Mexico—the New China?

Mexico has captured 18% of North American auto production and that is expected to increase to 25% by 2020.

Mexico’s auto industry employment has soared 46% to about 580,000 jobs since 2009, according to the Brookings Institution. U.S. auto employment has gained a paltry 16% in the same period.

Other U.S. high-value industries such as aerospace and electronics will also face competition from Mexico’s, according to the Brookings Institution.

Mexico’s aerospace industry is on the rise exporting more than $5 billion in 2012, a 16% increase over 2011.

Of all industries, however, Mexico’s auto industry is the leader thanks with low wages, high productivity, great quality and Mexico’s proximity to the U.S. not only by road, but by rail.

Harley Shaiken, a UC Berkeley labor professor said, “The auto industry is critical, because it is among the most sophisticated of manufacturing technologies,” he said. “If you can build a Honda Fit, then almost all other manufacturing is vulnerable.”

Mexican autoworkers earn about $8 an hour compared with the U.S. average of $37. How can the U.S. auto worker compete?

Honda has decided to produce its subcompact cars in Mexico. Its Celaya factory will employ 3,200 when it reaches full production this year.

A new Nissan plant opened last year. Mazda is starting production of its Mazda3 compact car in Mexico this year. Volkswagen’s Audi luxury brand is building a $1.3-billion factory near Puebla, Mexico, near where VW assembly plants already build the Jetta, Golf and Beetle for the U.S. market. Finally, Mercedes-Benz is also considering locating a plant in Mexico.

Mexico’s bottom line is that its automobile production is projected to double to more than 3 million this year as compared to 2009, according to IHS Automotive.

As even more automobile factories are being built in Mexico, there are no new auto factories being built—or even planned in the U.S.

Is Mexico the new China? Looks like it.