Mexico is on track to become the top exporter of automobiles to the United States, and it’s the Japanese automakers like Mazda, which has all but pulled the plug on U.S. production, making that happen.
Japanese automakers have long discussed plans to build more plants in North America to sell more cars and trucks to American consumers. The problem, as far as American manufacturing is concerned, is that they’re building many of them south of the border.
Just as American-owned automakers (Ford and GM) are moving production of their models from Canada to the USA, thereby reducing the volume of Canada’s exports to the United States, factories of Japanese-owned automakers are flocking to Mexico for a number of reasons:
- To take advantage of lower labor costs.
- To export vehicles to the USA duty-free, courtesy of NAFTA
- To play the “Made in Mexico” card to Mexican consumers
- To bring manufacturing closer to the U.S. market
- To avoid unfavorable exchange rates involving the yen and the U.S. dollar
- To avoid high shipping rates on ocean vessels from Japan
In fact, Japanese automakers quietly have more than tripled exports of cars and trucks from Mexico bound for American dealerships and showrooms since 2002.
Why do I say they have done this “quietly”? Because since at least the mid-2000s, Japan’s automakers have been playing the “Made in USA” card in America, admittedly better than Detroit has even though Detriot automakers have far more factories in the U.S. And Japanese automakers in particular have successfully propagated the myth that they have been the primary propeller of American manufacturing in the auto industry, and that American auto companies have been largely moving overseas. Another reason that say that this has happened “quietly” is, I suppose, is because I doubt you have read any of this information anywhere else…am I right?
The main reason the above manufacturing myth was so easy to swallow? Because American journalists could not resist the irony of reporting how Toyota was building a new plant in the Deep South, but GM was closing a plant in the U.S. and moving it offshore. But American-based journalists back then were focusing on the exception rather than the rule.
Of course Japanese companies were building auto plants in the U.S.! The main reason was that they barely had any compared to U.S.-owned auto companies.
Back in 2006, it didn’t matter to American reporters that General Motors had 82 major plants in America and Ford had 35.What mattered to authors of articles on the auto industry was that Toyota, Honda, and Nissan had eight plants each, apparently, and this was not only big news but cause for immense celebration, and furthermore, a reason to berate American automakers.
It didn’t matter that American automakers GM and Ford had the number one and number two market share, respectively, in the U.S. The myth was still propagated that GM and Ford weren’t building cars consumers wanted to buy. No one has ever successfully explained to me how one grabs the top spot in market share if consumers aren’t buying their products.
It didn’t matter that U.S. automakers used more domestic parts in their cars and trucks than foreign automakers.
It didn’t matter that U.S. automakers employed far more Americans in the USA than all their foreign competitors combined, and supported far more dependents, retirees, and their families as well.
It didn’t matter that U.S. automakers have been building cars and trucks here for over a hundred years and that Toyota, for example, didn’t erect its first U.S. plant until 1986.
And it didn’t matter that U.S. automakers were spending just as much money upgrading existing multi-decades-old factories as Japanese automakers were spending on brand new ones. After all, which of the following two stories is more likely to grab the headlines: “GM to invest hundreds of millions of dollars on upgrades to transmission plant built in 1940” or “ Toyota to spend hundreds of millions of dollars on a gleaming new factory in the Deep South”?
In recent years, General Motors has moved either complete or partial production (or made announcements detailing future production moves) of the following models from Canada to the United States: Buick LaCrosse, Cadillac XTS, Chevrolet Camaro, Chevrolet Impala, Chevrolet Equinox.
GM is moving production of Cadillac SRX from Mexico to the U.S., and Ford has moved some production of its popular Fusion model from Mexico as well. Ford also announced earlier this year it is moving production of its commercial F-650 and F-750 pickups from Mexico to the U.S. to establish “complete design, manufacturing and engineering control over our F-series lineup,” according to Ford President of the Americas Joe Hinrichs.
So it’s easy to see how the shift of U.S. automakers’ models from Canada to the United States, along with the shift of Japanese automakers’ models from Japan to Mexico, is helping Mexico to become the top exporter to the United States. And, this has occurred despite U.S. automakers shifting production from Mexico to the United States, thereby reducing their exports from that country.
How has the Japanese shift to Mexico helped Japan grab more Mexican market share? Well, consider this: Back in 2009, Detroit’s Big Three (slightly distorted since Chrysler can no longer be called a “Detroit automaker” in my book) had a 57 percent market share in Mexico while Japanese brands only had a 23 percent Mexican market share. After just four short years later, Japanese automakers commanded 42 percent market share compared to the Big Three percentage of only 35 percent. Nissan is now Mexico’s number one selling brand.
American automakers GM and Ford should be roundly congratulated for moving more production from other countries back to the United States. And Japanese automakers should be roundly criticized for telling us they’re moving more production to “North America” and then flooding Mexico with most of it, especially after playing the “Made in USA” card in the media in more recent years.