Carmakers say bienvenido to Mexico, adios Canada

There’s little more than a weeded-over parking lot outside the former Freightliner truck factory in St. Thomas, a small town about a 30-minute drive south of London, Ont.

Not long ago, the site was a hive of busy autoworkers. But in 2008, German automaker Daimler closed the shop and moved production offshore, part of a $600-million cost-cutting plan that saw 1,400 people thrown out of work. A plumbing component maker has since taken over part of the old Freightliner space, but together with the shuttering of the nearby Ford plant and its 1,600 jobs, St. Thomas’s days as a major hub of Canada’s automotive industry are over as carmakers move production to greener pastures elsewhere.

More often than not of late, the elsewhere in question is Monterrey, the third-largest city in Mexico. About an hour-and-a-half flight from Houston, it’s fast becoming a hub of global car manufacturing.

New Freightliner transport trucks roll out of there three at a time nowadays, made by Mexican shop floor workers who work for as little as one-fifth of what a Canadian made doing the same work.

The fact is, Mexico now makes twice as many cars as it did a decade ago, and has leapfrogged Canada in the process.

Freightliner aren’t the only ones to have moved to Monterrey. A stone’s throw west of the Freightliner plant is a Chrysler facility. Just north of the city, ground has broken on a massive Kia plant, the biggest construction project in a part of Mexico that’s already booming.

While Mexico was once a bottom feeder on the car industry food chain known mainly for cheap labour, the country is moving up in the world.

“At the beginning, we were just doing assembly,” says Diba Iluna, who runs Canadian component maker Magna’s powertrain plant in Ramos, about 40 kilometres west of Monterrery. “Now we do assembly and machining of components. We do some very complex components here that seven years ago we thought we would never [do].”

Cellina Villareal, the economic development officer for the state of Nuevo Leon, bristles at the suggestion that Mexico is little more than a bargain bin for workers.

​”Mexico is not cheap labour anymore. We’re giving added value to the processes,” says Villareal.

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