MCALLEN, RGV – Alex Ávila, a national advisor to INDEX, the maquiladora trade association, says he and other industry leaders are very concerned about Andrés Manuel López Obrador winning next year’s Mexican presidential election.
The leftist populist, who leads the National Regeneration Movement (MORENA) party, is riding high in the opinion polls.
“Who knows who is winning. A lot may depend on how the NAFTA renegotiations go. López Obrador is one of those guys, I don’t want to say like Venezuela, okay, but it is a comparison we can make,” Ávila said.
“We have seen what has happened in Venezuela, they have adopted economic policies that do not work. Talking to some industry people, they are worried about López Obrador. He is the guy we worry about because he would change the stability of the entire Mexican economy. If López Obrador wins, he will change the way Mexico has been run for the last 80 years.
Ávila made his comments in an exclusive interview with the Rio Grande Guardian at INDEX Reynosa’s monthly managers meeting, held at the Cambria Hotel in McAllen on Wednesday evening. Ávila, a former president of INDEX Reynosa, is the second high-profile figure to voice concerns about the outcome of the Mexico presidential election, which takes place July 1, 2018.
At a Border Economic Development & Entrepreneurship Symposium at the Embassy Suites two weeks ago, Robert Kaplan, president of the Federal Reserve Bank of Dallas, said he was concerned that anti-Mexican rhetoric in the United States could impact the election in Mexico.
Asked by Marie T. Mora, associate vice provost for faculty diversity at UT-Rio Grande Valley, about renegotiation of NAFTA, Kaplan said: “My concern is, I think it is a constructive thing for us to be leveling the playing field and renegotiating trade agreements. I think some of these other issues and the rhetoric associated with them, my fear is, when you go to Mexico, they have an election coming up in July of 2018 and I would not want to see a situation where in order to get elected president of Mexico, you need to be anti-America, anti-American.”
Kaplan said the United States has “benefitted enormously” from having “good, solid, relations” with Mexico and countries on our border.
“History has shown that that is not only economically valuable, it is geo-politically valuable. And the only comment I would make is, being down there (Mexico) a lot I am sensitive and concerned about how this (Mexican presidential) election might go and what the geo-political ramifications might be. Maybe more about the rhetoric than anything else. That would be a caution I would have.”
Ávila said the Mexican political landscape had improved in recent weeks thanks to the emergence of José Antonio Meade as the PRI candidate. Meade is seen as an independent, having served in both the Calderón and Peña Nieto administrations.
“The PRI seems to have a good guy, Meade, who has come from nowhere. We were expecting a political career guy, but they have found an independent, a well-known person. Brand new, just came out, came out of nowhere,” Ávila said. “That is good news.”
López Obrador, on the other hand, is a real danger, Ávila said, because he will make big changes. “A lot of things will happen. There would be more instability.”
While the maquiladora industry grew steadily in 2017, next year is “going to be tricky,” Ávila predicted.
“We have political issues, we have NAFTA coming up, the renegotiations. We were in Mexico City two weeks ago talking about NAFTA, whether it would be favorable or unfavorable. Also, we are going to have the Mexican election. It is clearly going to be a transition year. Hopefully, it will not slow the economy. I hope we see, if not growth, then at least stability, economic stability.”
Ávila contrasted the mood of national leaders in the three NAFTA countries – the United States, Mexico, and Canada – today with those in charge when the trade association was created back in the early 1990s.
“We have still not fixed NAFTA. It is still on the table, still in negotiations. Someone walks in, someone walks out, I want this, I want that. When NAFTA was created, the three major players, presidents, prime ministers, they were, ‘we want to do this.’ Now, one wants this, one wants that. They all have different agendas,” Ávila said.
Asked how 2017 has gone for the maquiladora industry, Ávila said there has been growth, despite labor shortages.
“There was a lot instability in the world this year, but we have been growing. We grew double digits in all the industries. Last month was down, but that is down to the holidays.”
Ávila said maquila plant managers have been talking about three things all year.
“Security, that is an issue that is still in our head. No. 2 is the union issue we have. No. 3 is people. We have been growing exponentially but we do not have enough people, to be honest. It has been tough. We have gone from 110,000 to 120,000 and nearly 130,000 employees in Reynosa. It is all about having the right people. It is about getting people that want to work in manufacturing,” he said.
“Now, there are maquila plants in the middle of Mexico. The Occidente-Guadalajara area is growing, Guanajuato is growing really fast. They are keeping a lot of the people. Due to the security issues we have on the border, it does not allow us to get the people we used to have. They are saying, ‘well I can get the same job here, why do I want to move to the border where it is more dangerous?’”
Ávila said the maquiladora industry employs about three million people directly in Mexico. Indirectly, he said it accounts for about six million people, maybe more.
“It keeps growing, as new companies come in, more European companies are coming to Mexico. More Asian-Pacific companies are coming into Mexico. If you ask me, the name of the game is no longer globalization. It is regionalization. And we will see this more when the new NAFTA comes into effect. I think Texas is going to benefit a lot, because of the low costs you have in the United States,” Ávila predicted.
“But, we are facing the same thing the rest of the world is facing – labor. When it comes to manufacturing, labor is missing in the entire world, not just Mexico. It is not seen as a sexy job. But, people want to buy stuff, so you have to manufacture the goods.”
Ávila added: “One of the things we have seen in our sector, electronics, and somewhat in automotive, is the growth is still there, but it has been more stable. Some people are predicting we are going to have a collapse in the economy next year, because it is the perfect combination of too much cash in the market, inflationary pressures, people buying too much stuff, a lot of credit available. A lot of companies growing, a lot of inventories. I hope they are wrong, obviously.”