Mexican tycoon Carlos Slim has pointed out that, in the long run, putting Trump in the White House will end up causing more harm than good to the USA itself than to Latin America.
Donald Trump is entirely blind to the fact that, if the USA scraps NAFTA altogether, there will be no turning back, conditions are such in 2016 that it will be nigh on to impossible to forge a new free trade agreement deal as it was done back in 1993 when president Carlos Salinas de Gortari ruled Mexico with an iron fist. Mexican president Enrique Peña Nieto does not have the autocratic powers his predecesors once had, and the Mexican Congress will be in no mood to ratifiy anything new president Trump may come up to replace NAFTA.
A recent study made known September 16th and published by The Wall Street Journal has concluded that Trump trade plan could push the USA into a recession, and imposing tariffs on Mexico and China could cost 5 million jobs in America according to the Peterson Institute for International Economics.
There is a growing consensus that NAFTA may have actually saved many autoworkers’ jobs, yet many blue collar workers who support Donald Trump have blinded themselves completely to this revelation. Furthermore, for a candidate who argues that free trade has led to the hollowing-out of U.S. manufacturing, the most ironic cut may be that car companies are building in Mexico rather than the United States, largely because it has freer trade than the United States does with the rest of the world. Critics of the North American Free Trade Agreement, who are placing all the blame on it, are denying the reality of global auto manufacturing. “That's what gets lost in the narrative”, said Bernard Swiecki, director of the automotive communities partnership at the Center for Automotive Research in Ann Arbor, Michigan. "Free trade agreements are driving BMW and Audi, but they're not free trade agreements with us. Blame NAFTA all you want — it wasn't the trade agreement that made that happen”. Why are so many non-U.S. automakers choosing Mexico? It's not just low wages, though Mexican auto workers make about 18 percent of what U.S. counterparts do, saving $600 on assembling a midsize Ford Fusion, according to the CAR. The real key is having free trade deals with more of the rest of the world than the United States, Swiecki said. On a Fusion sent to Europe, just the tariff difference from producing in Mexico saves Ford $2,500, while on a more expensive BMW or Audi, the difference is even more. And labor cost savings don't rise much as the cars get more expensive, but the potential gains from avoided export taxes do, he said.
In the rust belt, especially in Pennsylvania that was once a world class center for steel mills and the textile industry, Trump has promised the voters stricter immigration laws and the sealing of the borders, but in the last few years thousands of US jobs were actually saved or generated thanks to an investment that came from the least likely source: Mexico, according to a news report made by Robbie Whelan and published Friday November 4th by The Wall Street Journal. The WSJ has pointed out that Hazleton has turned into a case of the contradictions of globalization in an election in which Trump as well as Hillary Clinton (the latter following the lead of Trump in this issue) have questioned the benefits of free trade.
This is the news story as delivered by journalist Robbie Whelan:
Mexican Investment Flows Into Region Where Trump Resonates
Robbie Whelan
The Wall Street Journal
Friday 4 November 2016
Here in this former center of steelmaking and textiles, Donald Trump's campaign promises of stricter immigration laws and tighter borders resonate with voters.
But over the past few years, hundreds of jobs in Hazleton and the surrounding region of northeastern Pennsylvania have been preserved or expanded due to investment from an unlikely source: Mexico.
The result is that Hazleton has become a showcase of the contradictions of globalization in an election where both Mr. Trump and Democratic rival Hillary Clinton have questioned the benefits of free trade.
Mr. Trump had an 11% lead in Luzerne County, which includes Hazleton, in a late-October poll conducted for Axiom Strategies, a firm that has done work for Republican candidates.
In early 2009, Mexican baking conglomerate Grupo Bimbo SAB bought Weston Foods Inc., a U.S. unit of George Weston Ltd. of Canada , for $2.38 billion. With it came two Weston plants in Hazleton and a stable of American brands, including Arnold's bread, Boboli pizza crust and Thomas' English Muffins.
Despite buying Weston at the height of the financial crisis, Bimbo has reduced head count only slightly and built new plants in the region. Bimbo says that since 2012 it has invested $1 billion in the U.S.
