Restructuring of the Automotive Industry in the North American Free Trade Agreement (NAFTA) Region from 2007 to 2011

IntroductionThe world automotive industry lias undergone significant changes resulting from the 2008 financial and economic crisis, and from the growth of new automotive industries in developing countries. Relocation of production lias been one of the most important issues as it affects investment and employment, which are important factors for wellness in society.In the North American Free Trade Agreement (NAFTA) region, the crisis and the great recession that followed profoundly impacted the auto industry. Car production decreased 32.4%, from 12.9 to 8.7 million vehicles (Rubenstein, 1992), several facilities closed while others opened at different location, some models were replaced and others discontinued. Five years later production recovered, although geographical restructuring of production lias been different for each one of the three countries: Canada, United States of America (USA) and Mexico.Changes in the pattern of automotive geographical agglomeration in the NAFTA region have been studied from different points of view. Bailey et al. (2010) evaluated restructuring of the auto industry using a global perspective, including the impact of the industry and of green vehicles on the development of emergent national economies. Within the USA the factors related with industry-clustering in the northwest region and in the south during the 20th and early 21st century were studied by Rubenstein, (1992) and by Klier & Rubenstein (2008, 2009, 2013). Hill & Brahmst (2003) reported that incentives were partially responsible for the decisions made by foreign carmakers to locate in the Deep South. Stanford (2010) explains the geography of auto globalization and the politics of auto bailouts. Sean, McAlinden & Yen Chen (2013) studied the financial look at the -Detroit-Three" automakers.Holmes (1998 and 2004) studied the factors related with the development trajectory of the automotive industry in Canada and its relationship with the performance of the USA -Big Three" companies, the increasing labor costs and the rising value of the Canadian dollar. Sathe, Dziczek & Cregger (2011 and 2012) compiled a database containing all automaker facilities that closed in the United States since 1979 and examined strategies to re-purpose.Carrillo (1990, 2004) studied the location and specialization and integration of the Mexican and North American Automobile Industry to the after NAFTA. All these studies need to be focused from the perspective of the economic crisis suffered in the region and the consequences for production in the automotive industry within the NAFTA region.The aim of this work is to analyze the production relocation in the NAFTA region after the 2008 economic crisis in order to address questions regarding the regional fluctuations in production within a country, both at the assembly-plant level and in the product portfolio.Our central hypothesis is that the frost-belt industrial region (traditional spaces) lias lost the most, while the new industrial zones (emerging spaces) especially those in Mexico, have been the most favored since production increased and more sophisticated products began to be manufactured in the new spaces. We analyze NAFTA assembly-plants and compare production for two different years: 2007, when the crisis began and 2011 when the consequences could be observed.MethodsInformation was collected from Automotive News and companies' internet pages related to: where plants are located, year of establishment, firm owner, models and volume production in 2007 and in 2011 (automotive news, 2008, 2012).We defined five regions and produced two maps. Plants manufacturing heavy vehicles were not considered in the analysis. The reference years are cmcial as 2007 was prior to the severe crisis of 2008, while 2011 was the last year for which we were able to obtain full information from most assembly plants.NAFTA was divided into five zones as follows: the first one is the traditional industrial area in the United States that integrates five states (Michigan, Illinois, Wisconsin, Minnesota and Ohio). …