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Japan auto companies triple Mexican pay rather than move to US

198 points by Reedx 6y ago

ixvvqktiwl 6y ago
Sounds like a boon for Mexico, good for them. I guess it's kind of satisfying to see these policies have the opposite of the intended effect.
- hourislate 6y ago
  >it's kind of satisfying to see these policies have the opposite of the intended effect This policy is actually doing exactly what it is suppose to. It is preventing more auto manufacturers from moving operations to Mexico or Canada where labor and Exchange rates are more favorable. GM, FORD, Toyota, Honda, Chrysler all had their eye on moving more production to Mexico, this new agreement probably stops that. I don't think anyone thought an auto manufacturer in Mexico would pull up shop and move to the US, that wouldn't make sense.
  - thisisnico 6y ago
    Nothing is moving to Canada, there had been a pretty big exodus from Michigan and Ontario to Texas and Mexico after Nafta. They’re still closing plants in Ontario and moving them to Mexico. 16$ an hour is less than what they pay in Canada. Source: I work for a supplier in the Automotive Capital of Canada. These comments are so egregiously false.
    - hourislate 6y ago
      >16$ an hour is less than what they pay in Canada. It's the equivalent of 16. USD. So around 22. CAD? I agree, nothing is moving to Canada (comment was more aimed at Mexico)I guess since you work for a supplier you heard of FORD probably closing down their Oakville Assembly plant since they are not assigning any vehicle production to that plant after they stop making the Edge and the Lincoln equivalent.
      - thisisnico 6y ago
        They've also closed the Oshawa GM Plant, and they've reduced a shift at the FCA minivan plant. GM exited Windsor about 20 years ago. If anything the new agreement is aimed at re-balancing auto back to the US and Canada. We had a great automotive relationship in the past, it's mutually beneficial to both economies as there are strengths and weaknesses in the US industry and Canadian Industry. I'm interested to see what happens. I want to see Detroit as great as it was before NAFTA destroyed it.
- Aloha 6y ago
  It's good for the US to have economically prosperous neighbors too.
  - 0max 6y ago
    hilarious to the point of tears since we've been enabling the opposite for decades
    - adventured 6y ago
      Canada is one of the most affluent, stable, peaceful nations. For 2019 Canada's GDP per capita just barely missed surpassing Germany. They happen to be a prominent neighbor to the US, their primary cities are positioned next to the US border, and they are likely to get a lot wealthier in the coming decades. If the US gets credit for the bad, it also gets credit for the good (which is the part that critics universally evade at all costs). In GDP per capita Mexico ranks in front of 120 other nations, including: China, Turkey, Brazil, Argentina, Thailand, and just behind Russia. US imports are 1/3 of their economy; we're running a $100 billion trade deficit with Mexico, which is to their benefit. As an American I'm happy that we're doing that, it's to our benefit that Mexico's economy advances. It has the 15th largest economy in the world and continues to gradually climb. That's despite the intense domestic chaos they've been dealing with there the past ~13 years. As a developing nation their long-term economic potential is immense.
      - mbrodersen 6y ago
        GDP is completely useless as an indicator of anything important. Sell the same house 10 times and it will contribute to the GDP 10 times. However it is the same house. Nothing has changed. Nothing of value has been added.
        ta17711771 6y ago
        Real estate agents hate him!
- samfisher83 6y ago
  Even triple the pay they are making $16 dollars/hour which is less than whatever an american auto worker is going to make.
  - hourislate 6y ago
    I don't know about that. Being an autoworker no longer pays that well from what I understand. There are tiered levels of pay depending on how long ago you were hired, etc. It's not like the old days where you earned what the guy with 30 years of seniority earned per hour. Even the benefits are different with some folks who have been around for a couple of decades enjoy a different level of coverage or vacation, etc.
  - masukomi 6y ago
    Mexican workers get a dramatic quality of life improvement. US workers don't have to work for less than market value / cost of living prices. Tens of thousands of US people continue to get cheap cars. Sounds like a great deal.
    - gurumeditations 6y ago
      Exporting working class jobs from a higher cost of living area to a lower cost of living area is on the whole a loss for the vast majority of people who are not wealthy and a gain for those who are wealthy. It’s a blatant wealth transfer from the masses to the wealthy few. So Americans get cheaper cars but no way to pay for them, and wealthy Americans get record levels of wealth. Globalism is a sham and it’s surprising to still see someone parrot its hollow logic that only makes sense if you look at it in the short term and on a small scale instead of as a long term society-wide trend.
