https://abcnews.go.com/Business/wireStory/mexico-raises-low-minimum-wage-12-marks-increase-116448041
Compared to $7.25/hr in the US. Although to find employees most pay $15 to $20/hr in the US.
No wonder companies want to manufacture in Mexico.
Rising wages in the US helps with the wealth divide. But feeds inflation.
As the UAW President point out, during the strike last year: the automakers charge us just about the same for a car built in Mexico, as they do for a car built in the US.
Example: Ford Escape, built by UAW union labor, in Louisville, KY, starts at $29,495. A Bronco Sport, which is built on the same platform, but in Hermosillo, MX starts at $29,795. Only major extra you get on the Bronco for the dramatically cheaper labor that builds it, is standard AWD.
Steve
That’s not really relevant. If they make half the cars in Mexico and half the cars in the USA, and earn $3000 from the Mexico produced ones and earn $1000 from the USA produced ones, then they average a profit of $2000 on each car they sell. If they sold the Mexico produced ones for less, then their average profit per car will go down.
The same applies to parts and subassemblies. They may buy a subassembly from 2 or 3 suppliers (to diversify their supply chain for safety), and some suppliers will be more costly than other suppliers. But it is the average cost that matters in the end when determining overall financial results. (the primary complaint about “the globalization issue” is precisely that companies focused only on the lowest cost suppliers and ended up with a more fragile supply chain, often dependent on one country/region.)
If they passed on the savings from using Mexican labor, they would sell the cars for less, and sell more cars. Henry Ford figured that out a long time ago.
Steve
Yep. But if they passed on the savings from using Mexican production, they would have to shut down the US factories. Or at least have 90% produced in Mexico and only 10% produced in the USA. Of course, 10% is too small a number to make the factories efficient, so they would end up closing them down anyway. It all boils down to basic arithmetic.
Closing US factories has been the trend for thirty years. The first gen Jeep Compass was built in Belvidere, IL. The current gen Compass is built in Toluca, MX. The Belvidere plant stands idle.
When the Escape was the only model Ford had that size, the Louisville plant cranked out over 300,000 per year. Now the Bronco Sport, built in Hermosillo, MX, has taken sales away from the Escape, so Louisville only produces about 150,000 Escapes.
Ford used to build the Lincoln Navigator in Oakville, Ontario. Now, Ford imports the Navigator from China. Oakville stands idle.
Chevy used to build the Cruze compact in Lordstown, OH. They stopped building the Cruze, so former Cruze shoppers now buy a Mexican built Equinox. The Lordstown plant was sold to “Lordstown Motors”, which went BK, and the Lordstown plant stands idle.
Steve