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Late motorization and Status Quo of the Mexican Auto Industry: Prospects and tendencies Alex Covarrubias V El Colegio de Sonora Center of Studies on North.

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Presentation on theme: "Late motorization and Status Quo of the Mexican Auto Industry: Prospects and tendencies Alex Covarrubias V El Colegio de Sonora Center of Studies on North."— Presentation transcript:

1 Late motorization and Status Quo of the Mexican Auto Industry: Prospects and tendencies Alex Covarrubias V El Colegio de Sonora Center of Studies on North America

2 Objectives  Define late motorization in terms of “tipping points” –contagious conditions that outline the present era of new mobilities, crisis & shift to a Second Automobile Revolution, and some its key ensuing transitions.  Link automobility theory and Second Automobile Revolution’s premises to opening a new window to discuss contemporary changes in the auto-sector: Illustrate: The Mexican auto industry as a key case at point.  Outline employment systems and labor relations implications, stressing unions challenges.

3 Agenda  Preliminary concepts  Tipping Points  - Starters (Going LDCs; Urban Planet; Going Back and Forth)  - Consequential (a new geography of labor & wage relations)  Conclusions

4 I. Preliminary Concepts & Premises

5 The meaning of Late Motorization -LDCs’ arrival at mobility patterns, industrial and urban transitions brought about by their new position as the largest centers of production and consumption of private cars as Triad countries’ markets and environments exhaust. -LM means: a) The last/current evolutions of the AI; b) the likely last development of the AI as we know it; c) a number of critical points announcing the end of an era. -A critical scholar task: identify the “tipping points” & “starting conditions” (Gladwell, 2000).

6 The meaning of Late Motorization -LDCs turn into the last resource for CMCS + OIE + SC to survive -Entails social dilemmas; local & global conflicts assessing the cost of the AI & the CMCS -More than a Second Auto Revolution is underway. -It is in the making a new CMCS encompassing new connection, habitat & energy systems -It will be something “After the Car” -A critical scholar task: identify the “tipping points” & “starting conditions”

7 Automobility/Sprawl city theories :  AI: The quintessential manufacture produced by the leading firms & sectors in the 20 th Century/A labor relations pattern setter.  The major item of individual consumption (after housing?)/status provider/crime provider: theft, speeding, drunk driving, gender, etc.  A powerful mechanic complex linked to many industries: oil and energy; road-building; hotels, roadside service areas, dealers & repairs workshops, house building, suburbs, retailing and leisure complexes, marketing, urban design, etc.

8 Automobility/Sprawl city theories :  The dominant mode of private-mobility/subordinating other modes and reorganizing people time and space for work, family, leisure & pleasure.  The dominant culture of what development means.  The single most important cause of resource depletion, greenhouse emissions & a leading cause of accidents, mortality and c&d diseases.  Sprawl city as a key process modifying the urban/rural landscapes: expansion, fragmentation, resource depletion & density declining.

9 Grasping the key Dimensions of LM  Evaluate and asses the T-Sides: Benefits + Costs  -Economic from both sides –i.e., O & D  - Social/Cultural  - Environmental/Energy  - Urban/QL  - Labor/LS

10 Starters/Tipping Points II

11 Tipping Point 1 Going to LDCs

12 Auto Output (1950-2012) Source: Covarrubias/Reyna. Data from Organisation Internationale des Constructeurs d'Automobiles (2012) y Ward's Automotive Group (2013).

13 Global Auto Output DCs Vs LDCs Million Units LDCs DCs Source: SE: Mexico, 2012

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15 Global 2017 Forecats  Auto output: 104 million  Emerging markets will contribute 83% to 2010- 2017 growth.

16 Tipping Point 2 “The New Urban Planet”

17 The Urban Planet  At the end of 1990s world population was growing by 900 million per decade (a new London per month).  At the end of XX century world population passed 6 billion and will reach to 9.1by 2050.  In May 23, 2007 it took place the ‘transition day’: the urban world´s population numbered more than half of the total (3.2 billion).

18 & the UP will be ‘emergent’  By 2030 60% of the world population will be urban (UN)  Most of the growth is & will be in LDCs through a myriad of megacities with rising car fleets, accidents, air pollution, energy consumption, & resource depletion.  Five million more people every month live in cities of LDCs (Glaeser, 2012).

