Month: February 2014


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Was that El Chapo really El Chapo? The Mexican authorities have set out to prove it to the world.

Photo: Mexican newspapers, Feb. 26th. [RF]



Originally published at

With ‘El Chapo’ gone, Mexicans brace for drug cartel turf war

Along with the fear of more violence, some worry about the economic fallout of the arrest of Joaquin Guzman, whose operation pumped billions into Sinaloa state.

By Richard Fausset and Tracy Wilkinson
February 24, 2014, 7:38 p.m.

BADIRAGUATO, Mexico — Now that the Mexican government has nabbed the country’s most-wanted drug lord, Fernando Antonio Robles is worried about the future.

Robles is a 16-year-old bricklayer’s apprentice in the wild drug-producing municipality where Joaquin “El Chapo” Guzman grew up. In this hardscrabble patch of mountainous Sinaloa state, more than 74% of the people live in poverty. And yet the tiny county seat is full of fine new, freshly painted houses.

Robles knows that many of them were built by El Chapo’s men.

“A lot of people are going to be unemployed,” Robles said while loitering with a friend on the handsome town square, “because a lot of people worked for him.”

The arrest of Guzman on Saturday in the resort city of Mazatlan, a few hours’ drive and a world away from Badiraguato, was greeted with delight by the Mexican government. President Enrique Peña Nieto is hoping to show the world that he can fight a better war on drugs by relying, as he said Monday, more on “the application of technology and information analysis” than the sheer military muscle deployed by his predecessor, Felipe Calderon.

But many Mexicans are less euphoric about the capture of Guzman. The drug business has long been a main driver of Sinaloa’s economy. Here in the heart of El Chapo’s worldwide empire, many see him as a sympathetic character whose operation pumped billions of dollars into the state.

“He’s helped a lot of people,” said Jesus Gonzalez, the caretaker of a famous chapel honoring Jesus Malverde, an unofficial “folk saint” for the poor — and for drug dealers. According to legend, Malverde, who died in the early 20th century, was, like Guzman, a bandit who spread his wealth around. Guzman “has given out a lot of money,” said Gonzalez. “He’s built many things.”

The less controversial, but more widely held, opinion is that Guzman’s fall could lead to bloody turf and succession battles while doing little to interrupt the broad market forces that define the worldwide drug market and Mexico’s key role in it.

“The triumph of the Peña government in detaining El Chapo shouldn’t be underestimated,” Leo Zuckermann, a columnist for the Mexico City newspaper Excelsior, wrote Monday. “But the question that should interest us more is whether the arrest will help stop the violence in this country or not. I fear that the answer isn’t promising. In fact, the opposite could happen — that is to say, that there will be an increase in homicides, kidnappings and extortion in the short run.”

A power struggle may ensue within Guzman’s Sinaloa cartel, especially if it is revealed that Ismael “El Mayo” Zambada, Guzman’s top partner, gave him up — as some Mexicans suspect.

Such an internal war could disrupt the earning power of the men who commission those new houses in Badiraguato — and in the process hurt the economic prospects of workers like Robles.

But the Sinaloa cartel may also prove to be an exception to the rule. The largest of Mexico’s drug cartels, it has long been considered one of the most sophisticated and well managed. Some close observers assume that Guzman and other leaders had worked out a succession plan as smooth as Apple’s after the death of Steve Jobs. Guzman and Zambada worked together closely and are not likely to unleash their men against each other, these sources say.

The next generation is primed to pick up where El Chapo left off. Guzman’s “children are poised to take over for him,” said Ismael Bojorquez, editor of Culiacan’s Riodoce newspaper who has studied the Sinaloa cartel extensively. Zambada and the other main Sinaloa cartel leader, Juan Jose Esparragoza, known as “El Azul,” are firmly in control of their factions and do not need to seize Guzman’s portion of the operation, Bojorquez said.

Peña Nieto’s team expressed concern about the fragmentation of leaderless cartels soon after the new president took office in December 2012. Interior Minister Miguel Angel Osorio Chong said that the Calderon administration’s “kingpin strategy” — focusing on the capture or slaying of the nation’s top drug lords — resulted in smaller groups that were “more violent and much more dangerous,” often branching out into extortion, kidnapping and robbery rackets.