      - ksk 6y ago
        Well, nobody is "owed" a job. Markets transform and respond to pressures. When you operate in a saturated market like the US the only line item on the balance sheet that is easy to tackle is labor costs, not revenue or profit. Your customers aren't going to buy products from you because you gave a raise to your janitor instead of replacing them with a roomba (relax, its a joke :P). The China/Walmart economy is here to stay. For retail companies, the only growth markets that you can sell into are the developing world markets around the world. These are also the companies your retirement funds are invested in, unless you don't want your savings to grow. If every country turned protectionist, it will trigger a massive economic depression. I suppose we'd come out of it eventually, if global warming doesn't kill us first :)
SpicyLemonZest 6y ago
The article is making it sound like some kind of backfire, and I'm not really sure why. It's gotta be good in the long run for US auto workers if their competitors' wages triple.
- gwern 6y ago
  What are these 'wages' of which you speak? Robots do not have hourly wages: "Auto component maker Piolax, will also raise the hourly wage at its Mexican plant to $16 within the year. The company is also installing robots to mitigate rising labor costs, President Yukihiko Shimazu said."
  - awakeasleep 6y ago
    Anyone else a 'robotic automation takeover of all jobs' skeptic? There are obviously places where it makes sense, but a $15/hr human is preeeetty cheap compared to the price, programming, and maintenance of a robot. Seeing the quote from Yukihiko, I feel it reads like PR or a soothing word to stockholders who hate to hear about employees and wages
    - wolfgke 6y ago
      > There are obviously places where it makes sense, but a $15/hr human is preeeetty cheap compared to the price, programming, and maintenance of a robot. But such a robot is a good insurance against further increases of minimum wages.
      - throw_away 6y ago
        Cynically: you don't even need a real, working robot in-hand in order to threaten minimum wages. Even cheaper.
      - gwern 6y ago
        It also is great if the tariffs get dropped, since you were going to invest in robots anyway and this just moves your R&D forward in time. Which is better, relocating your entire factory & supply chain permanently only for the tariffs to disappear and render the entire exercise moot, or prioritize robots (even more than you were before, given coronavirus) and then regardless of what happens, you still enjoy the benefits of the robots? This and coronavirus and the recession are playing their usual role of shocking entities out of local optima... in this case, towards more automation & remote working. It is deeply ironic that Trump is essentially gouging Americans' welfare by forcing jacked-up prices which will subsidize the very automation & trade dynamics the Rust Belt blames their woes on.
JamalW 6y ago
If the US eliminated minimum wage, those jobs would have came here at the same rate.
erikw 6y ago
Wow, this should at least provide for some very interesting natural sociological experiments. For context, I make less than this as a software developer in Chile, and still have no problems saving and living a comfortable lifestyle. This is going to significantly impact the lives of folks working in these factories, and it will be interesting to see how it will affect the individuals, their communities, and the quality and competitiveness of the factories.
- AnthonyMouse 6y ago
  That's assuming it lasts. When you already have a factory in Mexico and now you have to pay them $16/hour, it makes little sense to immediately move it back to the US just in order to save $0 by paying US workers $16/hour instead. But the next thing that happens is that it becomes more cost effective to automate, so you start considering that. Then you don't employ as many people, and they become skilled workers who maintain high tech robots instead of unskilled workers turning wrenches, so you're not actually paying unskilled workers $16/hour anymore. Meanwhile the automation requires retooling, and maybe then you evaluate whether to retool the existing factory or to build a new one in a place with more skilled workers who can maintain the robots. In year zero you just raise wages for the existing workers. In year two or five or ten, something else happens.
  - HeadsUpHigh 6y ago
    The notion that car manufacturers from all the industries out there haven't already automated anything that's worth automating is something that I can't understand.
    - wtallis 6y ago
      "Worth automating" isn't a simple one-time binary decision. Whether a given process is worth automating depends on the cost of automating it, and the labor costs that it will save, both of which change over time.