Weston had about 2,500 workers in Pennsylvania, while today, Bimbo employs roughly 2,300, including those at its U.S. headquarters in Horsham and workers at nine industrial-scale bakeries.
In a region that lost thousands of factory jobs over the past few decades, the deep-pocketed new owners were welcomed. “Bimbo could have taken the company and moved it out of the area, but we're very fortunate that they decided to keep them here,” said Kevin O'Donnell, president of CAN DO Inc., Hazleton's nonprofit economic development group.
Other Mexico-based food manufacturers have invested in the area as well. In 2005, Mission Foods, a tortilla maker and U.S. arm of Mexico's Gruma SA, opened a plant in nearby Mountain Top that employs roughly 400 people.
And in 2012, Arca Continental SAB acquired Wise Foods Inc., a century-old, family-owned maker of Cheez Doodles and other snack foods based in Berwick, a small town across the Susquehanna River from Hazleton.
The Hazleton area isn't alone in seeing Mexican investment. Annual direct Mexican investment in the U.S. more than tripled from 2006 to 2015, from $5.3 billion to $16.6 billion, according to Bureau of Economic Analysis data analyzed by the Wilson Center, a nonpartisan think tank in Washington. The Mexican government estimates that 123,000 U.S. jobs are supported by Mexican investment.
“There's been this shift from Mexicans coming across the border looking for jobs, to having this huge boom in capital coming across the border and creating jobs in the U.S.,” said Andrew Selee, the Wilson Center's executive vice president and senior adviser to its Mexico Institute. “The infusion of Mexican capital has saved some classic American brands and preserved the jobs that go with them.”
Another big Mexican investor north of the border is Mexichem SAB, a global petrochemical giant with $5.7 billion in annual sales that has invested more than $2 billion in the last five years in 13 U.S. states.
Mexichem exports fluorspar and other raw materials from Mexico to its U.S. plant in Louisiana, which produces products such as refrigerants used by the car industry. The company, in turn, ships ethylene gas from the U.S. to feed its Mexico plants.
Mexichem's chairman, Juan Pablo del Valle, has been one of the few major Mexican businessmen to publicly criticize Mr. Trump's protectionist and anti-immigration plans and his speech against Mexicans and other groups.
At a recent rally in Florida, Mr. Trump referred to "rural towns in Pennsylvania, Ohio, North Carolina and all across our country," saying that establishment politicians had "stripped away these towns bare" and sent jobs and factories to Mexico, China and other countries.
His message is popular in Hazleton, reflecting uncertainty about the economy but also tensions over illegal immigration.
In April, 77% of voters in Luzerne County's Republican primary voted for Mr. Trump, who won six times as many votes as his nearest competitor, Sen. Ted Cruz.
Until World War II, Hazleton had thousands of anthracite coal miners, but the industry declined as cleaner, more efficient fuels gained popularity. Some workers migrated to jobs related to the steel industry, which had a center in the nearby Bethlehem Steel works, while others worked in textiles.
But all three industries largely left the area by the end of the 20th century. As of September, the metro area that includes Hazleton, Scranton and Wilkes-Barre had an unemployment rate of 5.9%, 1.1 points higher than the U.S. average.
At the same time, Hazleton, a city of about 25,000 people, saw a large influx of Hispanic immigrants, drawn by the relatively inexpensive cost of living and ample jobs in the distribution and food industries.
In 2006, in response to a rising crime rate that some politicians attributed to undocumented immigrant drug dealers, Hazleton's then-mayor, Lou Barletta, enacted harsh ordinances targeting landlords who housed illegal immigrants and employers who hired them. The policies were later ruled unconstitutional by a federal judge.
Mr. Barletta, now a Republican congressman seeking his fourth term representing the Hazleton area, said people here see Mr. Trump as a candidate who understands the region's economic struggles. “Free trade with open borders is a direct assault on towns like Hazleton,” Mr. Barletta said.
