Economic Experience of Mexico since North American Free

Economic Experience of Mexico since North American Free Trade Agreement Essay The Mexican automotive industry has undergone a lot of changes since the signing of the North American Free Trade Agreement (NAFTA). Initially this industry was dominated by US assemblers and parts producers. Policies instituted by the Mexican government affected the industry. US automakers in Mexico purchased large quantities of raw materials for vehicle manufacturing from Mexican owned suppliers. These in many times did not meet internationally set standards in terms of quality and price. Many companies therefore like Acme motors operated inefficiently producing substandard vehicles. These constrained the export of vehicles to the US. (World Bank, 2000) NAFTA helped change the setup to rescue the automotive industry in Mexico. This benefited Acme motor company. The highly protected automotive market opened up allowing Acme to consolidate production across borders. The industrial restructuring has permitted Acme to enhance its competitiveness directing its massive production to meet the ever growing market abroad especially in North America. NAFTA has therefore enabled Acme to identify production sites based on business factors rather than trade barriers. (Adkisson, 2000). Since the industrial streamlining in Mexico, Acme has adopted new millennium vision to become an international firm and the world’s lowest-cost volume producer of super-quality vehicles. The company’s management strategy has enabled production of better vehicles, increase in global market share, increased profits and developed reputations internationally. Acme has since reduced its engineering personnel by over 29% decreasing the labor costs. The company also currently uses one process to develop cars. This is a different strategy since initially different engineering centers operated under varied processes. (Randall, 1996) From the year 2000, Acme has constructed an over 5 billion dollars facility in Mexico. The firm produces a new line of engines with high performance ratings for their efficient power train system. They include Auto turbo engines and V-8 Quattro engines. The company produces around half a million engines per year each type. This has enabled the company to increase efficiency and reduce freight cost per unit by over 50% . Industrial growth contributes to around 25% of Mexico’s GDP. Acme motors contributes a lot to the country’s economy. Mexico has since become one of the most open countries in the world of trade allowing access from various countries like USA, Canada, Europe and others. The trade liberalization has enabled the industry to grow and Acme has benefited much. The good relationship that Mexico enjoys with international organizations like IMF and World Bank has helped to develop various economic sectors like industrialization. The World Bank stands ready always to assist Mexican authority in implementing their policies. The Bank mobilizes resources to support Mexico’s effort in policy design and implementation and Acme is a beneficiary. There is more trade liberalization in Mexico and workers’ rights are protected. Acme has been in the forefront in implementing the workers rights leading to improved productivity. The country has a close relationship with members of World Trade Organization. This offers more economic grounds for Acme to find ready market for its products. Acme’s economic contribution has been instrumental in Mexico. NAFTA has therefore led to massive economic transformation in Mexico. The Mexican industrial set up led by Acme motor company has since grown to greater heights. This has led to a general development of the country’s economy. Acme is the major economic contributor in Mexico.