Succession battles are also believed to have added to Mexico’s recent violence. The killing of Arturo Beltran Leyva in Cuernavaca in December 2009, for instance, unleashed a bloody power struggle among his lieutenants.

Despite the new government’s criticism of the strategy, however, few expected Peña Nieto to abandon it, particularly since that would mean rebuffing American security officials who often supply intelligence on the whereabouts of the capos. The United States’ ability to track Guzman’s satellite phone use was a key to his arrest.

The future of the cartel was the chief topic of debate Monday among residents of Culiacan, a city of 600,000 people.

The cartel’s influence is all-pervasive here: A well-tended cross covered in balloons is displayed prominently in front of a busy shopping mall, commemorating the 2008 slaying of Guzman’s son Edgar Guzman Lopez. The businesses in the mall are apparently too intimidated to argue with its presence. In the leafy town square, conversations with a stranger are often left to trail off when a speaker thinks a cartel spy might be nearby.

Taxi driver Jesus Luis Caldera, 36, predicted the cartel would weather the loss of Guzman. “It’s going to be the same movie — only with different capos,” said Caldera, who said he used to move cocaine for the cartel until he went to prison for it.

Armando Sanchez, 28, the manager of an electronics company from the state of Guanajuato, was playing curious tourist Sunday afternoon at the Malverde shrine. He worried that Guzman’s death might give rival groups — particularly the bloodthirsty Zetas gang — a chance to muscle their way onto Sinaloa cartel territory.

“We’re going to see a lot of fighting for control,” he said.

Guzman may be locked away, but there is still anxiety that the vast machine that has protected him over the years remains intact. The Culiacan newspaper Noroeste reported Monday that it received threatening phone calls after it contacted Mazatlan’s government offices to inquire about reports that municipal police there had been protecting El Chapo.

Guzman’s 13 years of life on the run had its share of hardships: Mexican officials said he avoided arrest last week at a house in Culiacan by escaping through a series of underground drainage canals.

But he was also apparently intent on creating a semblance of a normal life. On Monday, Osorio Chong said that Guzman was with his wife, a former beauty queen named Emma Coronel, and the couple’s young twin girls, when he was arrested. Osorio Chong said that the wife and children were not detained because “they had absolutely nothing to do with respect to the actions of the criminal.”

In the mountain town of Badiraguato — about 50 miles north of Culiacan along a two-lane road controlled by heavily armed police checking up on who might want to visit there — Joaquin Guzman is still the local boy made good. A store selling pirated CDs was stocked with music singing his praises.

“They want to see him dead, but they can’t,” one tune declared. “The cartel is big, it’s blowing up / I’m proud of Chapo Guzman.”

As word of Guzman’s arrest spread, many locals didn’t buy it at first, preferring to believe it was a complicated ruse on the part of the Americans, said Pedro Perez, 45, a worker at an ice cream store.

Others, like Culiacan resident Rodolfo Albertos, 58, see no conspiracy. When it comes to the drug trade, he said, the forces that will continue to shape it are as clear as day — whether “El Chapo” is around or not.

“This isn’t going to stop,” Albertos said. “Not so long as there are consumers. As long as there are consumers, there’s going to be business.”

Cecilia Sanchez of The Times’ Mexico City bureau contributed to this report.

Copyright © 2014, Los Angeles Times

Photo: From the bowels of eBay. 


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Originally published at

Mexican drug lord hid in mountains, homes, sewers

Joaquin ‘El Chapo’ Guzman once reportedly escaped pursuers through a bathtub. In the end, a satellite phone call gave him away.


By Tracy Wilkinson, Richard A. Serrano and Richard Fausset
February 23, 2014, 10:38 p.m.


CULIACAN, Mexico — The residence where Mexican drug lord Joaquin “El Chapo” Guzman apparently had been hiding is a tidy, whitewashed house with spike-topped wrought iron fencing, a heavy metal door and blackened windows.

It sits across from a high school and is surrounded by drainage canals that may have been part of a system officials said Guzman used as both a means of escape and to access a network of other homes.

Guzman was nothing if not discreet. “I thought the house was empty,” a neighbor told The Times on Sunday.

Guzman’s famous Houdini-style string of getaways ended early Saturday when Mexican marines, acting on U.S. intelligence, tracked him to an apartment just over 100 miles to the south in the seaside resort of Mazatlan. He had made a crucial mistake, sources said, using a satellite phone that eventually helped pinpoint his location.

He reportedly was sleeping with an AK-47 assault rifle but did not have time to grab it before the marines overpowered him in the predawn operation.

Guzman, one of the world’s leading drug traffickers and Mexico’s most-wanted billionaire fugitive, spent his first full day in an underground cell on Sunday at a maximum-security prison with other alleged traffickers with names like The Hummer.

Now in his mid-50s, he had eluded arrest for such a long time that he gained folk hero status. It is widely suspected that he paid off military, police and government officials to remain free while he steadily built his heroin, cocaine and marijuana empire.

The series of operations that finally ended in his arrest began in the second week of February, according to Mexican officials and Americans from the Drug Enforcement Administration and the Marshal’s Service.

Mexican authorities captured a lieutenant to Guzman’s right-hand man, Ismael “El Mayo” Zambada, and confiscated a collection of cellular telephones, the sources said. Starting in mid-February — days ahead of a state visit to Mexico by President Obama — Mexican marines staged a series of raids on numerous properties in Culiacan, hot on Guzman’s trail, said the sources, who requested anonymity because they were not authorized to speak to the media about the pursuit.

The phones led to two top henchmen in his operation, with code names El 19 and El 20. On Feb. 17, marines descended on the whitewashed house in Culiacan, the capital of Sinaloa state, birthplace of his powerful cartel. Guzman apparently barely escaped. Neighbors said the military staked out the place for two days.

But that’s when Guzman used the satellite phone, and U.S. intelligence agents were able to nail down its location.

“We could triangulate him, follow him wherever his phones were used,” one U.S. official told The Times.

Michael S. Vigil, a former top DEA official who had been briefed on the capture, confirmed that agents used a triangulation system to find Guzman, similar to what was employed in the 1993 pursuit and killing of Colombian kingpin Pablo Escobar. “But today the technology is first rate,” he said. “You can track someone within [7 1/2 yards] anywhere in the world.”

As Mexican and undercover U.S. agents raided the properties in Culiacan, they discovered a network of homes with steel-reinforced doors and hidden tunnels that led underground and sometimes through the city’s sewer system. They learned that Guzman was always a step ahead of them, however, disappearing down the tunnels before the authorities arrived.

Last week, there were unconfirmed reports that Guzman and Zambada were in Culiacan for a family party. He typically felt so “untouchable” that showing up in the state capital would not be out of the question.

Interrogating those being arrested, and using the phone tracking devices, the U.S. and Mexicans’ search for Guzman took them to a resort hotel in Mazatlan. At the same time, one of the key detainees began to talk and served as an informant to describe how Guzman had lately been venturing down from his nearby mountain hide-out.

“He was going through these tunnels and sewers, and we knew he was in Sinaloa country,” said one U.S. official. “The investigation lasted about a month, with Chapo living in a half-dozen houses and skirting between.

“He might have started to feel he’d be safer in jail than being on the run. The Zetas were hunting for him too,” said the official, referring to a rival drug cartel.

Residents at the seaside Miramar apartment complex in Mazatlan noticed a black-haired, mustachioed man moving in at midweek. They didn’t think much of it. Mazatlan sees lots of comings and goings, including an enormous population of wintering Americans and Canadians.

On Saturday, a little before 4 a.m., several dozen Mexican marines and other agents wearing black ski masks surrounded the 11-story Miramar apartment complex. They moved quickly to the fourth floor and found Guzman in an apartment there. They also raided an apartment on the fifth floor.

No shots were fired. By about 6:30 a.m., four men, three women and a baby were arrested with Guzman, who was quickly placed in a helicopter and taken to Mexico City, where he was paraded briefly before reporters.

