After Initial Boom, Mexico's Economy Goes Bust

[RamboLiberal]

http://www.latimes.com/news/nationworld/world/la-fg-nafta2jan02,1,1545611.story?coll=la-home-headlines

The heady early years of the North American Free Trade Agreement brought Oscar Garcia opportunities he had scarcely dreamed of.

An electrical engineer raised in Mexicali, he became manager of the biggest factory the city had ever seen — a Mitsubishi plant the size of three football fields where workers assembled computer monitors. Garcia bought a new sport utility vehicle. He paid cash for a new home.

Then, it all came crashing down. Unable to compete with more sophisticated flat-screen monitors made in the Far East, Mitsubishi in August shut the $250-million plant it had opened in 1998, putting Garcia and 1,200 others out of work and leaving most of its machinery to rust in a junkyard. A cluster of high-tech companies that had come up around the factory also closed.

"I thought I would retire with Mitsubishi. It was such a good place to work," Garcia, 36, said. "But I don't see much chance of a new industry coming along to replace it."

Garcia's story mirrors the course of the Mexican economy since NAFTA opened up cross-border commerce and investment 10 years ago.

[nadinbrzezinski]

1. It also killed the local industries

hence why NAFTA is not that popular any longer

[Liberal Veteran]

2. Race....Race to the bottom!!!!!

There's cheaper labor somewhere still.

[mrdmk]

3. The reporter means LCD screens

This may be off topic, when the reporter for the L.A. Times says sophisticated flat-screen monitors; they mean space saving LCD screens. The L.A. Times has been attempting to improve their reporting, but the corporate cutbacks have gotten to every major corporation. This is what you get when doing things “on the cheap”.

Mitsubishi on the other hand is not doing much better at forecasting the market. Mitsubishi and Chrysler Motors had a close relationship for a long time now. Lee Iacoca did mention in one of his speeches that there was good reason that Mitsubishi was the Number three car maker from Japan and from my experience with those engines, I agree. Mitsubishi Diamond Scan monitors and T.V. were once the rave. Now out-dated, Mitsubishi refused to redesign their products for future markets. This problem had nothing to do with the cost of labor, just piss poor management.

As far as China goes, the same thing could happen to that labor market also. With cheap labor now and payroll increases as time goes on, also factories needed to be retooled (i.e. need equipment) from time to time, will corporations find it more convenient to move operations someplace else, for the lowest price of course.