      - 6y ago
linuxftw 6y ago
Obviously, nobody is going to move a state of the art facility that cost billions just because their labor costs went from 'nothing' to 'almost nothing.' What it will do is prevent more things from leaving the US to go to Mexico. Me being a cynic, I'm fully expecting the employees will have to return some of that cash via forced employee dormitories and such, but we'll see.
- gscott 6y ago
  Plus paying a person in Mexico $16 an hour is still 50% cheaper then paying an American $16 an hour.
  - renewiltord 6y ago
    Is that payroll tax and stuff like that? Or something else?
phkahler 6y ago
Why move production to the US and pay more when you can just leave it where it is and pay more? This seems reasonable.
- deleted 6y ago
  [deleted]
jonahhorowitz 6y ago
> The center also said U.S. car sales will drop by up to 1.3 million units annually due to the Trump administration's trade policy This is incredibly good news, if true. We need to reduce the number of cars in the US if we are going to have any chance of confronting climate change.
- 8ytecoder 6y ago
  Not without a change in the underlying dynamics including infrastructure. Used car sales and prices have dropped drastically and so people would just keep their old inefficient cars longer than ever before. Remote working if it sticks might contribute more to car reduction.
- onion2k 6y ago
  Only if there's a corresponding drop in the number of cars in use. It could be that people keep their old, inefficient, polluting cars for on the road for longer rather than replacing it. That would be bad for the environment.
  - AnthonyMouse 6y ago
    There is some disagreement about whether this is actually the case. It takes a lot of resources to build a new car. Meanwhile the average passenger cars has been above 30MPG for 15 years now and the newer ones aren't dramatically better than that. So you only come out ahead with a new car if you put a lot of miles on it. But then that's still conflating "new" and "efficient" -- a 2004 Prius still gets better mileage than the new car average. This doesn't apply to electric cars, which do use dramatically less petroleum (i.e. none), but they're mostly already made in the US, so making petrol cars cost more may actually be an environmental advantage because more people will buy electric.
  - mensetmanusman 6y ago
    People are driving drastically less.
627467 6y ago
> The US-Mexico-Canada Agreement requires 40% or more of parts for each passenger vehicle be manufactured by workers who are paid at least $16 per hour... On face value this seems to be a very progressive condition.
- microcolonel 6y ago
  It's kinda two ways. It raises the cost of automobiles (that's why analyses project a reduction in automobile sales by a bit over a million vehicles per year), reduces labour demand, and erases more low-skilled work; but those who do get the jobs may be paid more than otherwise, until the numbers expire.
  - tom_mellior 6y ago
    > It raises the cost of automobiles (that's why analyses project a reduction in automobile sales by a bit over a million vehicles per year) What do new cars cost in the US? Does a price difference of $500 or $1000 really make someone say "all right, I'd rather do without a car"?
    - kulahan 6y ago
      My guess is no, but it might make someone say "all right, I'd rather get a used car".
      - gpm 6y ago
        And person a getting a used car might make person b who was going to get a used car not get a car at all (or get a lower quality used car making person c...). Also it might make some families go "all right I won't get a 2nd (or nth) car".
        AnthonyMouse 6y ago
        It also changes the math when you have an old car in need of repair and have to decide whether to fix it or replace it.
haecceity 6y ago
What are the benefits to the companies of increasing minimum wage if the condition for no tariffs is increase minimum wage and move production to US?
gaukes 6y ago
The big issue seems to be that companies don’t know how long this version of NAFTA will last. If Biden becomes the next president and signals support for keeping the agreement the way it is, there’s a good shot they’ll move to the USA.
- AnthonyMouse 6y ago
  He could also signal support for leaving it the way it is right now and create an immediate benefit to American workers, but he doesn't really have the political incentive to signal that right now even if that's what he intends to do. (And the political incentive only changes if voters respond negatively to that sort of political gamesmanship.)
- tzs 6y ago