Vigil said Guzman was sound asleep in bed, wearing just pants and no shirt, when he and his girlfriend were awakened as agents burst into the apartment.

“He was stoic. He didn’t say anything,” said Vigil, the DEA’s former special agent in charge in San Diego and the Caribbean, who also oversaw international operations. “He knew it was over.”

Guzman was “tired” of living in the mountains and “made a fatal mistake” of moving into the Culiacan and Mazatlan areas, Vigil said. “Those mountains are remote. I’ve been there. No TV. No entertainment. If you had millions and millions of dollars, you’d want some basic comforts.”

Vigil also said that Guzman had started traveling with just one or two bodyguards, so as not to raise suspicions about himself. “He was trying to get under the radar.”

Vigil described how several weeks ago when officials thought they were close to snatching the Sinaloa cartel leader, he vanished down an escape hatch in the bottom of a bathtub and fled through the sewers. “He knew how to get away.”

DEA agents have long said finding Guzman was not as difficult as making the decision to capture him. Given the possibility he might have been heavily protected, such an operation could have led to a bloodbath that no one wanted, DEA officials told The Times.

It remains unclear why President Enrique Peña Nieto, who generally has not wanted to confront cartel leaders the way his predecessor did, authorized the operation to capture Guzman.

Some Mexican commentators suggested that the president, facing low domestic approval ratings in the polls, was looking for a way to demonstrate his dedication to security issues. Capturing Guzman, by far the top prize in a drug war that has claimed tens of thousands of lives, would serve to counter rumors that Peña Nieto was soft on the Sinaloa cartel and had made a deal of convenience with Guzman.

It is also possible, several experts suggested, that the capture of Guzman was handed to the president as a fait accompli, given how successful the Mexican marines have been. More than the rest of the Mexican military, they work most closely with their U.S. counterparts and have been credited with some of the most important victories in the drug war.

“Peña Nieto does not focus on security the way [previous President Felipe] Calderon did,” said George Grayson, an expert on the Mexican drug war at the College of William & Mary in Virginia. “The Mexican navy has gotten very good at this — phone eavesdropping, drones — with U.S. cooperation, and I don’t think Peña Nieto” was controlling the operation.

Guzman has long been wanted by U.S. authorities, who offered a $5-million bounty for information leading to his capture.

Vigil said the Department of Justice will soon decide on the best venue for prosecuting Guzman in the U.S. — Chicago, San Diego or El Paso — to get him the harshest sentence possible. But he doubted that Peña Nieto’s government would be in a hurry to turn him over.

“He’s basically a human trophy,” he said, “the crown jewel of the new presidential administration.”

Wilkinson reported from Mexico City, Serrano from Washington and Fausset from Culiacan. Times news assistant Cecilia Sanchez in Mexico City contributed to this report.

Copyright © 2014, Los Angeles Times

Photo: Reading about the fall of the capo in downtown Culiacan, Sinaloa, Monday, Feb. 24, 2014. [RF]




Originally published at

‘El Chapo’ Guzman: Life of the cartel king of Sinaloa

By Richard Fausset and Tracy Wilkinson
February 22, 2014, 2:04 p.m.

MEXICO CITY — From his naming on the Forbes magazine list of the world’s richest billionaires, to his frequent supposed sightings and magical escapes, Joaquin “El Chapo” Guzman has been a larger-than-life drug lord who reached mythical proportions in Mexican “narco” folklore.

He rose from a simple low-level trafficker from Sinaloa, the cradle of Mexico’s opium and marijuana trade, to become the nation’s most powerful and most elusive fugitive.

For Mexicans, the capture of Guzman, reported Saturday to have occurred in a joint operation by Mexican marines and U.S. federal agents in the Sinaloan coastal city of Mazatlan, is somewhat akin to Colombia’s killing of Pablo Escobar — or even the U.S. elimination of Osama bin Laden.

His luxurious life on the run was the stuff of legend. More than once, he was reported to have entered a fancy restaurant, ordered cellphones confiscated, dined lavishly, then picked up everyone’s check.

So apparently untouchable was he, that his young beauty queen wife traveled uncontested by authorities to Los Angeles to give birth to twin girls in 2011.

