I'm not going into the hole of trying to explain to you why the meat packing business can't move to Mexico.
?? Heard of NAFTA? Of course it can. Get ready to eat some crow!
How old are you really?
Old enough to use Google. Your weak understanding of your own pet peeve increasingly convince me you were on Bush's planning team for post-major combat operations in Iraq.
migration.ucdavis.edu
In the mid-1990s, new competition for U.S. meat packing is on the horizon through competition with Mexico enhanced largely by NAFTA. Even with the major change in U.S. meat packing during the past 15 years, Mexican meat packers have a large potential cost advantage over current U.S. meat packers (see Huffman and Melton 1996; Huffman 1995).
Potential Mexican Competition
U.S. beef packing has attributes that make a significant part of it transferable to Mexico in the long-run. It is labor intensive (accounting for about 50 percent of U.S. packing cost on a value added basis), it uses relatively low-skilled labor, and in the U.S. it remains significantly more unionized. Furthermore, the wage elasticity of packing labor is quite low, and although the capital investment for a new packing plant is large, capital service=s cost share is small (see Melton and Huffman, 1995). Hence, there is a potential cost advantage to meat packing in Mexico relative to the U.S. and a relatively small capital cost is associated with such a transfer. Thus far, Mexico has not had the level of technology, capital, and infrastructure needed to capitalize on its low wage rates in beef processing. However, NAFTA will have effects that extend beyond trade. NAFTA also lowers barriers to capital investments and technology transfers between the countries. In the long-run, these technology transfers could alter the comparative advantage of beef production and processing in ways that affect both the magnitude and direction of trade between the countries.
Cost advantages in beef packing could also be re-enforced by the Mexican leather industry. Whereas Mexico currently imports beef hides to support its leather industry, the U.S. leather industry has declined steadily for over 30 years (i.e., the proportion of hides domestically processed has fallen from about 80 percent in the mid-1960s to less than 30 percent by 1990). Locally available hides would bear less freight cost and thereby increase their relative value to domestic suppliers in Mexico.
Melton and Huffman (1996, 1995) examine potential NAFTA effects on the U.S.-Mexican beef cattle industry under the likely scenario that in the long-run full beef industry technology will be transferred to Mexico. This means that U.S.-Canadian beef cattle genes for larger sized adult animals, cattle finishing in confinement (feedlots) on high energy diets using feed grains and plant protein, and large modern semi-automated U.S.-Canadian type meat packing plants will be transferred to Mexico. Associated with this transfer will be a need for enhanced management skills to make these sectors function efficiently. |
