Auto parts plant tells story of NAFTA
Manufacturing sector booming in Mexico
SAN JUAN DEL RIO, MEXICO • Looming above a Canadian auto parts plant, keeping watch over workers, is a painting of the Virgin Mary. This same plant plans a celebration of its latest expansion with a party featuring a mariachi band.
It’s far from Windsor. It’s close to Mexico City.
The story of the Exo-s factory is the story of NAFTA: manufacturing booming in Mexico, while surviving in the north; supply chains that are internationally interconnected and extra-efficient; and a Mexican workforce seeing the most modest gains and longing for more.
Canadian auto-parts companies have more than 120 plants and 43,000 employees in Mexico, and this Quebec-based plastics-maker is among them. It has grown a bit in Canada, but exploded here: when it opens a new warehouse on its property, its Mexican workforce will have nearly tripled to 300.
The plant manager explains why Mexico was a must. His company’s customers — GM, Cadillac, Fiat Chrysler — are here and need plastic products. They opened plants here because of Mexico’s low costs, government incentives, and free-trade agreements with 47 countries allowing tarifffree shipment throughout Latin America.
“For us it was a nobrainer,” Francois Ouellet said.
“When (our customers) open a new plant they want us to be close to them. If not we would have put at risk our actual business we have in Canada and the United States ... We would have a problem to keep our business (without Mexico).”
The company’s U.S. and Canadian branches are still adding jobs, albeit more modestly. Canada has about 127,000 auto jobs today, the same the year before NAFTA was signed in 1993.
But something dramatic then happened. Canada’s long-term trend line looks like a steep mountain: employment climbed toward a peak in 2000, dropped, then plunged catastrophically after the 2008 recession and is now slowly inching back to early 1990s levels.
The Great Recession was a near-death experience for many companies, including the precursor to Exo-s. It relied upon GM for threequarters of its revenues — and that giant’s near-collapse almost pulled down an entire ecosystem of suppliers.
Exo-s responded by diversifying. It not only spread operations to Mexico; it spread beyond the auto sector, beyond its core business of under-the-hood plastics like engine covers and coolant tanks.
The Canadian government is pushing for higher labour standards in a new NAFTA agreement. It has consulted closely with union leader Jerry Dias, who has said workers across the continent would benefit if Mexicans got more independent unions, freer collective bargaining, and pay hikes.