Back in the 1980s, the U.S. auto industry went through a major upheaval. Foreign automakers started opening up more and more plants in the South, taking advantage of the region’s weaker unions and lower labor costs. That, in turn, undercut the historically dominant position of Detroit and the Midwest.
Now, half a century later, the U.S. auto industry is going through yet another major churn. And this time around, Mexico is the driving force.
That’s one upshot of a new report on the auto industry from the Brookings Institution. The report is ostensibly a case study focused on Tennessee’s automotive sector, but it also offers a glimpse of the way the entire North American auto industry has shifted over the last 20 years.
The big story here is Mexico, which has massively expanded its share of North American auto manufacturing since the North American Free Trade Agreement (NAFTA) in 1994. Automakers from GM to Nissan have been opening plants south of the border, attracted by Mexico’s low wages and dense industrial clusters: