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An indepth look at Mexico, its assets, its huge potential and what is holding Mexico back. It ranks much higher than Brazil in many respects- higher investment as a fraction of its GDP, technical education, an easier place to do business, less regulation, better management talent, more industrialized. In 2010 Mexico had $400 billion of business with the U.S. With rising Chinese wages Mexico is an attractive place for foreign investment, with a hardworking and educated workforce. Mexico suffered badly during the 2008 recession in the U.S. It is trying to reduce its dependence on exports to the U.S in key areas such as the automotive industry. Exports to the U.S. by the automotive industry are now 65% of the total, and the auto industry association in Mexico is working to bring this figure to 50% by exporting to Latin America and Europe. Economic growth was 5.4% in 2010, and expected to be 4-5% in 2011. Drug violence may have reduced the growth by one percentage point according to some estimates. The think tank, Mexican Institute for Competitiveness, estimates that economic growth would be 2.5% percentage points higher if labor market and competition laws are changed, and the oil industry is opened up to foreign investment as happened in Brazil. A study by OECD and the Federal Competition Commission (CFC) of Mexico has shown that 31% of Mexican household spending goes to products operating in high price monopolistic or oligopolistic markets. The bottom ten percent spend even higher proportion of incomes, around 38%, for products supplied in such markets. This includes pharmaceuticals, airline travel, banking, and electricity. Taking on these cartels is a difficult task. The CFC is beginning to take the first steps in this direction, in what will be a long road to fair prices for Mexican consumers. Banking was opened to Wal-Mart. The collapse of Mexicana was an opportunity to auction landing slots to other airlines. An auction system has been developed by CFC for drugs. A new competition law sets penalties for collusion in pricing, with upto 10 years in jail. And Carlos Slim's telephone monopoly was fined $1 billion for its telecom monopoly practices. In 2009 the Calderon government shut down Luz y Fuerza, a state electricity company costing the governmment $3 billion in subsidies for an highly inefficient operation. ...

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Two weeks after his election Donald Trump says the U.S. will not join the Trans Pacific Trade Agreement during his term in office. Barack Obama took seven years to negotiate the trade agreement which was opposed by trade unions, the auto industry and was unpopular in the midwestern U.S. because of the impact of trade in hollowing out the manufacturing sector. Here Frank Sieren of the DW.com points out that the agreement was not really about trade, as most of the gains of trade had already been realized according to experts. It was part of the "pivot to Asia" to maintain American dominance in the region, says Sieren. After China pulled together some Asian and European countries into its trade agreement, the Regional Comprehensive Economic Partnership (RCEP), the U.S. pushed for TPP as a counterweight to the China sponsored trade zone. China says it will try to integrate the countries in TPP into the trade zone it has sponsored. President Trump has said that the U.S. is better off negotiating agreements with each country and not getting into multilateral trade agreements. He fought the election campaign on the basis of the opposition to TPP and trade agreements that unfairly hurt American workers. This could have provided the 110,000 margin of victory in the states suffering from the hollowing out in manufacturing such as Michigan, Wisconsin, Ohio and Pennsylvania. A similar hollowing out in Ontario favored Justin Trudeau's Liberals against the Conservatives in Canada's election. ...

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Some startling statistics on U.S. wages and incomes and the increase of part-time workers, by the publisher of U.S. News and World Report, Mortimer Zuckerman. He cites the Pew Research Center reports that show one third of Americans identifying themeselves as lower class or lower middle class compared to one quarter before 2008. This affects social mobility with the increasing gaps in incomes, education and social behaviour acting to reinforce each other and leading to even lower future mobility. Industries that are showing growth are in low wage occupations. The Bureau of Labor Statistics shows growth in future in industries noted for low wage part time work- health care, social assistance and retail, with some jobs lacking minimum wage and overtime protections. Revealing in this respect is that in the last 2 years fully 43% of net employment growth is in the 1.7 million jobs added in low wage work in food service, retail and employment services industries. The number of Americans working full time declined by 5.9 million since Sept 2007, part time workers increased by 2.6 million. The effects of higher part time workers and job recovery predominantly in lower wage industries is likely to affect consumer spending and slow growth....

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Honda plans to move more of its manufacturing to the U.S. as the value of the yen drops below 80 to the dollar in 2011. Honda faces problems from parts shortages after floods in Thailand, and U.S. market share down 1.5 percentage points to 9% in 2011. Honda's profit declined by more than 50% for the third quarter of 2011. The yen trading at 77 to the dollar in Dec 2011 is making it impossible for Honda to make a profit from vehicles made in Japan and sold in the U.S. Honda plans to double the capacity of the Civic plant in Greensburg, Indiana, increase capacity at its other assembly plants. It will build a new plant in Celaya, Mexico, in 2014, to manufacture the Fit subcompact. This will raise North American production from 1.29 million vehicles to close to 2 million. About 200,000 to 300,000 of these vehicles will be exported to other international markets. Profits on small subcompacts are small, making manufacture of the Fit more economical in North America than in Japan. In 2011 Honda manufactured between 30-40% of vehicles in Japan, the new plans are to reduce this to 10-20% in the next 10 years, a major shift....

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Difficult conditions for public sector unions as state governors work to reduce deficits. A weak economy leads to concessions by private sector unions in 2010-2013. This is one of the most difficult periods in union history following the financial crisis of 2008 and large job losses in many industries, especially the auto industry. Maher describes conditions in different industries including telecom, auto, airlines oil, retail,and rail.

