x

By Sumit Modi

In stark contrast to Ford’s cancellation of its proposed Mexican manufacturing plant,

 

Professor Christian Stadler said: "BMW is right to carry on with its plans in Mexico and there are four good reasons why. First, although Trump has sounded very aggressive in his statements, especially on Twitter, we still do not know if this will translate into policy. When you look at the Ford decision, that really fitted in with its wider agenda, it was more efficient to extend production in the US.

"Plus, once Trump looks at the details of the car industry, he will see that 40 per cent of the components of cars manufactured in Mexico are imported from the US, so imposing tariffs on car imports would also hurt the US economy.

"Thirdly, if Trump does become aggressive on trade he has to expect a reaction. For instance BMW manufactures its SUVs in the US, and its biggest market for that car is China, which may counter any tariffs on its exports with tariffs of its own. 

"Finally, economically Mexico is just too good to give up on for car manufacturing. It has free trade agreements with 40 countries globally, so even if there is a downturn in the US there are plenty of other markets car companies can facilitate with production in Mexico.

"On average the cost of a worker in Mexico is $8 per hour, while in the US it is $60, so production is so much cheaper in Mexico manufacturers will think twice about moving production from there even if Trump does take action.

"Trump is going to get headlines with his statements, but it might not turn into a policy that will work."

Share
Share

Featured Articles

Sustainability, ESG, net zero in focus at must-attend event

Sustainability takes centre stage at two-day hybrid conference featuring thought leaders covering circular economy, scope 3, ESG, B Corp, net zero, DE&I

Must-attend sustainability events for executives in 2022/23

Discuss and debate the most pressing issues around sustainability at these nine executive events – from London to Abu Dhabi, San Diego to Singapore

Meet the CEO on a mission to nurture women leaders in Africa

The argument for women leaders in Africa is compelling, yet numbers are small. But one female leader is on a mission to change that – Awamary Lowe-Khan

BCG's Daniel Weise on supply chain and procurement strategy

Leadership & Strategy

Flexible work perks heat up as the war on talent rages

Human Capital

Meet the COO: Former Israel Defense Force cyber lead Parnes

Technology & AI