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Jobs Promised by Trump Returned ...... To Me'xico


John Little
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Mexico City in the 1980s
Mexico City in the 1980s
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In June, 2018, President Trump announced that the world's largest electronics manufacturer, Foxconn, headquartered in Taiwan, was going to bring back jobs to the US in the state of Wisconsin. Along with the founder, Terry Gou, he stood in front of a Wisconsin crowd and promised the return of 13,000 jobs to America. Hon Hai Technology Group, known simply as Foxconn, was going to realize one of Trump's signature promises: bringing jobs back to America.

He lied. They never came back. Only six months later, on January, 2019, Foxconn reconsidered and stopped the project citing huge labor costs among other detractions. President Trump was not on hand for that announcement.

So where did those jobs go instead?

Mexico.

They went to Mexico.

Not immediately, did they go to Mexico. Those jobs were absorbed in India. But Foxconn never had plans to build in the US anyway. As they stated, labor costs were too high. Trump's promise was just another side show to appease the brain dead, nothing more. And it worked to perfection.

According to Reuters on October 8, 2024, "Foxconn is building in Mexico the world's largest manufacturing facility for bundling Nvidia's GB200 superchips, a key component of the U.S. firm's next-generation Blackwell family computing platform, senior executives at the Taiwanese company said." This past August Nvidia announced that it had started shipping Blackwell samples which should generate several billion dollars in revenue in the fourth quarter.

Benjamin Ting, Foxconn senior vice president for the cloud enterprise solutions business group said, "The demand is awfully huge." So that huge plant in Trump's mind was never destined for the US, but for our neighbors to the south.

Foxconn already has a large manufacturing presence in Mexico and has invested more than $500 million to date in the state of Chihuahua. They know that the Maquiladora program will ensure their products will make it across the border without a problem.

But Foxconn isn't the only Chinese dragon in the mix in Mexico. BYD has recently decided to invest heavily in Mexican manufacturing by announcing the construction of a production plant inside our southern neighbor's borders. They have already sold 50,000 EV vehicles in 2024 and are expected to sell an additional 100,000 in 2025.

A new SUV model for Mexico called the BYD Yuan Pro, with prices starting at 599,880 pesos ($29,472), was unveiled late last year. This price is less than half of Tesla's comparable price in the US.

Other car companies, including BYD, Zeekr, MG Motor and Yadea, have stated that they also have plans to invest in Mexico, with many developing manufacturing plants.

China-Briefing dot com recently posted, "The question of reshoring manufacturing operations from China to Mexico has gained attention, especially in light of recent global disruptions. Rising labor costs in China, exacerbated by the US-China trade war and stringent COVID-19 policies, have led some companies to consider relocating to lower-cost countries closer to the US. Analysts point to Mexico as an attractive option due to its proximity to the American market, lower operational costs, and participation in the USMCA, which facilitates tariff-free trade. Additionally, Mexico's familiarity with US business practices and products makes it a viable option for companies serving North and South American markets."

China has been steadily increasing their investment in Mexico. Their foreign direct investment (FDI) reached a 13-year high in 2023, climbing to $5.6 billion, a 21-fold increase from the $267 million in 2018. Since 2020, new Chinese firms to Mexico has grown nearly 3 times. With the advent of these new promises of mega-manufacturing facilities being built, that investment growth will only skyrocket.

Along with the necessary investment of infrastructure, roads, plumbing, zoning, utilities and the rest comes all the accoutrements of such an endeavor. There will necessarily be training of the local population who will be thrust into a Spanish/Chinese/English mix. That can take upwards of six months. All appropriate Chinese procedures need to be translated into Spanish. There will be the arrival of ambulatory industries; fast food, minimarts, mechanics, etc. Housing and shopping accommodations will be required. The boost to the economy will be substantial, both locally and nationally.

The majority of investments, however, remain concentrated in basic manufacturing sectors, such as automotive parts and electronics assembly. In 2023, China spent $3.5 billion on automotive original equipment manufacturing (OEM) in Mexico. High-tech investment, has taken slightly longer to develop. Nevertheless, Chinese tech companies have expanded their industrial footprint by 39 percent over the past two years.

Mexico has also begun other major infrastructure investments to attract China and more investors along the way. The Interoceanic Corridor of the Isthmus of Tehuantepec was recently completed by former President Lopez Obrador and can now start to compete directly with the Panama Canal. The five largest construction projects initiated in Mexico during Q3 2024, according to GlobalData's construction projects database, are as follows:

1. Amigo LNG Terminal Development. The project involves the construction of an LNG terminal with a processing capacity of 7.8MTPA in Guaymas, Sonora. Construction work started in Q3 2024 and is expected to be completed in Q2 2026.

2. Saltillo Tire Manufacturing Plant. The project involves the construction of a tire manufacturing plant on a 600,000m2 area in Saltillo City, Coahuila State. Construction work commenced in Q3 2024 and is expected to finish in Q3 2025.

3. Lift Platform Production Plant. The project involves the construction of a lift platform manufacturing plant in Guanajuato Puerto Interior. Construction work started in Q3 2024 and is forecast to complete in Q2 2025.

4. Tlajomulco de Zuniga Pick-Up Truck Assembly Plant. The project involves the construction of an assembly plant on a 50,000m2 area in Tlajomulco de Zúñiga Municipality, Jalisco State. Construction work commenced in Q3 2024 and is expected to be completed in Q1 2025.

5. VYNMSA Torreon Industrial Park. The project involves the construction of an industrial park in Torreón, Coahuila State. Construction work started in Q3 2024 and is expected to be completed in Q1 2025.

The above projects will only enhance Mexico's ability to receive and accommodate their Chinese investors even more quickly and thoroughly. Their ramp up time to full production will be shortened to the max. The local and national economies will start to receive the benefits of these investments almost immediately.

While US policy is likely to strike a very adversarial stance over the next few years, China is more than willing to step into that diplomatic, friendly role once championed by Mexico's neighbor to the north. As China is set to overtake the US in GDP, it appears to be playing Mah Jong while the US is content with Chinese checkers.

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66 year old Californian-born and bred male - I've lived in four different countries, USA, Switzerland, Mexico, Venezuela, and currently live in the Dominican Republic - speak three languages fluently, English, French, Spanish - have worked as a (more...)
 

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