The cost of labor in the US is on average 7% of the final cost of the vehicle while in Mexico it represents 3%, in addition the labor cost per car is 60% lower than if it had been built on American soil.
Just because of the lower labor costs, Mexico saved around US $ 2.368 billion in 2015 for the big US automakers that built vehicles in the country.
This is a little more than the investment that Ford will make to build its plant in San Luis Potosí ($ 1.6 billion), plus the injection of capital of General Motors (of 800 million dollars), to improve its operation in Guanajuato and San Luis Potosí.
The average labor cost per car made in Mexico was $ 970 USD, 60 percent lower than if it had been built on US soil, where it would cost $ 2,425, reveals an El Financiero´s analysis with estimates from the Center for Automotive Research (CAR, And Ernest & Young.
Donald Trump, the president-elect of the United States, has said he wants to revise the North American Free Trade Agreement (NAFTA) to impose tariffs on cars imported from Mexico.
The next president of the American Union has argued that these take away jobs to US citizens because of the low cost of labor and tax facilities provided by the governments of the states where they install the plants of auto companies such as Ford, General Motors and Fiat Chrysler.
Specialists and industry representatives stressed the importance of waiting for the results of a possible renegotiation of the NAFTA, because even though a tariff of 15 percent could be cushioned on the cars assembled in Mexico with lower costs and the strength of the dollar over the Mexican Peso, the plans of the automakers can still be adjusted because the change can take away competitiveness.
"It is a fact that (a renegotiation) will make companies rethink their future steps inside and outside of Mexico, however the increase in production quality, which rises at a better pace than the global average, indicates that it is an additional attribute of our country.
By focusing efforts in this direction, we could achieve an unequaled combination of quality and cost of production" said Brais Álvarez Gallardo, an analyst at J.D. Power Mexico.
The cost
Labor costs per car produced in Mexico by 60% lower compared to the United States.
In the US market, the cost of labor is on average 7 percent of the final price of a vehicle, up from 3 percent in Mexico, per Kelly Blue Book.
Per figures from INEGI, 62 percent of the total auto parts used to build a car in Mexico come from local firms and the remaining 38 percent are imported from the United States or from some Asian nation such as Japan or Korea. South.
It is estimated that Fiat Chrysler Automobiles (FCA), which produced 503,589 vehicles on Aztec soil last year, spent about $ 488 million on labor, $ 733 million less than if it had manufactured that same number of units in the United States.
This saving equals 43 percent of the company's net profit reported in 2015.
In the case of Ford, who produced 433,752 units in 2015 in Mexico, it paid workers approximately 420 million dollars, about 631 million less than if it had chosen to manufacture them in the United States. That amount represents 8.2 percent of their total net profit.
On the other hand, General Motors last year armed 690 thousand 446 vehicles in the country. Had it done so in the United States, its labor expenditure would have reached $ 674 million, 150 percent more than what it disbursed in Mexico. Thus, in doing so, the country saved US $ 4.1 million, which is equivalent to 11.9 percent of its net profit the previous year.
Opportunities and their advantages
The benefits that US automakers get from building their vehicles in Mexico give them ample scope to make a business plan that will allow them to adjust if there is any change in NAFTA, said Mario Hernandez, a leading partner in the IMMEX segment of KPMG Mexico.
Per information from the International Organization of Automobile Manufacturers (OICA), Mexico climbed this year from tenth to seventh as a producer of cars globally. For Eduardo Solís, president of AMIA, this reflects the quality of the workforce and not only of the low labor cost.
"If it were only because of the low labor cost (the opening of plants in the country), we would see factories in Central America, including Guatemala or El Salvador, but this is not the case, and this is due to the development of skilled labor, Mexico offers the best professionals to make quality cars" he said.
Regarding auto parts, Óscar Albín, president of the National Auto Parts Industry (INA), pointed out that the labor cost can weigh between 4 and 25 percent in the operating expenses of a company that manufactures parts for vehicles, depending on what Is manufactured.
"There are other components that move more the cost of a plant, such as electric power, which is important in iron smelting", he added.
Source: elfinanciero.com.mx