In recent years, Guzman extended the operations of his Sinaloa cartel to an estimated 50 countries across Latin America, Africa and Europe, even hooking up with one of the most notorious Italian mafias, the ‘Ndrangheta.

“This gives us the dimension of who was ‘El Chapo’ Guzman,” said Jose Reveles, author of several books on Mexican drug-trafficking.

Given Guzman’s folk hero status, the constant rumors of his presence across borders and time zones, and his ability to bribe local officials to look the other way, it was difficult for some officials not to accord Guzman a grudging respect.

Guillermo Valdes, the former head of Mexico’s National Security and Investigation Center who authored a book on his country’s drug trade, called Guzman an exceptional leader — a “business genius.”

“I think that ‘El Chapo’ is a person with a leadership capacity and a strategic vision that the other narcos don’t have, and they recognize that,” Valdes told the Spanish newspaper El Pais. “He’s a very intelligent person, with a great capacity for listening. With a great ability to seduce people, as well as a large imagination … and creativity.”

The U.S. government offered a reward of up to $5 million for information leading to his arrest. The Mexican government was offering a reward of 30 million pesos, or about $2.3 million. There were many reported near-misses, including a supposed appearance in Baja California in 2012, days before Secretary of State Hillary Clinton was in the region.

There is some disagreement over Guzman’s actual birth date, but the U.S. State Department puts it at Dec. 25, 1954, making him 59 years old. Interpol lists him as 56. The U.S. government lists him at 5-foot-8 and 165 pounds, but others say he is about 5-foot-6, hence his nickname “El Chapo,” or “Shorty.”

To many Mexicans, guessing Guzman’s whereabouts had become a popular and macabre parlor game — a kind of cartel “Where’s Waldo?” Mexican security officials, meanwhile, conducted numerous searches in vain, contributing to the mystique of bad man as wily trickster–and burnishing his reputation as a folk antihero.

A popular narco-corrido, or song glorifying the drug world, by a Mexican group called Los Buitres (The Vultures), captured the life that so many here assumed Guzman he was living, and the legend that had grown up around him:

“He sleeps at times in homes,” the song goes

“…at times in tents

Radio and rifle at the foot

of the bed

Sometimes his roof is a cave.

Guzman does seem to be everywhere.”

Many other Mexicans not seduced by Guzman’s outlaw image still believed that the Sinaloa cartel was a “businesslike” operation that didn’t prey upon innocents as much as other cartels like the Knights Templar, famous for their extensive extortion racket in the state of Michoacan; or the Zetas gang, who have terrorized regular people with extortion, kidnapping, human trafficking, and a penchant for killing that seems, at times, to be unmoored from any sort of human scruples.

Yet it was Guzman’s decision to move into territory controlled by those other groups that led to some of the most bloody fighting in the last three years in states that had until then been relatively peaceful.

Guzman was born in Badiraguato, an isolated municipality in Sinaloa, the Pacific Coast state notorious for its untameable badlands and multi-generational web of drug producers and smugglers. He grew up poor, working on his grandfather’s farm, and was reportedly adamant about never returning to the life of a Mexican peasant.

A former mistress, Zulema Hernandez, told writer Julio Scherer that Guzman was kicked out of the house by an abusive father. He is believed to have left school after the third grade.

Like many in Sinaloa, Guzman had family members with connections to the drug trade. In his case, it was Pedro Avila Perez, a founder of the Sinaloa cartel, which had long grown and distributed Mexican marijuana and heroin, but by the 1980s branched out into smuggling Colombian cocaine into the U.S.

Guzman got his start overseeing drug production on local farms. He then began handling the planes, boats and trucks used to smuggle the South American cocaine into Mexico.

By 1989, deaths and arrests, plus good luck and ambition, had put El Chapo and his cousin, Hector Palma, at the top of the sector of the cartel that moved as much as 24 tons of cocaine into the U.S. each month. But Guzman’s power was challenged by a faction led by the Arellano Felix family, based in Tijuana. Guzman sent dozens of gunmen to attack the Arellanos at a party in Puerto Vallarta in 1992, killing nine people.