  Even if they were sure it was going to last, why would they move to the US? If they stay in Mexico, they can build cars for the US and Canadian markets and make sure that 40% of the parts are made by workers making $16 an hour to avoid tariffs, and in the same plant they can build cars for the rest of the countries in the Americas but use parts made by workers making more normal Mexican wages. If they move to the US, they will be paying US levels of pay for both the cars they build for the US and Canada and the ones they build for the rest of the American continents. Another disadvantage of building in the US cars for export to other countries that are not Canada or Mexico is they would have to worry about a trade war between the US and those other countries. If the current US administration slaps tariffs on country X, and X retaliates with tariffs on some US export and happens to pick cars as one of those exports, that is going to hurt the car company's sales. If they had remained in Mexico, they would not have to worry about US trade wars messing up their sales outside the US.
  - AnthonyMouse 6y ago
    > Even if they were sure it was going to last, why would they move to the US? If it no longer saves them money to be somewhere else, it's good PR. You get to hang a huge "made in USA" flag on your dealerships. > If they stay in Mexico, they can build cars for the US and Canadian markets and make sure that 40% of the parts are made by workers making $16 an hour to avoid tariffs, and in the same plant they can build cars for the rest of the countries in the Americas but use parts made by workers making more normal Mexican wages. People in the rest of the Americas buy different vehicle models. Chevy Beat, Nissan March, Volkswagen Vento. Very popular in Mexico. The US market also just dominates the market on the entire continent. It has almost as many people as all of South America, but more importantly, they're the people who buy new cars. Many of those other countries not only have lower car ownership rates, a large fraction of their cars are used cars exported from the US market. So they don't buy nearly as many new cars and most of what they do buy are different vehicle models. > If the current US administration slaps tariffs on country X, and X retaliates with tariffs on some US export and happens to pick cars as one of those exports, that is going to hurt the car company's sales. If they had remained in Mexico, they would not have to worry about US trade wars messing up their sales outside the US. This is assuming cars being assembled in Mexico are being exported in large numbers to the countries likely to get into a trade war with the US, which are predominantly on other continents. But the cars sold in those markets are typically also manufactured there. The Yaris is popular in Europe, they make them in France. The Buick Excelle is popular in China, they make them in Shanghai. The Toyota Corolla is manufactured on six continents. The cars they make in North America are mostly going to the US. And a trade war between the US and e.g. Costa Rica doesn't seem that likely, or if it somehow happened, that much of a concern for US auto manufacturing.
moltar 6y ago
Of course, because as soon as they do that, they’ll start planning to phase out humans as much as possible. It’s clear that we are on the cusp of total automation. Moving a factory to US is probably just more costly than to pay employees $16 for a few more years. And the employees who are left are highly paid engineers anyways.
yellowapple 6y ago
It turns out the real border wall was the friends we made along the way. That is: if auto workers are being paid that minimum wage by foreign automakers, that's gonna be a massive boon to Mexican household incomes, which improves the standard of living for at least some people, and in a dramatic way. This money will, I reckon, go straight toward things like entrepreneurship, higher education, and other things that help with upward mobility on a generational scale. This can (and I hope will) translate to less emigration pressure, since fewer Mexicans will feel the need to move north for US wages if they're already being paid US wages, and fewer migrants from further south will feel the need to continue across the US/Mexico border if they could instead settle in Mexico for similar pay and much lower cost of living. This could persist long-term, since a better-educated and more innovative population can give the Mexican economy one hell of a jumpstart (and, importantly, help whip up a generation of Mexicans with the technical education to keep up with the inevitable automation push). I'm curious how this will play out long term, but it seems reasonable to me that we should pay workers according to the value they create rather than merely the cheapest employers can get away with paying (and contrary to what the far-capitalists might claim, these are rarely if ever in sync, especially when talking about outsourced labor; a worker in Mexico is not inherently worth different than a worker in the US, so why should those two workers be paid differently?), and I'm oddly optimistic about how this might play out.
omega3 6y ago
For context in Mexico the average wage for an auto assembly worker was $7.34 per hour and just $3.41 per hour for an auto parts worker in 2017.[0] [0]https://www.cargroup.org/wp-content/uploads/2018/04/nafta_briefing_april_2018_public_version-final.pdf https://www.cargroup.org/wp-content/uploads/2018/04/nafta_br...

