Abstract
After half a century of attracting foreign direct investment (FDI) flows and becoming one of the three hotspots in the global automotive industry, Mexico has been unable to advance in upgrading and catching-up, other than in processes—not in terms of products and even less so in design. Furthermore, it does not have its own industry and largely depends on cheap labor to preserve its competitiveness. In comparison with the Asian entrepreneurial state, what we have referred to as the Mexican syndrome, represents the unintentional effects of being inundated by global value chains (GVCs) and FDI flows.
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Notes
- 1.
The USMCA must still be ratified by the legislative branches of the three countries, which is expected to take place during 2019.
- 2.
Unless otherwise indicated, Mexico’s auto industry data cited here are from INEGI (Instituto Nacional de Estadistica Geografía e Informatica), ProMexico, AMIA (Asociación Mexicana de la Industria Automotriz), and OICA (International Organization of Motor Vehicle Manufacturers).
- 3.
From 2007 to 2017 Mexicoauto output grew 1.9 times (from 2.1 to 4 million units per year), China’s 3.2 times (from 8.9 to 29 million units for a 225% total increase), and India’s 2.2 times (from 2.2 to 4.8 million units annually for a 118% overall increase).
- 4.
Data up to December 2017 according to INEGI-EMIM (2018). Considering indirect jobs associated to the MAI, the estimations amount to 2 million jobs.
- 5.
In the eighties started a “new era” of the MAI (Carrillo V. 1990) featured by trade liberalization and export-oriented policies. The auto industry’s decrees of 1983 and 1989 emphasized these features. Yet there were still restrictions on local content, native ownership and trade barriers that NAFTA would come to eliminate immediately (approximately 50% of them) or gradually, in a ten-year period.
- 6.
It belongs to the Daimler-Nissan alliance to assemble Mercedes-Benz and Infiniti models.
- 7.
Forbes 2018 ranking places him at sixth.
- 8.
They are GM, Nissan, Honda, BMW, Mazda, Daimler AG, VW and Toyota.
- 9.
The MAI goes back to the 1920s and 1930s when Ford, GM and Chrysler set up the first automotive facilities in Mexico. Yet they mostly assembled completely knocked down units. The decade of the 60s is identified as the full starting point of the MAI, when the D3, Nissan and VW built assembly plants in Central Mexico and Puebla following Mexican government’ import substitutions policies to spur domestic production. A second phase or wave of the MAI started in the eighties, when the industry was reoriented to external markets. NAFTA brought about the third wave and the boom of the MAI came to represent a fourth stage.
- 10.
NOM-163-SEMARNAT-ENER-SCFI-2013. CO2 emissions cast by the exhaust and its equivalence in terms of fuel encompassing new vehicles up to 3857 Kg.
- 11.
I estimate this 30% based on the specifics contained in the same collective bargaining agreements. The Conference Board estimates at 29.7% of total compensation the cost for benefits in the whole Mexican manufacturing sector.
- 12.
Other location-sensitive cost factors range as follows: Cost of capital, 11–25%; taxes, 10–18%; transportation, 6–21%; utilities, 2–7%; and facilities, 2–5% (KPMG 2016).
- 13.
It states that, for the agreement not to be delayed, Mexico shall adopt such legislation before January 1, 2019.
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Covarrubias V., A. (2020). The Boom of the Mexican Automotive Industry: From NAFTA to USMCA. In: Covarrubias V., A., Ramírez Perez, S.M. (eds) New Frontiers of the Automobile Industry. Palgrave Studies of Internationalization in Emerging Markets. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-18881-8_13
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