Two years later, the Arellanos sent gunmen to ambush El Chapo at the Guadalajara airport, but instead killed the cardinal of Guadalajara, Juan Jesus Posadas Ocampo. Much about the shooting remains unclear, but one theory holds that the bishop was mistaken for Guzman.

The death of the bishop sent shock waves throughout Mexico and beyond. The Mexican government had long been viewed as lax in its punishment of drug lords, if not occasionally complicit with them, particularly with El Chapo, who was said to enjoy protection from some of the country’s top law enforcement officials.

At that time, public pressure forced the government to crack down. Guzman was arrested in Guatemala a couple of weeks after the shooting.

He was transferred to a maximum security federal prison in Guadalajara, where he lived comfortably. But when faced with extradition to the U.S., he apparently decided to flee.

On Jan. 19, 2001, according to the State Department, Guzman escaped from the prison “allegedly with the assistance of prison officials.”

The U.S. government summarized the next chapter of his life bluntly: “While on the run from Mexican authorities,” says the official profile on the State Department’s Narcotics Reward Program website, “Guzman-Loera has reestablished himself as a high-ranking member of the Mexican drug trade.”

He emerged, apparently, as a wizened, battle-tested CEO eager to prove he was still on top of his game. As the Mexican federal government got more serious about fighting the drug war, he relied more on corrupt local officials for protection. He created a mobile stealth operation, and probably benefited from the largess of wealthy Colombian traffickers who saw his operation as the most stable and well-managed of the Mexican cartels.

In the late 1990s, he is believed to have added methamphetamine to the Sinaloa gang’s portfolio, arranging the shipment of precursor chemicals from Asia to Mexico’s Pacific Coast, and setting up mega-labs for meth production throughout rural Mexico.

Guzman’s unbridled ambition and lust for expansion brought predictable, and tragic, clashes with other big-money, big-ego drug lords, and was a key driver of the bloody nightmare that plagued the country during the six-year term of Mexican President Felipe Calderon, from 2006 to 2012, and continues to plague it, to some extent, today.

Guzman’s desire to control the drug transit route through the city of Juarez was the likely reason for the 2004 assassination of Rodolfo Carrillo Fuentes, the head of the Juárez cartel, which had formerly lorded over the city. The slaying unleashed a long and bloody struggle for that city. Guzman would later clash with his former allies in the Beltran Leyva drug organization, and engage in a brutal war for territorial control with the paramilitary drug group known as the Zetas.

The fight to stay at the top came at a tremendous personal cost for El Chapo. Year after year, friends, family and associates were killed by drug-world rivals, or in shootouts with police and the military, or arrested and sometimes extradited to the United States.

The prize was unfathomable wealth, and an empire that extended into hundreds of U.S. cities, and into lucrative drug markets in Europe and Asia. His influence, it seemed, was everywhere: In February of last year, the Chicago Crime Commission declared Guzman to be “Public Enemy No. 1,” for the drugs he was believed to be pumping into the crime-ridden metropolis, even though he probably never set foot in the place.

Cecilia Sanchez of the Times’ Mexico City bureau contributed to this report.

Copyright © 2014, Los Angeles Times

Photo: The living room of the unit at the Mira Mar condo complex where it is believed Joaquin “El Chapo” Guzman, the most wanted drug lord in Mexico and a multi-billionaire fugitive, was captured during a raid at dawn on Saturday. (Don Bartletti / Los Angeles Times / February 22, 2014, via LA Times)


Mexico becoming a driving force in auto production


Originally published at

Mexico becoming a driving force in auto production

Mexico accounts for about 18% of North American auto production, and auto industry employment there has soared 46% to about 580,000 jobs since 2009.

By Jerry Hirsch and Richard Fausset
February 22, 2014, 5:00 a.m.

The first Honda Fit rolled off the assembly line Friday at a new $800-million factory near Celaya, Mexico, a symbol of the growing might of the country’s auto industry.

Honda’s U.S. factories spit out hundreds of thousands of Accords and Civics each year. But when the automaker redesigned the Fit for North America, it turned to Mexico for an increasingly skilled workforce and favorable export rules.