198 points by Reedx 6y ago

Sounds like a boon for Mexico, good for them. I guess it's kind of satisfying to see these policies have the opposite of the intended effect.

hourislate 6y ago
>it's kind of satisfying to see these policies have the opposite of the intended effect This policy is actually doing exactly what it is suppose to. It is preventing more auto manufacturers from moving operations to Mexico or Canada where labor and Exchange rates are more favorable. GM, FORD, Toyota, Honda, Chrysler all had their eye on moving more production to Mexico, this new agreement probably stops that. I don't think anyone thought an auto manufacturer in Mexico would pull up shop and move to the US, that wouldn't make sense.
- thisisnico 6y ago
  Nothing is moving to Canada, there had been a pretty big exodus from Michigan and Ontario to Texas and Mexico after Nafta. They’re still closing plants in Ontario and moving them to Mexico. 16$ an hour is less than what they pay in Canada. Source: I work for a supplier in the Automotive Capital of Canada. These comments are so egregiously false.
  - hourislate 6y ago
    >16$ an hour is less than what they pay in Canada. It's the equivalent of 16. USD. So around 22. CAD? I agree, nothing is moving to Canada (comment was more aimed at Mexico)I guess since you work for a supplier you heard of FORD probably closing down their Oakville Assembly plant since they are not assigning any vehicle production to that plant after they stop making the Edge and the Lincoln equivalent.
    - thisisnico 6y ago
      They've also closed the Oshawa GM Plant, and they've reduced a shift at the FCA minivan plant. GM exited Windsor about 20 years ago. If anything the new agreement is aimed at re-balancing auto back to the US and Canada. We had a great automotive relationship in the past, it's mutually beneficial to both economies as there are strengths and weaknesses in the US industry and Canadian Industry. I'm interested to see what happens. I want to see Detroit as great as it was before NAFTA destroyed it.
Aloha 6y ago
It's good for the US to have economically prosperous neighbors too.
- 0max 6y ago
  hilarious to the point of tears since we've been enabling the opposite for decades
  - adventured 6y ago
    Canada is one of the most affluent, stable, peaceful nations. For 2019 Canada's GDP per capita just barely missed surpassing Germany. They happen to be a prominent neighbor to the US, their primary cities are positioned next to the US border, and they are likely to get a lot wealthier in the coming decades. If the US gets credit for the bad, it also gets credit for the good (which is the part that critics universally evade at all costs). In GDP per capita Mexico ranks in front of 120 other nations, including: China, Turkey, Brazil, Argentina, Thailand, and just behind Russia. US imports are 1/3 of their economy; we're running a $100 billion trade deficit with Mexico, which is to their benefit. As an American I'm happy that we're doing that, it's to our benefit that Mexico's economy advances. It has the 15th largest economy in the world and continues to gradually climb. That's despite the intense domestic chaos they've been dealing with there the past ~13 years. As a developing nation their long-term economic potential is immense.
    - mbrodersen 6y ago
      GDP is completely useless as an indicator of anything important. Sell the same house 10 times and it will contribute to the GDP 10 times. However it is the same house. Nothing has changed. Nothing of value has been added.
      - ta17711771 6y ago
        Real estate agents hate him!
samfisher83 6y ago
Even triple the pay they are making $16 dollars/hour which is less than whatever an american auto worker is going to make.
- hourislate 6y ago
  I don't know about that. Being an autoworker no longer pays that well from what I understand. There are tiered levels of pay depending on how long ago you were hired, etc. It's not like the old days where you earned what the guy with 30 years of seniority earned per hour. Even the benefits are different with some folks who have been around for a couple of decades enjoy a different level of coverage or vacation, etc.
- masukomi 6y ago
  Mexican workers get a dramatic quality of life improvement. US workers don't have to work for less than market value / cost of living prices. Tens of thousands of US people continue to get cheap cars. Sounds like a great deal.
  - gurumeditations 6y ago
    Exporting working class jobs from a higher cost of living area to a lower cost of living area is on the whole a loss for the vast majority of people who are not wealthy and a gain for those who are wealthy. It’s a blatant wealth transfer from the masses to the wealthy few. So Americans get cheaper cars but no way to pay for them, and wealthy Americans get record levels of wealth. Globalism is a sham and it’s surprising to still see someone parrot its hollow logic that only makes sense if you look at it in the short term and on a small scale instead of as a long term society-wide trend.
    - ksk 6y ago
      Well, nobody is "owed" a job. Markets transform and respond to pressures. When you operate in a saturated market like the US the only line item on the balance sheet that is easy to tackle is labor costs, not revenue or profit. Your customers aren't going to buy products from you because you gave a raise to your janitor instead of replacing them with a roomba (relax, its a joke :P). The China/Walmart economy is here to stay. For retail companies, the only growth markets that you can sell into are the developing world markets around the world. These are also the companies your retirement funds are invested in, unless you don't want your savings to grow. If every country turned protectionist, it will trigger a massive economic depression. I suppose we'd come out of it eventually, if global warming doesn't kill us first :)

