NPR’s “Morning Edition”
features an upbeat report by Jason Beaubien on Cuidad Juarez. Yes, Juarez: the border city in full grip of Mexico’s drug war. But the economy is thriving, adding jobs and exporting more goods to the United States than ever before.
Car part factories are a big part of the city’s industrial base. Other plants focus on “reverse logistics,” refurbishing credit card readers and the like for Wal-Mart and other retailers.
Foreign companies are investing heavily in Juarez for two reasons. Starting factory wages are about $10 a day, about a tenth of wages across the border in El Paso, Texas. Second, Juarez can’t be beat when it comes to turnaround. When car dealerships and parts stores order a part from a factory in Juarez, the parts are in the US the following business day.
This isn’t a blip. Investment and manufacturing in Mexico will keep growing. As this blog has noted before, inflation has pushed up wages along China’s coast, putting them on par with wages in Mexico. Combined with high and volatile energy prices, and growing concern about copyright protection in Asia, the lure of nearsourcing becomes apparent. American and Japanese firms are expanding operations in Mexico. And Asian businesses whose success to date has been based exclusively on manufacturing in China, are expanding in Mexico even more aggressively than Western firms: rumors are that Foxconn plans to become the largest private employer in the country.
