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Mexico to Trump: Those Carrier Jobs are not the Story

The announcement that Carrier would be keeping jobs in Indianapolis rather than moving them to Mexico was greeted by Mexican officials with little more than a shrug
By The News · 02 of December 2016 08:48:47
Buildings in San Jéronimo, Monterrey, No available, photo: Wikimedia/Hector Martínez

For the Mexican government, few goals seem more important than winning new foreign investment. The competition among Mexican states to bring the next automobile plant or aerospace factory is intense and produces big-time incentives for foreign companies who make the move.

But the announcement that Carrier, the Indiana-based company that makes air conditioners and heaters, would be keeping some 1,000 jobs in the Indianapolis instead of moving them south of the U.S. border to Monterrey, was greeted by Mexican officials with little more than a shrug.

“I see this as something that should occupy us, not worry us,” said Hector Castillo Olivares, the mayor of Santa Catarina, the Monterrey suburb where the new Carrier plant is being built.

“The United States is not the world,” the state’s governor, Jaime “El Bronco” Rodríguez, told a radio station. “We don’t depend on them, nor do we have to depend on them.”

Or as Fernando Turner Dávila, the state’s economic development secretary put it: “We are confident about the future.”

While some of this might be positive government-speak to mask a painful loss of hundreds of jobs, other dynamics are also at work.

For one thing, the Carrier decision is not a disaster for the company’s Mexico operations. As Turner explained, the new plant will still open in coming months and will create jobs, though fewer than planned. The company currently employs about 3,000 people in the Monterrey area, he said, and this is going to increase to about 4,100, compared to about 5,000 before Trump arrived on the scene.

Monterrey, and other cities in northern Mexico’s manufacturing belt, are a success story for the country. They have recovered from some brutal drug war years and are now home to a robust network of manufacturing plants making cars, electronics, steel and other products.

But the United States isn’t really key to that success. In Nuevo León, the state that is home to Monterrey, 92 percent of the total investment is domestic. Of the 8 percent that comes from abroad, the United States accounts for 40 percent of this, a contribution that has been declining over the years, as companies from Europe and Asia bring more jobs to the state, Turner said.

South Korea is now one of the most important, as they have opened a Kia car plant in Monterrey and brought in other parts suppliers.

“You can’t forget that we are already a globalized world,” said Castillo Olivares, the mayor. “I have received visitors from countries in Europe and Asia who are interested in investing here: Korea, Great Britain, they are interested in manufacturing and also in the automobile industry.”

Mexican officials also predict that Carrier’s decision will not be the first of many dominoes to fall. The Carrier issue came up in the middle of the campaign, in a Rust Belt state of which Vice President-elect Mike Pence is governor. The closure of a plant also attracts more political opposition than a company just opening a new plant in Mexico, Turner Dávila said.

“We don’t think it’s a sign [of things to come], I think it’s something extraordinary,” Turner Dávila said. “Globalization is not going to end with Mr. Trump. The United States cannot and will not isolate. It is not possible.”

Trump’s victory has already caused some tangible damage to Mexico. The value of the Mexican peso has plummeted, and fell further on Thursday on the news that the widely respected Mexico’s Central Bank (Banxico) governor, Agustín Carstens, would be moving on next summer for a new job as the general manager of the Switzerland-based Bank for International Settlements.

But for now, cautious optimism seems to be one thing Mexico still has in abundance to export.