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US-Mexico trade supports US employment

US-Mexico trade supports US employment

Although the title of this post may seem to be counter-intuitive to some, numbers support its claim. US-Mexico trade supports US employment generating millions of jobs in the United States both in the manufacturing and the service sectors of the domestic economy.

From the perspective of manufacturing, goods imported into the United States from its neighbor to the south contain an approximate forty-percent of US manufactured content. This translates into numbers that were published in a paper that was written in 2010, by the office of Ambassador and US Trade Representative, Ron Kirk, entitled, “The President’s Trade Policy Agenda.” According to the USTR’s accounting nearly six million US jobs were supported by US-Mexico trade going back to 2008. Since exports to Mexico have grown since that time, and because each additional $1 billion in US exports has the effect of supporting 6,000 additional positions in the US, it can be deduced that US-Mexico trade supports US employment to a greater degree today than it did a full six years ago. At the time of the publication of “The President’s Trade Policy” by the Office of the United States Trade Representative, the States of Texas and California were those whose employment base was supported by the thriving bi-lateral commerce that exists between the two nations. In 2008, the number of California jobs supported by commerce with Mexico was in the proximity of 700,000 positions, while the number in Texas came close to half a million. As is the case with aggregate national numbers, it can be expected that those figures are higher in 2014. The fact that US- Mexico trade supports US employment is not solely a border state phenomenon, however. In a total of twenty-two US states, the commercial connection between the two NAFTA partners supports over twenty-two thousand positons.

While forty-percent of the content of manufactured goods imported from Mexico is composed of inputs Made in the USA, the fact that Mexico is a partner that adds value in the manufacturing process also supports jobs in the United States. According to the USTR, in 2010, Mexico’s GDP growth rate of 5.4% was accompanied by a subsequent purchase of an additional thirty-four billion dollars of US goods by Mexico and its citizens. Mexico’s rate of GDP growth for the entirety of 2014 is projected to be in the vicinity of 2.4%. Although this figure is a bit shy of half of the 2010 number, an increase in Mexican GDP will be accompanied by an uptick in the value of goods purchased from the United States. The overall growth in the Mexican economy bolsters data that demonstrates that US-Mexico trade supports US employment.

The US-Mexico economic partnership also supports US employment in the service sector. A sizable group of Americans, especially those that travel to Mexico, are familiar with the US investment in services that has flowed into the country over the last two decades that the NAFTA has been in place. It is very visible to the eye. Anyone who has traveled to any of Mexico’s more sizable cities has noted the presence of major US retailers such as Wal Mart, Costo, Sams Club, Home Depot and others. These businesses, as well as others, have led to the creation of thousands of jobs for Mexican citizens in the retail, and other sectors of the country’s service economy. Less visible, but impactful nonetheless, is the effect of Mexican investment flowing northward has had on the US service sector. It is another area in which US-Mexico trade supports US employment. Among notable Mexican investors in the US service economy is America Movil. America Movil is headed by billionaire Carlos Slim, and is the largest provider of cell phone service in Latin America. This Mexico company owns US telecommunications brands such as StraightTalk TracFone, SafeLink and Net10 Wireless.

Another very large investor and job creator over the last several years with Mexican roots has been Grupo Bimbo. The company entered the U.S. baked goods market in the middle of the 1990s, and now has approximately 15,000 US employees. Among Grupo Bimbo’s best known US brands are Thomas’ English Muffins, Entenmann’s and Oroweat. Headquartered in Pennslyvania, Bimbo Bakeries USA, has also purchased Sara Lee. The price paid for the company was nearly $1 billion dollars. As a result of this deal, Mexican capital now supports the 14,000 US jobs attached to Sara Lee’s 41 US bakeries, as well as those connected to its sales and product distribution apparatus.

Although there are those that view the US-Mexico economic relationship as being a “zero sum game,” in which the US has received the “short end of the stick,” in terms of both actual numbers of job and revenue generated, the facts bear out the reality that US-Mexico trade supports US employment.

Remember, relevant and useful Mexico manufacturing content is available at one’s finger tips by downloading the Tecma Group mobile app from the Google Play Store, interesting parties can also receive Mexico manufacturing information on a weekly basis by SMS Texting the word Tecma to 96000.

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