Keep Mexico In Mind
Each month NPTC President and CEO Gary Petty writes a column in Fleet Owner magazine that focuses on the individuals, companies, best practices, and resources that make private trucking the force that it is in the American economy. Reaching more than 100,000 subscribers, three-quarters of whom are private fleet professionals, this column provides an excellent forum to communicate the value of the private fleet. Click here to view the archive.
Gary Petty | email@example.com | Private Fleet Editor for FleetOwner Magazine
Gary Petty has more than 30 years of experience as CEO of national trade associations in the trucking industry. He has been the president and CEO of the National Private Truck Council since 2001.
Keep Mexico In Mind
Imagine doing $500,000 of business every 60 seconds. Half a million dollars a minute. That’s the amount of trade between the United States and Mexico that takes place every minute of every day. In 2000, this totaled $247 billion. Today, the U.S. exports more to Mexico than to Britain, France, Germany and Italy combined.
Think of this trade in truckloads — since 80% gets where it’s going that way. One million barrels of oil; 432 tons of bell peppers; 283,000 light bulbs; 166 Volkswagen Beetles; 16,250 toasters; and $51-million worth of auto parts. That’s the daily volume of United States-Mexico trade. This trade is currently valued at $750 million a day, and is projected to increase to $1.6 billion by 2006.
Wal-Mart, the world’s largest retailer, looms large in this market, operating 520 retail stores in Mexico that gross $9 billion in annual sales, or one-third of the company’s international operating profit. And the Wal-Mart in the border town of Laredo, TX, is the highest grossing Wal-Mart in the U.S. Mexicans earning $5 a day replaced robots used in U.S. distribution centers resulting, officials say, in Wal-Mart’s Mexico City distribution center being the most efficient in the world.
Since NAFTA, exports of U.S.-made cars to Mexico have increased more than 1,000%. Chrysler, for example, exported 5,300 vehicles to Mexico in 1993 and 60,000 last year.
This example of dramatic growth in exports to Mexico has helped add about 900,000 new jobs in the U.S. — jobs that pay 13% to 18% higher than average. And more than half of the 3.5-million jobs created in Mexico since l995 are connected to trade, giving Mexicans more buying power for goods from both sides of the border and around the globe.
Barriers remain, however. Mexico still bars the sale of used trucks from the U.S. and will continue to do so until 2019 under NAFTA. In the past, Mexicans generally perceived the suspiciously “used” trucks from the U.S. as rolling junk, which they often were. At the moment, heavy-duty used trucks in the U.S. have the greatest buyers’ market in history — a market denied to prospective Mexican customers where the average used truck is early-’80s vintage and older.
As for new U.S. trucks, Mexico has a heavy 20% tariff on medium and heavy trucks. This tariff was supposed to be eliminated under NAFTA, but this has not happened yet. Since NAFTA took effect, U.S. truck manufacturers have opened plants in Mexico. In addition, U.S. truck leasing has been initiated in Mexico and is doing a brisk business under partnership arrangements.
The image of Mexico’s economy once stereotyped by a donkey cart on a sleepy, dusty road alongside a man with a blanket on his shoulder has long since faded. Today’s image is one of trucks delivering goods to a multinational super discount store. The man is very likely a production worker. He wears a “Made in the U.S.A” jacket as he stands with a basket of U.S.-produced food and clothing in the checkout line. The baseball cap on his head reads “NY.” His wage is $5 a day. He dreams of a $5-an-hour job so he can buy that $600 Sony television.
NAFTA is proving that our economy depends on that man’s dream coming true. It’s happening in a borderless market just down the road.