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Hillary Clinton narrowly loses the Michigan primary to Bernie Sanders in March 2016, as the Sanders campaign focusses on Clinton's support for trade agreements that hurt American workers and lead to loss of manufacturing jobs. About three fifths of voters in the Michigan primary considered this a major issue. Many less educated younger workers see their job prospects diminish and wages drop with free trade that hurts American manufacturing jobs. Bill Clinton signed the NAFTA agreement with Mexico, and as a member of the Obama administration Clinton supported the Trans Pacific Trade Agreement, later opposing TPP when she left the cabinet. Sentiment against trade that hurts manufacturing jobs in the U.S. is strongest in midwestern states such as Michigan, Ohio and Illinois. This was also a major issue benefitting the Liberals under Justin Trudeau who won in Canada's industrial Ontario province which has suffered hollowing out and loss of manufacturing jobs under the Conservative Harper administration. In the U.S. the issue goes back to the Clinton Administration for two decades. New jobs created by Apple, Google, and other tech companies pale in comparison with the industrial jobs created in another era that benefitted working class families. This issue and high unemployment or under employment, lower wages for working class families, was a major issue in the 2016 U.S. presidential election campaign. Widening wealth disparities, and lack of upward mobility, high tution and healthcare costs for ordinary families, dominated the campaign in the U.S....

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The situation in Guangdong province in 2012, with older factories unable to compete with the rising wages, stricter environmental enforcement, and lower export demand. Many Taiwanese manufacturers are closing factories. The growth in Dongguan, a manufacturing hub in Guangdong, is estimated at 3.5% for the first three quarters of 2012, half the overall rate for Guangdong province. A researcher in a Chinese think tank says China's manufacturers are in a kind of "sandwich trap" with competition from Vietnam and India in lower wage production and competition from Germany and the U.S. in higher wage technology intensive products. This is especially true in 2012-2013, now that U.S. and German manufacturers have reduced costs and increased competitiveness.

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Keith Bradsher describes the life of one family of migrant workers in China struggling to get their ony daughter through college. Wu Yiebing is a worker in coal mining and his wife Cao works on farms nearby. He has managed to send his daughter Wu Caoying to college. She is a sophomore in college but fears for the future because of the lack of opportunities for new college graduates in China. She also feels the heavy burden as the parents spend half their income to get her through college and have no retirement savings. This is typical of many migrant families in China who see education as the only way for the next generation to have better lives than their parents.

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China's current account surplus has declined to 2.8% of GDP for 2011 from about 10% in 2007, and will be around 2.3% of GDP in 2012, according to IMF estimates. The U.S. current account deficit is down to 3.1% of GDP from 5.1%. By controlling the exchange rate China was able to keep the competitiveness of its exports, resulting in a five fold increase in exports from 2000 to 2010, according to the IMF. The decline could be temporary say experts, as the the recession in Europe and the U.S. resulted in slowing exports, with its infrastructure buildup sucking in imports of machinery and other goods from the western countries at an accelerated pace with its 2009 stimulus measures. Another reason is that in the last decade China has developed its own high tech and other companies which will now increase exports. IMF forecasts show a pickup in China's trade surplus to 4.25% by 2017. This could be lower if the renminbi is allowed to appreciate. Estimates of appreciation of the renminbi are 8 percent in nominal terms since June 2010 against the dollar. Including inflation, which is higher in China, the renminbi has appreciated by 13% since June 2010. ...

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Close to half of the respondents in the 2010 Annual Survey of the American Chamber of Commerce in Shanghai, say that they face regulators who show a preference for domestic companies. About 80% of respondents said their operations were profitable in 2010. In 1999, 58% of Shanghai members of the chamber said their profit margins were below worldwide levels. In 2010, 78% said their profit margins matched world levels. Just under half of the respondents said they feared a negative impact from China's effort to build "indigenous innovation" and encourage domestic champions in each industry. 63.1% of respondents say regulations are getting worse or staying the same. Chinese President Hu on a state visit to the US in January 2011 is presenting the idea of a level playing field for American companies.

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The first signs of a return to growth are seen in the European automobile market. The European Automobile Manufacturers Association reports a 1.7% increase in new passenger car registrations for May compared to April 2013.

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This New York Times editorial after the Senate passed a bill in October 2011 calling for action on the misaligned Chinese currency, points to ways a misaligned currrency is damaging for China. It cites the Peterson Institute for International Economics estimate that this is costing China $240 billion a year. This is a result of accumulating huge dollar reserves that have a declining value against the renminbi. Higher import prices lead to higher inflation. And low interest rates on savings, to the point that they are lower than the inflation rate, hurt the vast majority of Chinese and reduce domestic consumption. And perversely this leads to money pouring into speculative uses such as real estate, creating unsustainable bubbles in housing. The Times editorial says China is not generating jobs from this strategy, as the export strategy is relying on use of advanced technology in manufacturing and not creating many jobs. It cites a statistic showing employment has increased by only 1 percent a year from 2004 even with GDP growth above 10%. China is beginning to realize the cost of this strategy, and is planning a shift in its five year economic plan. But this rebalancing has many obstacles. The current system dominated by state run companies, banks, local and federal government, is biassed in favor of the old export led strategy, and experts are pessimistic about the possibilities for change. The Times suggests China may be falling back on the export led strategy as the global economy is slowing. The whole system would have to change after three decades of this kind of development, and would require new leadership and major changes....

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This WSJ editorial says the recent agreement at the Caterpillar Joliet plant in llinois is not about leverage but about increasing U.S. manufacturing competitiveness. As U.S. competitivness improves and the economy grows wages will increase. It does little service to management, labor and the U.S. economy for above market wage rates to lead to loss of manufacturing competitiveness as happened in the U.S. automobile industry, resulting in closing of plants.

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Declining manufacturing wages in the U.S. and the return of manufacturing jobs. Indiana's experience with new manufacturing plants.