tci2013 the reindustralization of north america and the role of mexico
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The reindustralization of North America and the role of MexicoHugo A. Lara García
Societal Challenges and Clusters: the Scandinavian Model vs other Models
6 September 2013
Hugo A. Lara García
September 6th, 2013
The Reindustrialization of North America and the role of Mexico
What does reindustrialization mean to North America?
- Developed countries had
long thrive as a result of
their ability to manufacture
goods and sell them to
global markets.
- For the past 100 years USA has been the leading producer of manufactured goods, but…
- Manufacturing has decline as a share of US GDP and employments.- This loss in not limited to low wage jobs in low tech industries, nor to the status
relative to low wage nations.
In addition:
- NA is lagging behind in innovation and manufacturing, relative to high wage nations such as Germany and Japan.
- NA has lost leadership in some medium and high tech industries that employ a large proportion of highly skilled workers.
Besides NA has been losing:
- Significant elements of research and development.
- The ability to compete in manufacturing many products that were
invented and innovated in NA.
Manufacturing and Creating Value
Manufacturing creates more Value
If manufacturing creates more value:
- NA has to go back to its manufacturing roots, but not simply by
manufacturing per se,
- NA needs to make sure its reindustrialization process moves in
to ADVANCED MANUFACTURING
The big question is:
- Is NA ready to compete in Advanced Manufacturing against developed and developing countries?
How competitive is North America?
Industry Profitability
source: competitive alternatives-KPMG Guide to international business location costs
Industry Profitability
source: competitive alternatives-KPMG Guide to international business location costs
Industry Profitability
source: competitive alternatives-KPMG Guide to international business location costs
source: competitive alternatives-KPMG Guide to international business location costs
source: IMF
source: source: SAI Law & Economica based on information from Rubin, Jeff and Benjamin Tal “ Will soaring transport costs reverse Globazitation”
source: The Interational Energy Agency
source: OANDA,INEGI,UN, Contrade, US Bureu of Economic Analysis and WB
20
06 07 08 09 10 11 12 13-15
-10
-5
0
5
Fiscal Deficit(% of GDP)
MexicoGermany
Spain
USA
Source: Monitor Fiscal FMI; SHCP
21
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11
79 82 83 83 8590 89 87 89 88 85 84 82 81 81 79
83 82 80
Mexico's Manufacturing ExportsAs % of Total
Source: INEGI
Mexico´s Role in this Process
23
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 115
10
15
20
25
USA
Mexico
Manufacturing GDP as% of Total(%)
Source: INEGI
24
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 115%
10%
15%
20%
U.S. Imports Participation(%)
China
Mexico
Japan
Source: Banxico
Ingreso Chinaa OMC
25Source: SAI: Can Mexico compete with China?
Total Population 2011(millons)
China Mexico
26
06 07 08 09 10 11 12 130
20
40
60
80
100
120
140
Source : Monitor Fiscal FMI; SHCP
Mexico
Germany
Spain
USA
Public Debt(% of GDP)
27Ajustado por productividad. Source: BCG. US Census Bureau, US Bureau of Economics, U.S. International Trade Comm.
02 03 04 05 06 07 08 09 10 11 120.0
0.5
1.0
1.5
2.0
2.5
3.0
Labor Cost(dollars/hour)
China
Mexico
Some Final Thoughts
- It would be very difficult for any of the three countries to provide the competitive advantages for manufacturing vis a vis with China and other developed and developing countries.
- For Mexico it is a historical opportunity to be part of the reindustrialization process of the US.
Some Final thoughts
- Countries don´t compete, companies do.
- Governments need to establish the right policies to ensure the competitiveness of the companies participating in their strategic sectors.
- Major reforms need to take place.– Market access– Energy– Agriculture synergies– Labor Mobility Vs. Migration
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