SpicyLemonZest 6y ago

The article is making it sound like some kind of backfire, and I'm not really sure why. It's gotta be good in the long run for US auto workers if their competitors' wages triple.

gwern 6y ago
What are these 'wages' of which you speak? Robots do not have hourly wages: "Auto component maker Piolax, will also raise the hourly wage at its Mexican plant to $16 within the year. The company is also installing robots to mitigate rising labor costs, President Yukihiko Shimazu said."
- awakeasleep 6y ago
  Anyone else a 'robotic automation takeover of all jobs' skeptic? There are obviously places where it makes sense, but a $15/hr human is preeeetty cheap compared to the price, programming, and maintenance of a robot. Seeing the quote from Yukihiko, I feel it reads like PR or a soothing word to stockholders who hate to hear about employees and wages
  - wolfgke 6y ago
    > There are obviously places where it makes sense, but a $15/hr human is preeeetty cheap compared to the price, programming, and maintenance of a robot. But such a robot is a good insurance against further increases of minimum wages.
    - throw_away 6y ago
      Cynically: you don't even need a real, working robot in-hand in order to threaten minimum wages. Even cheaper.
    - gwern 6y ago
      It also is great if the tariffs get dropped, since you were going to invest in robots anyway and this just moves your R&D forward in time. Which is better, relocating your entire factory & supply chain permanently only for the tariffs to disappear and render the entire exercise moot, or prioritize robots (even more than you were before, given coronavirus) and then regardless of what happens, you still enjoy the benefits of the robots? This and coronavirus and the recession are playing their usual role of shocking entities out of local optima... in this case, towards more automation & remote working. It is deeply ironic that Trump is essentially gouging Americans' welfare by forcing jacked-up prices which will subsidize the very automation & trade dynamics the Rust Belt blames their woes on.

JamalW 6y ago

If the US eliminated minimum wage, those jobs would have came here at the same rate.

erikw 6y ago

Wow, this should at least provide for some very interesting natural sociological experiments. For context, I make less than this as a software developer in Chile, and still have no problems saving and living a comfortable lifestyle. This is going to significantly impact the lives of folks working in these factories, and it will be interesting to see how it will affect the individuals, their communities, and the quality and competitiveness of the factories.

AnthonyMouse 6y ago
That's assuming it lasts. When you already have a factory in Mexico and now you have to pay them $16/hour, it makes little sense to immediately move it back to the US just in order to save $0 by paying US workers $16/hour instead. But the next thing that happens is that it becomes more cost effective to automate, so you start considering that. Then you don't employ as many people, and they become skilled workers who maintain high tech robots instead of unskilled workers turning wrenches, so you're not actually paying unskilled workers $16/hour anymore. Meanwhile the automation requires retooling, and maybe then you evaluate whether to retool the existing factory or to build a new one in a place with more skilled workers who can maintain the robots. In year zero you just raise wages for the existing workers. In year two or five or ten, something else happens.
- HeadsUpHigh 6y ago
  The notion that car manufacturers from all the industries out there haven't already automated anything that's worth automating is something that I can't understand.
  - wtallis 6y ago
    "Worth automating" isn't a simple one-time binary decision. Whether a given process is worth automating depends on the cost of automating it, and the labor costs that it will save, both of which change over time.
    - 6y ago

linuxftw 6y ago

Obviously, nobody is going to move a state of the art facility that cost billions just because their labor costs went from 'nothing' to 'almost nothing.' What it will do is prevent more things from leaving the US to go to Mexico. Me being a cynic, I'm fully expecting the employees will have to return some of that cash via forced employee dormitories and such, but we'll see.

