A friend whose specialty is supply chain stuff remarked to me that the industrial labor rate in Mexico is in the range of 1.65 to 2.25 USD/hr-for a 48 hour work week. This is cheaper than the Chinese rate -even before transportation, duties, etc. are factored in.
My thoughts:
Labor rates at GE-Texas and PR- Muncie could be viewed as downright expensive by comparison to Mexico.
GE Aircraft Engines has a large presence in Mexico, over 1000 employees. One has to wonder if beginning to move the loco business south of the border was politically tenable at this time.
It appears than sooner than later, less of the manufacturing equity for domestic locos will remain in Erie compared to EMD and their domestic production.
Perhaps EMD has regained their historical role as the low-cost producer.
If so, one would expect some additional flexibility in terms of pricing,i.e., ability to undercut the competition.
btw, the progressive station assembly line shown in Texas was used at the(years ago) modernized Alco plant and GMD London.
And it is true that EMD subcontracted a lot of assembly work to a fabricator in Mexico (San Luis Potasi, was part of N De M don’t know who owns it now).
However, since Cat/Progress rail acquired EMD that work seems to have shifted To EMD’s new Indiana plant so maybe dirt cheap laboe isn’t everything…
EMD is building locomotives in Mexico at Bombardier’s Sahagun plant.
An interesting side note to that is that the FRA has mandated that windshields withstand a bullet from a 22 rifle. This is why you see most cabooses have plated windows in transfer service, as it would cost too much to replace them.
That said, TFM apparently put 1034 in a boxcar body to protect it…
I looked at the picture carefully and came to the conclusion that TFM 1034 is actually on the track behind the boxcar.
I am also convinced that the real reason that Cat opened its Muncie plant and GE opened the Fort Worth plant was to reduce labor costs (union-busting).
I looked at the picture and concluded ‘sideswipe’. Note how the boxcar appears to have no trucks, you can see daylight through the roof, and the visible hood portion of 1034 is WAY too close to the visible side of the boxcar.
Sorry for the drift. One other thing to look at with plant relocation is local incentives – free or low-cost land, PILOT or other tax abatement/forgiveness, etc.
Labor costs may certainly have something to do with it, as might particular state regulations on things like workmen’s compensation, at-will employment, or right-to-work/open shop policies.
Couldn’t agree more about local incentives. My point was that it is hard for a US manufacturer to compete with third-world labor rates-and all that goes with them.