EnStrikes at factories near the Mexico-U.S. border at Matamoros have disrupted operations at 70 out of 115 factories in the area, the Wall Street Journal reports. That’s been precipitated by pay increase demands and could be worsened by increased labor rights under the U.S.-Mexico-Canada Agreement.
As outlined in Panjiva research of Oct. 1 USMCA’s new rules will take years rather than months to fully take effect – particularly given the slow progress of ratification in all three countries – but are in part designed to reduce Mexico’s low wage advantage over the U.S. and Canada.
Panjiva data shows that exports from Matamoros and the surrounding 50km to the U.S. were worth $5.46 billion in 2018 having increased by 15.7% year over year.
Source: Panjiva
The largest product lines shipped from the area to the U.S. come from the automotive and electrical equipment industries. Automotive body components (HS 8708) were the largest product line at $1.21 billion exported in 2018 at $1.21 billion after a 12.1% increase year over year.
The fastest growing export group was wiring harnesses after a 374.1% jump. By contrast there was a slowdown in the largest electrical equipment lines – for example a 8.1% drop in shipments of electrical lighting and a 5.7% drop in power transformer exports.
Leading exporters in the capital goods industry including electrical equipment provider Kemet – which exported $355.8 million of equipment from the region in 2018 – safety equipment supplier Autoliv ($316 million) and wiring harness manufacturer Ark de Mexico ($408.7 million).
Further labor unrest is possible and could cause ongoing disruptions to supply chains depending on Mexico – for example teacher’s strikes following the elections disrupted rail network operations into Manzanillo and Lazaro Cardenas ports.
Source: Panjiva