gscott 6y ago
Plus paying a person in Mexico $16 an hour is still 50% cheaper then paying an American $16 an hour.
- renewiltord 6y ago
  Is that payroll tax and stuff like that? Or something else?

phkahler 6y ago

Why move production to the US and pay more when you can just leave it where it is and pay more? This seems reasonable.

deleted 6y ago
[deleted]

jonahhorowitz 6y ago

> The center also said U.S. car sales will drop by up to 1.3 million units annually due to the Trump administration's trade policy This is incredibly good news, if true. We need to reduce the number of cars in the US if we are going to have any chance of confronting climate change.

8ytecoder 6y ago
Not without a change in the underlying dynamics including infrastructure. Used car sales and prices have dropped drastically and so people would just keep their old inefficient cars longer than ever before. Remote working if it sticks might contribute more to car reduction.
onion2k 6y ago
Only if there's a corresponding drop in the number of cars in use. It could be that people keep their old, inefficient, polluting cars for on the road for longer rather than replacing it. That would be bad for the environment.
- AnthonyMouse 6y ago
  There is some disagreement about whether this is actually the case. It takes a lot of resources to build a new car. Meanwhile the average passenger cars has been above 30MPG for 15 years now and the newer ones aren't dramatically better than that. So you only come out ahead with a new car if you put a lot of miles on it. But then that's still conflating "new" and "efficient" -- a 2004 Prius still gets better mileage than the new car average. This doesn't apply to electric cars, which do use dramatically less petroleum (i.e. none), but they're mostly already made in the US, so making petrol cars cost more may actually be an environmental advantage because more people will buy electric.
- mensetmanusman 6y ago
  People are driving drastically less.

627467 6y ago

> The US-Mexico-Canada Agreement requires 40% or more of parts for each passenger vehicle be manufactured by workers who are paid at least $16 per hour... On face value this seems to be a very progressive condition.

microcolonel 6y ago
It's kinda two ways. It raises the cost of automobiles (that's why analyses project a reduction in automobile sales by a bit over a million vehicles per year), reduces labour demand, and erases more low-skilled work; but those who do get the jobs may be paid more than otherwise, until the numbers expire.
- tom_mellior 6y ago
  > It raises the cost of automobiles (that's why analyses project a reduction in automobile sales by a bit over a million vehicles per year) What do new cars cost in the US? Does a price difference of $500 or $1000 really make someone say "all right, I'd rather do without a car"?
  - kulahan 6y ago
    My guess is no, but it might make someone say "all right, I'd rather get a used car".
    - gpm 6y ago
      And person a getting a used car might make person b who was going to get a used car not get a car at all (or get a lower quality used car making person c...). Also it might make some families go "all right I won't get a 2nd (or nth) car".
      - AnthonyMouse 6y ago
        It also changes the math when you have an old car in need of repair and have to decide whether to fix it or replace it.

haecceity 6y ago

What are the benefits to the companies of increasing minimum wage if the condition for no tariffs is increase minimum wage and move production to US?

gaukes 6y ago

The big issue seems to be that companies don’t know how long this version of NAFTA will last. If Biden becomes the next president and signals support for keeping the agreement the way it is, there’s a good shot they’ll move to the USA.