Mexico already accounts for about 18% of North American auto production, but that’s expected to jump to 25% by 2020 as automakers pour billion of dollars into factories, said Joe Langley, an analyst at IHS Automotive. The nation has joined Germany, Japan and the U.S as one of the heavyweights of auto production, he said.

U.S. auto factories have also kicked into a higher gear since the recession as auto sales have rebounded. But Mexico’s plants are adding jobs and production even more quickly.

Mexico’s auto industry employment has soared 46% to about 580,000 jobs since 2009, according to the Brookings Institution. U.S. auto employment has gained 16% in the same period.

Other U.S. manufacturers — especially high-value industries such as aerospace and electronics — also will see new competition from Mexico’s industrial ascendance, said Mark Muro, a policy analyst at the Brookings Institution.

Mexico is also positioning itself as a global player in high-tech manufacturing. The nation’s federal government boasts that more than 100,000 Mexicans graduate each year prepared for careers in engineering and technology. The aerospace industry in particular has boomed, with exports of more than $5 billion in 2012, a 16% increase over 2011.

Companies such as General Electric and Honeywell develop new turbines in Mexico, and numerous companies build engines in relatively new high-tech centers such as Queretaro in the central Mexican region known as El Bajio. Aircraft company Bombardier has rapidly ramped up production in Mexico, where it now builds major aircraft components.

But the auto industry is leading the charge, with low wages, high productivity and high quality, said Harley Shaiken, a UC Berkeley labor professor.

“The auto industry is critical, because it is among the most sophisticated of manufacturing technologies,” he said. “If you can build a Honda Fit, then almost all other manufacturing is vulnerable.”

Southern U.S. states have in recent years lured many new auto plants with lower wages and other enticements. But labor costs in the U.S. are now leveling out, Muro said.

“Mexico is the new South — the low-cost alternative,” Muro said.

Nowhere is this more evident than in auto production, driven by free-trade agreements and an export push to Europe, the U.S. and Latin America, said James Rubenstein, an auto industry analyst and geography professor at Miami University in Oxford, Ohio.

“Mexico is hot, hot, hot right now,” Rubenstein said. “While trade agreements are a controversial issue in the U.S., Mexico has embraced it fully, and it is now very easy to export out of Mexico.”

Mexico has a network of 11 free-trade agreements covering 44 countries, many in Europe and North and South America, according to the Mexican government. Mexican autoworkers earn about $8 an hour, according to the Center for Automotive Research, compared with the U.S. average of $37.

But American manufacturers would be mistaken to think Mexico’s growth relies solely on low wages, Muro said.

“You can’t compete solely on labor costs,” he said. “Mexico is developing a good supply chain and a good enough technical workforce to be very competitive. Meanwhile, it offers a strong international platform.”

“For a while, Mexico was feeling the heat from China,” Rubenstein said.

Now it’s the other way around. Mexican labor costs are higher, but the overall cost of doing business and exporting products is lower. The Mexican plants, for example, have good access to both sides of the Panama Canal.

“The quality also is higher out of Mexico,” Rubenstein said.


That played into in Honda’s decision to locate its subcompact car factory in Mexico.


“We are very confident that the products we build there will provide outstanding quality,” said Rick Schostek, senior vice president at Honda North America.

The Celaya factory will employ 3,200 when it reaches full production this year. Honda also is building a $470-million transmission plant in Celaya that is scheduled to begin production in the second half of 2015 with 1,500 employees.


Elsewhere in Mexico, a new Nissan plant opened last year, and Mazda is starting production of its Mazda3 compact car at a Mexican factory this year. Volkswagen’s Audi luxury brand last year broke ground on a $1.3-billion factory near Puebla, Mexico, near where VW assembly plants already build the Jetta, Golf and Beetle for the U.S. market. Mercedes-Benz is also considering locating a plant there.


Mexico has a long history of auto assembly. Volkswagen recently celebrated its 50th year of building cars there. But Mexico’s production is projected to double to more than 3 million this year compared with 2009, according to IHS Automotive.


