AP: Low wages, trade deals luring auto plants and jobs to Mexico (thanks to NAFTA up next TPP)

http://apnews.excite.com/article/20150421/us--making_cars_in_mexico-da44712094.html

By TOM KRISHER and CHRISTOPHER SHERMAN

DETROIT (AP) — Mexico has become the most attractive place in North America to build new automobile factories, a shift that has siphoned jobs from the U.S. and Canada, yet helped keep car and truck prices in check for consumers.

In the past two years, eight automakers have opened or announced new plants or expansions in Mexico. Just last week, Toyota announced a new plant in Guanajuato to build the popular Corolla, work now done in Canada, while Ford unveiled plans for Mexican engine and transmission factories.

Low labor costs and fewer tariffs are the swing factors. A worker in Mexico costs car companies an average of $8 an hour, including wages and benefits. That compares with $58 in the U.S. for General Motors and $38 at Volkswagen's factory in Tennessee, the lowest hourly cost in the U.S., according to the Center for Automotive Research, an industry think tank in Ann Arbor, Michigan. German auto workers cost about $52 an hour.

Mexico also trumps the U.S. on free trade. It has agreements with 45 countries, meaning low tariffs for exporting globally. That, along with low labor costs, convinced Audi to build an SUV factory in the state of Puebla. The German automaker will save $6,000 per vehicle in tariffs when it ships a Q5 to Europe, compared with building the same vehicle in the U.S., says Sean McAlinden, chief economist at CAR.

FULL story at link.



FILE - In this June 12, 2013, file photo, workers assemble Volkswagen Passat sedans at the German automaker's plant in Chattanooga, Tenn. Lured by low wages and tax-saving free trade agreements, auto companies from the U.S. and overseas are accelerating plans to build new factories and add jobs in Mexico. The moves, part of a decade-long trend, are luring investments and work that could have gone to the U.S. and Canada, according to experts. But they also are likely to keep car and truck prices in check even as automakers add expensive fuel-saving features to meet U.S. gas mileage requirements.AP Photo/ Erik Schelzig, file)