Mexico, Mexico, Mexico… or maybe not
|Lindsay Chappell is the Mid-South bureau chief for Automotive News.|
Nissan CEO Carlos Ghosn reveals that, even as his company is building new North American factory capacity, it will run out of room again by 2017 and will need to build still another plant here.
By itself, that shouldn't come as a surprise given the sales momentum generated by Nissan dealers the past few years.
What is surprising is the way Ghosn characterized his options.
In comments to the press, Ghosn shared that Nissan likely will have to build a new auto factory in Mexico -- "or in the U.S."
Remarkable not because he mentions the possibility of constructing a U.S. auto plant merely as an afterthought to the idea of building it in Mexico. Remarkable because the United States is still on the table at all, given the allure of Mexico.
Consider that over the past couple of years, Mexico has flat out become the industry's preferred site for North America production. Building new assembly lines there, or making plans to source new vehicles there are: Nissan, Honda, Mazda, Audi, Chrysler, Fiat, Toyota and Hyundai. Mercedes-Benz and BMW are reportedly mulling it over. Ford said earlier this year it will invest $1.3 billion in an existing plant there.
Meanwhile, the number of new auto assembly plants announced on U.S. soil in the past two years: Zip.
Automakers from Ford to Toyota have been investing in existing U.S. vehicle and engine plants. They have been adding more U.S. work shifts to increase output. Volkswagen's still-new Tennessee plant -- which the company began planning back in 2007 -- is still in expansion mode.
Chrysler is hiring workers. Nissan is hiking production at Mississippi and Tennessee plants, Mercedes is expanding its Alabama plant, and General Motors is planning to spend money and hire workers at its Spring Hill, Tenn., factory.
But new U.S. plants? Not at all.
All of which makes Ghosn's recent comment -- "or in the U.S." -- somewhat fascinating. The executive appears to see some value in future U.S. production that his international competitors have temporarily lost sight of.
If Mexico's got it all covered -- inexpensive labor, low-cost supply base, free-trade with Brazil, etc., etc. -- then what would persuade anybody to build a new plant in the United States?
Perhaps Ghosn was simply being kind, as if mentioning a possible U.S. site for public relations here.
But more likely, there is still some advantage to U.S. manufacturing that isn't outweighed by Mexico's labor savings. But whatever that happens to be is not readily apparent to most of the world's automakers.
You can reach Lindsay Chappell at firstname.lastname@example.org.