With Toyota, Mexico scores again
New $1B plant adds to production boon there
Toyota Motor said Wednesday it will invest $1 billion in a new Mexican car factory, a striking investment that is, after all, just another good day for Mexico.
Ford Motor plans to say Friday it will put as much as $2.5 billion into expanding two powertrain plants in Mexico. Honda Motor recently opened a plant there. Volkswagen delayed the U.S. launch of its redesigned Golf until it finished an expansion at a Mexico plant that builds the Jetta for the U.S. Audi, not content to share a factory with corporate cousin VW, is building a separate plant in Mexico. Hyundai corporate affiliate Kia is building the first plant in Mexico from a South Korean maker.
Those are in addition to plants already in Mexico that build hundreds of thousands of Chevrolet, GMC and Ram trucks every year, as well as cars sold in the U.S. by Ford, Nissan, FCA (formerly Chrysler Group) and others.
For Toyota, the big Mexico investment will result in a state-ofthe-art plant that in 2019 should begin building a next-generation 2020 Corolla compact sedan. Toyota already has a pickup truck plant in Mexico.
The new plant will replace Corolla production at a plant in Canada that will switch to a “midsize, high-value” model, says Jim Lentz, CEO of Toyota Motor North American operations. The Mexico plant will build 200,000 Corollas annually, creating 2,000 jobs. Those are jobs that could have been in the U.S. but aren’t because “we’re not as competitive here; it’s a really big deal,” says David Cole, chairman emeritus of the Center for Auto Research.
Low wages in Mexico are an undeniable draw. But just as attractive are Mexico’s well-educated and mechanically trained workforce and the generous incentives the Mexican government provides, Cole notes.
Capping it all: Mexico has freetrade agreements with more than four times as many countries as the U.S. Mexico’s “combination of low-cost labor and free-trade agreements make Mexico one of the most cost-effective locations for automotive assembly,” says Karl Brauer, senior analyst at auto researcher Kelley Blue Book.
Lentz said Toyota’s decision has little to do with trade, because it build Corollas in several countries and already exports them to 18 countries from its Blue Spring, Miss., factory. But that could change.
Cole worries that carmakers’ plans signal a corrosive problem: “The irony is that (U.S.) labor has opposed the trade agreements as amounting to exporting jobs. Well, our lack of such agreements is exporting jobs,” he says.