The World's Lorne Matalon reports that Mexico is considering giving financial help to GM, Ford and Chrysler. The three US automakers have plants in Mexico, and there is concern south of the border that the companies may not have the money to keep those plants open.
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LISA MULLINS: I'm Lisa Mullins and this is The World. The United Autoworkers Union today announced it's reached a deal with General Motors and the U.S. Government. That deal would cut labor costs for GM helping the ailing automaker to stay afloat. The U.S. government has already spent billions to bailout GM and Chrysler. Well now the government of Mexico is considering an auto bailout of its own. The goal would be to keep GM, Chrysler, and Ford from closing plants in Mexico. Here's more from The World's Lorne Matalon.
LORNE MATALON: Mexico says the loans are a done deal. All three of the big three say they're interested. Chrysler filed for bankruptcy three weeks ago. GM faces a U.S. imposed bankruptcy deadline of June 1st and Ford has posted losses in 13 of the last 15 months. Grim numbers in the U.S. aside, the companies Mexican operations carry little debt and are comparatively inexpensive to operate. Here in the GM plant in Toluca, some workers make $100 a week. The Mexican government can read the tea leaves however. Mexico's Auto Industry Association says exports fell by 40% over the first quarter as U.S. demand collapsed. GM's four major Mexican plants employing 12,000 people have faced rotating shutdowns since March. At this plant, two hours from Mexico City, workers assemble Silverado trucks, an increasingly hard sell in a recession. The factory floor was silent two months ago when GM shut down operations for a week. The company then temporarily furloughed 2,500 workers at a plant in Silao producing SUVs and Cadillacs. Alfonso Espina is a wheel specialist at Toluca.
ALFONSO ESPINA: If these loans don't come through for us, I don't want to even think about what will happen to my job. With so little demand in the U.S. it's only a matter of time before they close our plant here in Toluca again. We are really praying these loans save us.
MATALON: Another worker, Jose Angel Perez, is very concerned.
JOSE ANGEL PEREZ: [SPEAKING SPANISH]
MATALON TRANSLATING: It's worrying, he says. Unfortunately we depend on the United States. If the United States is in bad shape, Mexico is bad off. It's that simple. And if the U.S. is in recession, we're in worse shape then they are.
MATALON: Revamping the U.S. auto industry is like slowing a massive ship to a dead stop in choppy seas – extremely difficult. Mexico-based industry analyst Bill Scanlon says loans are not prospects. For Mexico short term auto output are grim.
BILL SCANLON: The market demand both in the United States and Mexico for heavy vehicles will not see any recovery until at least December of this year. This is not a good sign for manufacturing centers like Silao which potentially could see more work stoppages by the end of this year.
MAURICO CARDENAS: The Mexican economy is going to suffer. There is no way to avoid that.
MATALON: The Brookings Institution's Maurico Cardenas studied the U.S. industry's precipitous fall and the ripple effect in Mexico.
CARDENAS: We're going to continue seeing the weakening of consumer confidence here in the U.S., less orders, and of course less production and less employment in Mexico.
MATALON: Mexico's loans appear to dovetail with changing nature of GM's reorganization. By June 1st, GM must show the Obama administration that is viable or else risk filing for bankruptcy protection. But in an apparent about-face the company is planning to increase imports from Mexico and China and cut American jobs. The UAW is protesting vehemently saying it thought the U.S. government loans were dependent on a pledge to preserve American jobs. But published reports say some within the Obama administration believe forcing GM to preserve American jobs by shifting foreign production to the U.S. would ultimately require even more in aid from the American taxpayer. For The World, I'm Lorne Matalon in Toluca, Mexico.
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