AnthonyMouse 6y ago
He could also signal support for leaving it the way it is right now and create an immediate benefit to American workers, but he doesn't really have the political incentive to signal that right now even if that's what he intends to do. (And the political incentive only changes if voters respond negatively to that sort of political gamesmanship.)
tzs 6y ago
Even if they were sure it was going to last, why would they move to the US? If they stay in Mexico, they can build cars for the US and Canadian markets and make sure that 40% of the parts are made by workers making $16 an hour to avoid tariffs, and in the same plant they can build cars for the rest of the countries in the Americas but use parts made by workers making more normal Mexican wages. If they move to the US, they will be paying US levels of pay for both the cars they build for the US and Canada and the ones they build for the rest of the American continents. Another disadvantage of building in the US cars for export to other countries that are not Canada or Mexico is they would have to worry about a trade war between the US and those other countries. If the current US administration slaps tariffs on country X, and X retaliates with tariffs on some US export and happens to pick cars as one of those exports, that is going to hurt the car company's sales. If they had remained in Mexico, they would not have to worry about US trade wars messing up their sales outside the US.
- AnthonyMouse 6y ago
  > Even if they were sure it was going to last, why would they move to the US? If it no longer saves them money to be somewhere else, it's good PR. You get to hang a huge "made in USA" flag on your dealerships. > If they stay in Mexico, they can build cars for the US and Canadian markets and make sure that 40% of the parts are made by workers making $16 an hour to avoid tariffs, and in the same plant they can build cars for the rest of the countries in the Americas but use parts made by workers making more normal Mexican wages. People in the rest of the Americas buy different vehicle models. Chevy Beat, Nissan March, Volkswagen Vento. Very popular in Mexico. The US market also just dominates the market on the entire continent. It has almost as many people as all of South America, but more importantly, they're the people who buy new cars. Many of those other countries not only have lower car ownership rates, a large fraction of their cars are used cars exported from the US market. So they don't buy nearly as many new cars and most of what they do buy are different vehicle models. > If the current US administration slaps tariffs on country X, and X retaliates with tariffs on some US export and happens to pick cars as one of those exports, that is going to hurt the car company's sales. If they had remained in Mexico, they would not have to worry about US trade wars messing up their sales outside the US. This is assuming cars being assembled in Mexico are being exported in large numbers to the countries likely to get into a trade war with the US, which are predominantly on other continents. But the cars sold in those markets are typically also manufactured there. The Yaris is popular in Europe, they make them in France. The Buick Excelle is popular in China, they make them in Shanghai. The Toyota Corolla is manufactured on six continents. The cars they make in North America are mostly going to the US. And a trade war between the US and e.g. Costa Rica doesn't seem that likely, or if it somehow happened, that much of a concern for US auto manufacturing.

moltar 6y ago

Of course, because as soon as they do that, they’ll start planning to phase out humans as much as possible. It’s clear that we are on the cusp of total automation. Moving a factory to US is probably just more costly than to pay employees $16 for a few more years. And the employees who are left are highly paid engineers anyways.

yellowapple 6y ago

It turns out the real border wall was the friends we made along the way. That is: if auto workers are being paid that minimum wage by foreign automakers, that's gonna be a massive boon to Mexican household incomes, which improves the standard of living for at least some people, and in a dramatic way. This money will, I reckon, go straight toward things like entrepreneurship, higher education, and other things that help with upward mobility on a generational scale. This can (and I hope will) translate to less emigration pressure, since fewer Mexicans will feel the need to move north for US wages if they're already being paid US wages, and fewer migrants from further south will feel the need to continue across the US/Mexico border if they could instead settle in Mexico for similar pay and much lower cost of living. This could persist long-term, since a better-educated and more innovative population can give the Mexican economy one hell of a jumpstart (and, importantly, help whip up a generation of Mexicans with the technical education to keep up with the inevitable automation push). I'm curious how this will play out long term, but it seems reasonable to me that we should pay workers according to the value they create rather than merely the cheapest employers can get away with paying (and contrary to what the far-capitalists might claim, these are rarely if ever in sync, especially when talking about outsourced labor; a worker in Mexico is not inherently worth different than a worker in the US, so why should those two workers be paid differently?), and I'm oddly optimistic about how this might play out.

omega3 6y ago

For context in Mexico the average wage for an auto assembly worker was $7.34 per hour and just $3.41 per hour for an auto parts worker in 2017.[0] [0]https://www.cargroup.org/wp-content/uploads/2018/04/nafta_briefing_april_2018_public_version-final.pdf https://www.cargroup.org/wp-content/uploads/2018/04/nafta_br...