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An oportunity for Mexico?

General Motors has found itself in a critical moment. At the end of November, Rick Wagner, executive president of the largest automobile producer in the world, announced the closing of nine plants, two autopart factories and one distribution center in the United States--and the dismissal of 30,000 employees. With such a trimming, the company hopes to reduce costs up to US$7 billion by the close of 2006 and thereby better position itself to confront the tough competition it faces from Asian companies, principally Toyota Motor Corp.

But what impact will the adjustment have outside the United States? According to the analysts, GM will have to recuperate its profits by producing in markets with lower labor costs, such as China, South Korea and Eastern Europe. Even so, analysts assure that good news could be on the way for Mexico. Jaime Carreno, an analyst with Standard & Poor's in Mexico City, says that "the Mexican work force (in the automobile sector) is equally qualified as that in the United States, and the costs continue to be much cheaper." What's more, he explained, the many years that GM has operated in Mexico, its well-structured local logistics and its geographic proximity to the U.S. continue to provide important competitive advantages. Another local sector that could see benefits from the news is the autoparts industry, which sells close to US$10 billion annually to GM.
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Title Annotation:Automotive sector; General Motors Corp.
Author:de la Iglesia, Almudena
Publication:Business Mexico
Article Type:Brief Article
Geographic Code:1MEX
Date:Dec 1, 2005
Previous Article:Happier employees.
Next Article:If you can't beat 'em, join 'em.

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