WCA September 2014

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72 Wire & Cable ASIA – September/October 2014
From the Americas
– reaching a high of about 14 per cent – while China’s share
has declined.
In addition to the US companies cutting back in China and
heading to Mexico, Mr Cave noted, many manufacturers –
including well-known names like Caterpillar, Chrysler, and
Stanley Black & Decker – are expanding there.
With their billions of investment dollars they are helping to
drive the economic integration that US President Barack
Obama and Mexican President Enrique Peña Nieto have
both said is vital to growth.
While in some cases a move to Mexico is associated with
job losses in the United States, economists consulted by
the Times said that the American economy benefits more
from outsourcing manufacturing to Mexico than to China.
According to the National Bureau of Economic Research,
a private research group, roughly 40 per cent of the parts
found in Mexican imports came originally from the United
States, compared with only four per cent for Chinese
imports.
Such comparisons appear to have blunted some of the
scorn that greeted American companies moving production
to Mexico in the 1990s, observed Mr Cave. Even so, it
would be a mistake to believe that nothing is lost in the shift
of a manufacturing base.
Scott Stanley, a senior vice president at North American
Production Sharing, one of the largest firms to help
American companies set up production facilities in Mexico,
told the Times : “There are a lot of examples of clients who
were in Mexico, went to China and now want to come
back, and most of them have given up their expertise in
manufacturing.”
 To draw more US companies to Mexico now –
executives, officials and experts say – the adjoining
nations will need to become better neighbours, more
focused on sharing labour and moving product. Mr
Wilson at the Mexico Institute called particularly for
“globally literate workforces in both countries.”
At a very basic level, he told the Times, that means
teaching more Spanish in the US and more English
in Mexico. Other, more immediate, improvements he
considers necessary include shorter wait times at border
crossings and, in Mexico, better roads and lower-cost
electricity.
 Mr Cave summed up on a cautionary note: “After all,
as the rise of China showed once before, there is no
guarantee that Mexican and American manufacturing
will stay attractive for long.”
The US economy
‘Ticking along at a good clip’ at midyear –
but with plenty of room for improvement
According to Bloomberg BusinessWeek economics editor
Peter Coy, nearly seven years after the last recession
began the US economy was “ticking along at a good clip”
at the midpoint of 2014. If proof were needed, the ADP
Research Institute reported that private employers added
281,000 jobs in June, exceeding the most optimistic
forecast of economists surveyed by Bloomberg .
(“Jobs Growth Adds More Sunshine to US Economic
Performance,” 2nd July)
The Bureau of Labor Statistics had recently provided
additional encouragement. May of this year was the first
month which saw employment in the US climb above where
it was when the recession began in December 2007. June
results would extend the trend.
“The labour market appears to be firing on all cylinders
and is finally self-sustaining,” wrote two PNC Financial
Services economists in a note to clients.
No one would argue that all is well. Long-term
unemployment remains high and many new jobs pay
below-average wages. Productivity growth is weak,
furnishing one reason for the strong job figures: companies
need to hire more labour to get the job done. And
consumer spending adjusted for inflation fell in both April
and May.
“The economy is not growing quickly enough to use
up the excess capacity that has accumulated since the
crises began several years ago,” Steven Ricchiuto, chief
economist of Mizuho Securities USA, told Bloomberg.
 Still, Mr Coy noted, the US economy was certainly
looking stronger than one might have supposed from the
25th June government report that GDP (gross domestic
product) fell at an annual rate of 2.9 per cent in the first
three months of 2014.
A week later, economists were estimating that the
economy in fact grew at a three per cent annual rate in
the quarter — a remarkable reversal.
In other good news on 2nd July, capital goods shipments
came in above expectations. And the research firm
Autodata reported that May had been the best month
in US light-vehicle sales since July 2006. Even General
Motors, whose reputation has been badly damaged by
record recalls, experienced a sales rise.
Dorothy Fabian
Features Editor
❍ Mexican president Enrique
Peña Nieto
❍ United States president
Barack Obama