid- and high-level positions locally than they were prepared to do 20 years ago during the NAFTA boom, which allows a more highly skilled, mobile workforce to flourish.
Where education goes, innovation tends to follow. The green shoots are already showing with ultra-niche sports cars like the Vühl 05, designed and assembled entirely south of the border. And Mexico has already given us thetelenovela-worthy sports car drama that is/was Mastretta. All that’s missing from the broader narrative is an acknowledgement from Trump or anyone else with eyes to see that Mexico is not stealing auto jobs. It is, however, taking them.