19 Indices de Motorización Proyecciones % de Crecimiento 2010-2020 South Asia, including India393 Centrally Planned economies, including China 354 Asian rets183 East Europe158 Latin America81 West Europe21 Japan, New Zealand & Australia9 USA/Canada2.5 Motorization Index. Growth Projections % Source: Lizarraga M, 2006

20 Tipping Point 3 Mexico on the rise/The Alluring of Mexico

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22 Mexico 2012 Output by OEM

23 Key Features  8º producer after China, USA, Japan, Germany, Korea, India and Brazil.  4º major exporter after Germany, Japan & Korea  71% of exports go to NAFTA  Contribute one fifth of manufacturing jobs

24 PIB Billion Jobs Thousands Manufacturing Auto Manufacturing Auto

25 Employment Dealers Parts & Components Auto Manuf

26 Rising from hell & Going South: Labor as a key determinant III

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28 Auto Industry. Employment Selected Categories

29 North American Auto Industry to Hell and Back

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33 : KLIER & RUBENSTEIN, 2012.

34 Redesigned Ford Fiesta in Cuautitlan Engine plant II Chihuahua Transmission plant Irapuato Cactus project and a new transmission plant, San Luis Potosi New engine and transmission plant, Ramos Arizpe. New transmission plant, Silao Test track for high temperature, Cupuan del Rio Engine plant ‘Centenary’ in Derramadero New Engine plant, Silao Production of Nissan Micra, Aguscalientes New engine plant in Silao Automotive Modeling Center, Mexicali Mexican Auto Industry From 2008 On New Engine, Transmissions and Center Facilities.

35 New Ford Fiesta In Cuautitlan Cactus Project T250-Aveo, San Luis Potosi Nissan Micra- March, Aguascalientes Project CD3 Hybrid Fusion and Mercury 2010, Hermosillo Hybrid Captiva SUV New Platform For a New Model, Ramos Arizpe Sub-Compact Fiat 500 Premium, Toluca Jetta 6th Generation "Special Bicentennial Edition.“, Puebla Honda CR-V 'Crossover', El Salto Mexican Auto Industry From 2008 On Finished Vehicles New Projets Project CD4 Fusion Mondeo Convergency 2013, Hermosillo

36 SOURCE : KLIER & RUBENSTEIN, 2012.

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41 Automotive labour costs At actual exchange rate At PPP exchange rate As proportion of all manufacturing workers (%) Hourly compensation costs (US$, 2007) Share of US level (%) Hourly compensation costs (US$, 2007) Share of US level (%) Western hemisphere USA33.2310033.23100131 Canada40.3812235.82108139 Mexico3.95125.7417135 Brazil11.363415.7948191 Western Europe Germany52.2215744.47134135 France32.899926.3479115 Spain28.488628.0284136 UK35.7910827.6683119 Italy28.788724.6474102 Belgium41.6912534.12103118 Austria38.9611732.3897110 Eastern Europe Czech Republic *11.533516.6450119 Hungary8.952712.3037136 Poland7.732311.3034124 Asia Japan **25.427624.9375106 Korea21.106326.1479132 Taiwan7.482312.7338114 Australia31.759626.5680105 Standar deviation14.2510.12 Source: Author's calculations from Bureau of Labor Statistics (2009), OECD (2009b) and World Bank (2007). * Compensation for all employees (not just production workers). ** Estimate based on 2005 data (latest published) escalated by growth of total manufacturing hourly compensation cost between 2005 and 2007. Excludes profit-sharing bonuses that can add US$10 per hour to total compensation.

42 IV  A critical consequence as related tipping point:  - A new geography of labor & wage relations

43 Towards a global race to the bottom? Or towards a new map between high & low wages regions AI Employment Relations

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47 V  A different path for Mexico  Is it possible a high road strategy?

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56 Production & Labor Costs Projections A Model in Progress The Future?

57 Sources: Covarrubias, Torres & Cirett (2013), Production/Labor Cost Regression Model. With data from ILO & OICA. AI Hourly compensation costs 2050 Projections AMERICA

58 Sources: Covarrubias, Torres & Cirett (2013), Production/Labor Cost Regression Model. With data from ILO & OICA. AI Hourly compensation costs 2050 Projections W Europe

59 Sources: Covarrubias, Torres & Cirett (2013), Production/Labor Cost Regression Model. With data from ILO & OICA. AI Hourly compensation costs 2050 Projections E Europe

60 Sources: Covarrubias, Torres & Cirett (2013), Production/Labor Cost Regression Model. With data from ILO & OICA. AI Hourly compensation costs 2050 Projections All Regions

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