All aboard Mexico’s speed boat to China

Having just returned from the World Federation of Personnel Management
Associations (WFPMA) World Congress in Mexico City, I’m pleased to report that
Capitalism appears to be alive and well in the global labour markets. I say
this confidently, after learning two interesting new pieces of information.

Back in the early 1990s the North American Free Trade Agreement (Nafta) was
struck between Canada, the US and Mexico. It essentially created an EU-like
business environment, but without the drive for common currency. The primary
concern pre-Nafta was the likely flow of jobs to low-cost locations such as

After listening to numerous speakers and audience questions, it is clear to
me that one of the hot topics for Mexican business is the possible flow of
their jobs to China.

What the Mexicans are concerned about now is China’s accession to the World
Trade Organisation, and the efficiencies this will drive into Chinese manufacturing
and assembly. China’s cost structure is so much lower than Mexico’s, that it is
quite realistic that a great deal of easy-to-ship assembly and manufacturing
work could migrate from Mexico to China, leaving only heavy manufacturing in

Then, I learned about an interesting programme at i2 Technologies in Dallas.
It launched a scheme last year where employees and managers in their
development and consulting areas may relocate to India, on local packages, at
the company’s expense. The only requirement is that they be able to qualify for
an Indian work permit. This is not a programme to repatriate Indian nationals –
they are moving a variety of employees over there.

According to Travis Jacobsen, i2’s director of investor relations, one of the
drivers is the roughly 1:3 ratio of costs between Bangalore and Dallas. He is
convinced that for their money, people get a much higher standard of living in
Bangalore than in Dallas. i2 indicated to me that Microsoft and Intel are
involved in similar programmes.

The message from Mexico and Dallas is two-fold. First, labour mobility is no
longer limited to simply moving the work overseas. Savvy companies with an eye
towards what globalisation can mean for them are not just moving the work, but
are moving the workers.

Second, regardless of how well-established you may be in a marketplace, you
can’t afford to become complacent. When Nafta was agreed, China’s WTO entry was
not on the horizon. Now, where once we watched American jobs disappear into
Mexico, that country now worries about their jobs disappearing to China.
There’s still a lot to be said about disruptive pricing.

I’ve touched on the global mobility of talent before – companies must seize
and manage it well.

By Lance Richards, Member of the SHRM Global Forum Board and globalHR
Editorial Advisory Board

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