Free Trade vs. the Auto Bailout -- Clinton's oversimplifications overlook important point
http://www.reuters.com/article/us-usa-autos-mexico-insight-idUSKCN0T51CW20151116
Detroit’s Big Three automakers are accelerating plans to produce more small cars for the North American market in Mexico as they seek to reduce labor costs, while using higher-paid U.S. workers to build their very profitable trucks, sport utility vehicles and luxury cars.
New versions of several of their popular U.S. compact cars are expected to be made in Mexico, people familiar with the companies' plans said. They include General Motors Co’s new Chevrolet Cruze hatchback, a successor to Ford Motor Co’s Focus compact and a replacement for Fiat Chrysler Automobiles NV’s Jeep Compass compact SUV.
The decisions are prompting three major automotive research firms, who are often used by the automakers and their suppliers for industry forecasting, to project a big increase in Mexican output of small cars by the three companies.
AutoForecast Solutions estimates that GM, Ford and Fiat Chrysler will collectively produce 45 percent of their small cars for the North American market in Mexico by 2020, up from 18 percent in 2014. LMC Automotive sees the 2020 figure at 37 percent, also against 18 percent last year, while IHS Automotive projects the Mexican percentage going to 42 percent in five years time, though it calculates the 2014 level at a higher level than the others, at 25 percent. In response to questions from Reuters, the three automakers declined to discuss their specific plans.
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GM and Fiat Chrysler agreed to build small cars in the U.S. as part of their government-funded bankruptcies. Now profitable and free of government ownership, their CEOs no longer must answer to the White House. Ford, which restructured without federal help, shifted U.S. production toward more fuel-efficient vehicles when truck sales swooned, but now is ramping up U.S. production of SUVs and pickups to meet robust demand.
Steven Rattner, the investor who was the first head of the White House auto task force, said the threat to U.S. jobs was a concern then and now.
"We were well aware of the situation with Mexico and the possibility that jobs would continue to migrate there," he told Reuters.
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