Production capacity is shifting rapidly to Mexico. Last week, Toyota was the latest automaker to announce plans to build or expand a plant there.
But the investment isn't a stampede. It was forecast years ago. This is what the industry expected to happen.
And there's logic to Mexico becoming the North American center of gravity for small vehicles. It has low wages and high worker productivity. It's close to the growing markets where price-sensitive vehicles sell well. And Mexico's trade pacts with dozens of other countries make it a natural export center.
The flood of investment is certainly a boon for Mexico's economy and workers. But it's not a calamity for the U.S. and Canadian economies and workers.
A decade ago, rising production in central and eastern Europe did not doom auto manufacturing in western Europe. Companies there adjusted their manufac- turing footprints to global needs and became more competitive. That European pattern may be repeated in North America.
But one thing is clear. Toyota's decision to build Corollas in a Mexico plant specifically designed for its new global platform signals that the competitive small-car arena will become even more cutthroat.