The UAW union and the Detroit Three are scheduled to start discussions on the workers’ contracts next month with the specter of a third party participant looming – Mexico.

The country has a unique position today among the countries that are crucial for the automotive industry: it has a strategic geographical position, between the northern and southern parts of the continent. It has also surged as one of the world’s largest automotive hubs thanks in part to that advantage, coupled with low labor costs and the inexistence of organized labor. The country is definitely going to make its mark on the contract talks between the UAW and GM, Ford and FCA US. The union will seek to keep as much auto production as possible in the US, even as the rivals of the Detroit Three are taking advantage of Mexico or the Southern part of the US, where unions are traditionally unwelcomed. Naturally, the Detroit carmakers will use Mexico as a trump card when fending off the union’s demand for increased salaries. Mexico “is the union’s biggest target for in-sourcing [production], and it is also the biggest threat the companies can wield,” comments Kristin Dziczek, director of the industry and labor group at the Center for Automotive Research.

Mexico is on its way to become a competing rival to Germany, the largest auto market and producer in Europe, with numerous automakers – from German to Korean and Japanese – jumping at the occasion of localizing production in Mexico. They strike numerous chords – they lower reliance on the high costs of production at home, gain easy access to North America and also take advantage of the myriad of free-trade agreements Mexico has for exports.

Via Automotive News


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