We’re moving into a whole new paradigm in the labor market. For years now we’ve been reporting on US labor shortages caused by too many baby boomers retiring and not enough children being born to replace them. Logically, if there isn’t enough labor and regulations in the U.S. are too cumbersome, companies choose to move production to other nearby countries like Mexico. Problem solved right?
In a word no. The labor problem may have temporarily been solved but give it enough time and enough time, eventually you’ll run out of other people’s labor.
From Bezinga:
The world’s largest automaker, which aims to produce 10 million vehicles this year, saw production halted for 19 days, according to a report from Reuters.
In addition to labor shortages, technical problems at the Tijuana plant, where the Tacoma pick-up truck is manufactured, also contributed to the delays.
The disruptions highlight a critical vulnerability for Toyota as it struggles to maintain smooth operations amid these challenges.
Source: Bezinga.com
It appears Mexico is running out of workers and there is a cascading effect impacting suppliers all the way back to Japan.
Meanwhile back in the U.S. a big vote for Mercedes plant in Alabama to unionize but there seem to be plans to unionize them all.
The net result of unionization and labor shortages in Mexico can be distilled to one thing: inflation.
Ultimately, we believe inflation will roar back up despite all the recent celebrations of a positively high 3.4% inflation rate for April. Stay tuned, stay profitable and stay solvent…