Mexico’s share of North American auto industry jobs jumped to 39.1% in 2012 from 27.1% in 2000, according to the Brookings Institution. Expect that share to keep growing as auto companies open more factories in Mexico. Meanwhile, there are no new auto factories on the horizon in the U.S.


As auto manufacturing has flourished, so has the supply chain to feed those plants. Mexico has become the fifth-largest producer of auto parts in the world after China, Japan, the U.S. and Germany.


The industry’s growing profile was underscored by Mexican President Enrique Peña Nieto’s attendance at the Honda plant’s opening ceremony Friday. Flanked by Japanese executives and entertained by an anthropomorphic Honda-built robot, Peña Nieto bragged of his country’s growing industrial prowess and vowed that more trade agreements would keep factories at full tilt.


“We will be more attractive to the world for making investments, for generating jobs in Mexico,” he said. “At the same time, these jobs are better paying…. That will allow us to create more of a sense of well-being for Mexican families.”


Hirsch reported from Los Angeles and Fausset from Mexico City. Cecilia Sanchez of The Times’ Mexico City bureau contributed to this report.

Copyright © 2014, Los Angeles Times

Photo: The first Honda Fit rolls off the assembly line at a new $800-million factory near Celaya, Mexico. Volkswagen recently celebrated its 50th year of building cars in the nation. (Honda / January 23, 2014, via LA Times)




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Originally published at

North America summit: Obama, Peña Nieto enter with low ratings

By Tracy Wilkinson and Richard Fausset
February 19, 2014, 11:28 a.m.

MEXICO CITY — One thing that Presidents Obama and Enrique Peña Nieto of Mexico share is they are hardly considered heroes in their homeland.

Both have low domestic approval ratings that sometimes stand in sharp contrast to their images abroad.

Obama flew to Mexico on Wednesday for a daylong summit with Peña Nieto and their Canadian counterpart, Stephen Harper, the almost-annual meeting of North America’s three leaders that has been taking place since 2005.

This year’s meeting is being held in Toluca, the rather nondescript capital of Mexico State just west of Mexico City,  where Peña Nieto served as governor until his run for the presidency in 2012.

Despite the to-be-expected protests from the left — one man Wednesday dressed up as Mexican national patriarch Miguel Hidalgo and shouted “out with foreigners” in the middle of Toluca; another burned an American flag – Obama gets relatively high marks among Mexicans.

In a survey this month by the Strategic Cabinet firm, 63.5% of Mexicans polled had a favorable opinion of Obama, down from 74.1% last April. [Link in Spanish]

Compare that to the 40% approval rating that Gallup gives Obama in the U.S., near the lowest of his presidency.

Peña Nieto fares even worse. He seems to be the darling of Wall Street and some East Coast press (including a flattering cover this week on international editions of Time magazine), but his disapproval rating at home has soared from 18% in December 2012 (the month he took office) to 61%, according to the Beltran & Associates polling firm.

With the Mexican government sprucing up Toluca and sending a massive security detachment in advance of summit, some Mexican Twitter users were circulating a tongue-in-cheek graphic that pleaded for Obama to stay – and even take over as mayor:

“Barack Obama for Municipal President of Toluca,” the graphic said, before noting his “achievements” over the last 15 days–including new plants and gardens in the old downtown area, new street paving projects, an increase in tourist revenue, and “more security with police and new circulating patrols.”

“Thank you very much,” it concludes, in English. “Please don’t go.”

All in good humor, of course, but it was easy to detect the acerbic undercurrent: a sense that Mexican authorities were applying Potemkin makeup to Toluca. Mexico State is the densest and most populous of the 31 Mexican states, and one that is suffering from its share of serious trouble.

Federal statistics show that the state’s 3,897 homicides last year led the nation.

Where Obama does come under pointed criticism in Mexico is his failure to push through immigration reform and his record-setting rate of deportations. Many deportees are Mexican.

“Almost 2 million expelled migrants during the Obama administration, a third of them Mexican,” complained Ricardo Monreal, a leftist congressman. “Why is that not a theme in the Toluca summit?”

Image: Begging Obama to stick around Toluca, via Twitter.