Mike Schlossberg, a Democratic state representative from the nearby Lehigh Valley, said Trump's message is resonating in Hazleton because of the “monstrous tensions" surrounding immigration there. “There's an incredible irony because immigrants create tremendous opportunity, because they create far, far more jobs than they take away,” he said.
Jolie Weber, chief executive of Wise Foods Inc., said Arca's purchase of the company helped it avert stagnation.
“If Arca had not bought Wise, Wise would have fallen into another private-equity firm's hands and that would have jeopardized the brand and the company's manufacturing facilities,” Ms. Weber said. “There certainly was a risk that those jobs over time would not be replaced.”
Over the last year, Arca has built a new wing on the Berwick factory to help handle logistics and bought two new 600-gallon boilers to expand its production of kettle-fried potato chips. Head count at the factory has remained steady at about 600 workers.
Two years ago, in Breinigsville, Pa., about 45 miles southeast of Hazleton, Grupo Bimbo opened what company officials describe as its most technologically-advanced plant in the country, a 230,000-square-foot bakery that flies the flags of the state of Pennsylvania, the U.S. and Mexico.
Inside, 275 workers -- new hires as well as employees from other Bimbo plants -- bake 2.8 million hot dog buns, loaves of bread and buns used for Burger King chicken sandwiches every week.
The average starting salary at the Breinigsville plant is $42,000 a year, said Jonathan Berger, a vice president at Bimbo Bakeries U.S.A. Inc.
“I don't think it's exactly the steelworkers of yesterday who are working in this plant,” he said. “But the next generation of workers who want to be involved in manufacturing, they have a place here, in a good work environment that has great technology in it.”
It is extremely ironic that, if Trump gets elected to the US presidency with the help of the citizens of Hazleton who right now suppot him and favor him over Hillary Clinton, and implements his anti free trade agreement policies starting with the killing of NAFTA, those who will be hit the hardest are the blue collars workers of America beginning with those who have been helped by the investments carried out by Mexican entrepreneurs inside the USA.
It stand to reason that if the US economy sinks into a black hole after the USA goes into full isolation mode under Donald Trump, with European and Asian investors carefully watching the manner in which the USA has treated one of its biggest trading partners, they will also be more than reluctant to make any investments inside an unreliable USA, they will not be in a mood to consider the USA as a trading partner. In brief, they will be scared of making any long term investment inside the USA. This in turn means that the hit may eventually end up taking hundreds of thousands of American jobs (if not millions) down the drain, for without any new investments there will be no new jobs.
Donald Trump, as owner of casinos and entrepreneur in the gambling business, is used to the business of gambling. But this time he is poised to make the biggest gamble of them all. He is getting ready to gamble American jobs, precisely the jobs of those blue collar workers to whom he has promised paradise and utopia. In case of an economic collapse many economists are now predicting if Trump wins, Trump himself will not be hit, that is precisely his game, that is the kind of deal he is offering. He would keep on receiving his presidential paycheck for four long years even if the US economy spins into a black hole and millions of Americans end up receiving their pink slips, and this perhaps would be the greatest spit in the face made to all American blue collar workers, especially those who live in places like Hazleton.
The bottom line is this: USA stands to loose more than Mexico with Trump in power implementing his political ideology, and the ones who will be hit the hardest are precisely the hundreds of thousands of American blue collar workers that Trump has rallied around him, most of them without a college degree that would have allowed them to read between the lines. But in the end, perhaps all this will not matter, for with an unpredictable irresponsible buffoon in the US presidency with the entire nuclear arsenal of the USA at his fingertips, in one of his classical fits of mistemper he may very well resort to putting the blame on others (besides Mexico) for the collapse of the US economy, trying to create a major distraction with some spectacular action such as launching ICMBs against North Korea; and from that point on it could be downhill not just for the USA but for the entire world, taking with him even the Russian President Vladimir Putin who fully supports him (Stalin made exactly the same mistake with Hitler). Indeed, if Trump wins, we may very well be approaching the end of times as predicted in the Holy Scriptures, precisely a few years after the third milleniium begun, which would be most fitting including to people such as those who live in the state of Pennsylvania.
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