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Will railroads benefit if Ford moves more production to Mexico?
It’s time for the railroads to concentrate on new traffic to and from Mexico but they will have to work for it and earn it. Fluid, seamless operations are called for here. Maybe new rail.
Service consistency is the key to traffic gains (and retention) in the rail transportation industry. Too many times, railroads fall short of customer expectations, then the business goes to the highway.
Toyota is smart to build a plant in Mexico. With the soon demise (I hope) of ISIS and the Taliban, et al, they will have a ready market for their “Tacticals” with the narco traficantes down there.
And we wonder why the US economy sucks with no manufacturing jobs anymore.
The question should be will America benefit if Ford moves more production to Mexico?
The only ones who will benefit are Ferromex and Kansas City Southern de Mexico. Since none of the American and Canadian Class I roads have trackage rights in Mexico, the Mexican Class I roads will have a virtual monopoly, and I don’t think Ferromex will be too keen to grant trackage rights to UP or BNSF.
Ferromex still has to interchange the traffic with BNSF or UP, and ultimately both Ferromex and KCS traffic needs to move on NS or CSX to reach eastern markets, and with CN or CP to reach Canadian markets. Some of these markets would be served by truck if the plants were in the US.
Now if NS were to make a bid for KCS they could offer single line service. Of course, it would be up to them to see that this single line service is an improvement over current service. Such a move could also make things more difficult for CP.
James H and Thomas D bring up some great points about the rail traffic. The manufacturing base in central Mexico also has direct single rail provider to ever expanding and improving Mexican gulf coast ports which will be needed as Mexico expands into Latin & South American markets. Shipping to East Coast via water is a legitimate competitor.
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As far as renaming the title. NAFTA and free trade has undoubtly created winners and losers. US probably has had on of the longest stretches of very low or zero inflation on material goods because of it. A benefit to consumer. At same time a big hit on the well paying unionized blue collar worker. But lets not forget the huge number and still expanding presence of Southeast US auto manufacturing. For autos the biggest loser in all this is Canada by far whose dwindling market share went straight to Mexico.
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But back to the railroads, specifically NS and CSX. East Coast railroads need to make runs at CP, CN, KCS and or FEC or all the above. Market forces are changing and so far they haven’t made the drastic cuts to compete against trucks on East Coast lanes. I believe both NS and CSX need to extend their market and rail reach and can’t understand why neither one of them go after KCS as hard as Hunter went after NS. Adding KCS access to gulf chemical coast, gulf coast ports and expanding Mexican manufacturing base with NS or CSX access to large metro/consumers areas from Chicago to Atlanta to Washington/Baltimore/Philly/NY & Boston makes way too much sense in my mind
Timothy Ekren, the reason no one is pursuing KCS probably has to do with the amount and type of debt the KCS has. I think that debt is more frightening to other RRs and their leadership, than us rail fans can understand. The debt is pretty substantial if I’m reading it correctly.
I don’t know about the rest of you, but I don’t think I’d feel safe driving a car made by people being paid wages below that of US’ minimum wage, and that after all is why they moved to Mexico, to get away from paying decent wages. I owned a 57 Ford , that was a great car. Ford no longer produces cars of that quality, so, in all fairness I doubt if the Mexican made Ford will have that much appeal in this country, especially when thy begin to be recalled as Toyota was. I wouldn’t worry about laying down extra tracks to the border, unless they talk about building a wall and construction materials are needed.
No kidding. $1 per hour guys aren’t making good things. They’re making junk.
Railroads will not be the beneficiaries of Vehicles produced in Mexico. The US and Canadian manufactures will experience a decline in equipment supply and the Trucking Industry will eat itself up by taking longer hauls and equally longer empty moves to return their equipment to the production facilities. Amazingly, the Manufacturers will only gain in lower wages. The equipment supply for automotive is controlled by the US rail carriers, with the CSXT and UP being the largest owners of equipment, all of which is the WRONG type to handle vehicles efficiently. Railroad equipment purchase experts ??? feel that continuing with a railcar design that is 67 years old is efficient. The rail shippers requested and demanded a new convince in the early 1990’s and the Automax was born. The ONLY railcar that is designed to reduce or eliminate empty miles by being capable of handling 95% of any vehicles manufactured without any modifications to its structure. /the magnanimous railroads gave the shippers what they wanted,the same thing they have had for the past 67 years, the bi and try levels of ancient times. Railroads are bent on exiting the vehicle market as tier are 50% less equipment supplies. ^9% of the existing supply is out of date and requires special relief to still be in service. The added mileage to supply a country that is basically coexistent. Where is the equipment supposed to come from? Railroads are stuck in the 50’s with the dinosaurs and can’t see their way out of the quagmire. .Auto Transport trucks are modified and yearly and retired in less than 8 years as they become too expensive to maintain Railcars don’t even get new lipstick. Yes, truck hunting is still a problem and deck compatibility is non existent as the deck heights are all “NOMINAL”. It seem like the railroad sales experts are lost in the para diem that says that bi levels are for trucks and try levels are for auto. Incidentally, when they run out of try levels they can charge the desperate shippers a
it seems a little parochial to weigh the loss of thousands of American jobs as to w hether or not railroads will make money or not. I realize your a railroad magazine ,but still.
how would you feel if the railroads used Mexican traincrews for through runs to trucking distribution points? UP is doing the opposite version of thisat their loadind facility in San Theresa nm now.also one has to wonder why be wont these carsbe sold cheaper.
Two posts down a man says the $1 an hour Mexicans will be making junk. I bought a new Chevy in 1976 made by Americans making 5 times as much money as I was, and it was the worst piece of crap I ever owned, new or used.
Mexican auto workers make $4 and up.
I simply will not buy a car manufactured in Mexico no matter how it is transported over the border, period !
The retail price of vehicles is determined by the demand for the cars in the U.S. It doesn’t matter if Ford is paying only 25 cents per hour. The car will still cost $32,000 because that is what an American is willing to pay for it. Every dollar Ford pays a worker in Mexico is a dollar not going in to the Detroit economy. NAFTA was a bad idea and it is making our country poorer. I recently bought a Ford made in Mexico and it is just like any other Ford. It is an American product assembled by foreign labor.
I bought a new car in 2009. My Mexican made Ford Fusion has more American parts in it than the St Paul made Ford Ranger that I considered. Don’t know if that is still the case…American parts in a Mexican assembled car.
I’m sure Donald Trump would have something to say about THIS!