$2.25/hr to Build a $40,000 Vehicle
Mexico’s wage repression scheme creates Nirvana for global automakers.
A system of wage repression in auto manufacturing that has long undermined the Mexican labor market, has dragged on the local economy, and has spread downward wage pressures to US autoworkers has been revealed by an AP story in the Detroit News.
And this is for factories that manufacture expensive products, even luxury products, in demand in the US and elsewhere. This isn’t about manufacturing T-shirts. But that system of wage repression has been working wonders for global automakers setting up shop in Mexico.
Most of the workers at the new Audi factory in the state of Puebla, inaugurated in 2016 and assembling the Audi Q4 SUV, which carries a sticker price in the US of over $40,000 for base versions, make $2.25 an hour, according to the Union.
Volkswagen, which owns Audi, started building Beetles in Puebla in 1967 and has since created a vast manufacturing empire in Mexico, with vehicles built for consumers in Mexico, the US, Canada, and Latin American markets.
This post was published at Wolf Street by Wolf Richter ‘ Sep 29, 2017.