Automakers’ troubles hit hard in Mexico

Dan Grech Nov 19, 2008

Automakers’ troubles hit hard in Mexico

Dan Grech Nov 19, 2008


Steve Chiotakis: So, how is the financial crisis affecting other parts of the world? Off to Saltillo, Mexico, known as Little Detroit for its many car-related manufacturing businesses. From the America’s Desk at WLRN in Miami, Dan Grech reports.

Dan Grech: Ecolimpio is an eerie place at dusk. An earth mover transfers huge mounds of toxic dirt. Noxious fluids chug through a pipe. Every week, auto-part makers in Saltillo send their hazardous waste here to be processed. But recently, deliveries started falling off.

Ecolimpio’s owner, Daniel Calvert, says he knew then that the local auto industry had begun to run cold.

Daniel Calvert: Oh yes, we’re a thermometer. Industries put aside their legal obligations on hazardous waste until things get better.

Calvert stands in a warehouse with stacks of metal drums. The stacks used to be higher.

Calvert: We’re losing money. We diminished 8 percent.

[Sound of a loud bang]

Grech: What was that sound?

Calvert: Just a bird. They fly and they crash in the drum.

Mexico’s auto industry is like that bird. It was soaring, as automakers from around the world set up shop in towns like Saltillo. They came for the country’s cheaper labor and its proximity to the U.S.

In one generation, Saltillo took in billions in investment. Its population doubled.
Then auto sales in the U.S. took a nose dive. Mexican auto exports fell more than 15 percent in August compared to one year ago. Chrysler laid off a third of its workers at its Saltillo truck plant.

Oscar Peart heads the local chamber of commerce. He also manufactures custom-built door holders used when painting pick-up trucks. He says Mexico’s other motor cities are suffering, too.

Oscar Peart (voice of interpreter): There have been big drops in orders in some plants, such as in Silao, Mexico City, Chihuahua and Sonora. Here, we are actually a little better off. We have very versatile assembly plants that allow us to change what we manufacture quickly.

Peart says his family, his business, his entire city depends on Detroit.

Peart (voice of interpreter): To survive, we will have to do what we call in Mexico “to tie up our guts.” We have to learn to save things like paper, pencils, electricity and water.

Chrysler is building a massive Freightliner truck plant in the town. It’s scheduled to open in February. But with American automakers in deep financial trouble, the future of Saltillo’s plants could be up in the air. This town they call Little Detroit could soon get even smaller.

In Saltillo, Mexico, I’m Dan Grech for Marketplace.

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