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American businesses watch Mexican elections

Jeff Tyler Jun 29, 2012

American businesses watch Mexican elections

Jeff Tyler Jun 29, 2012

Jeremy Hobson: On Sunday, voters in Mexico will go to the polls to elect a new president. And a lot of U.S. companies that do business south of the border will be watching very closely to see what happens.

Marketplace’s Jeff Tyler reports.

Jeff Tyler: At this plant near Mexico City, workers assemble cars for Ford. Next month, the company will crank out almost 10 percent more Ford Fiestas to meet rising demand, mostly from the U.S.

Juan Santillán oversees production. He says changes on the domestic landscape could also benefit the company.

Juan Santillán: There’s a lot of things that the government can still do to promote more investment.

Presidential candidate Enrique Peña Nieto — who is expected to win the election on Sunday — already has a relationship with the company. As state governor, he was here for the plant’s inauguration. If elected, he’s promised to cut the cost of electricity and invest in infrastructure. Santillán says those moves would help all foreign manufacturers in the area, not just Ford.

Santillán: So the ideal is that this central part of Mexico gets developed so big that, at the end, all can benefit from it.

Candidate Peña Nieto has also promised reforms that would benefit American oil companies. Manuel Molano is with the Mexican Institute for Competitiveness, a think tank in Mexico City. He says the proposed changes could erode the monopoly now held by Mexico’s national oil company called Pemex.

Manuel Molano: This would mean that more foreign companies could come and compete against Pemex in several aspects of the business.

Molano expects some business reforms no matter who wins the election.

Molano: Whatever the outcome is, there are good news for American businesses.

All the major candidates have promised to tackle corruption. And two have spoken of the need to reform outdated labor laws.

Joy Langston is a political science professor at the Center for Research and Teaching in Economics. She says the government needs to make it easier for companies to fire people.

Joy Langston: If somebody works at your office for a week, and then leaves, you are legally obligated to pay them three months of salary. And so that leads to all sorts of fraud. And all sorts of abuse.

As those workplace abuses decrease, Mexico becomes more attractive for American businesses.

I’m Jeff Tyler for Marketplace.

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