GM Is Expanding and Increasing Production

in Mexico, at least:

General Motors Corp., the biggest automaker in the U.S. and Mexico, increased production of $12,625 Chevrolet Aveos south of the border while seeking a bailout to keep domestic plants from closing.

Last week I wrote:

Other thought: What is the likelihood that Mexico has a significant comparative advantage in car manufacturing? My guess is that it probably does. In that case, is there any reason at all to believe that a bailout will make any difference in the long run?

The Bloomberg article discusses the absolute advantage Mexico has in automaking labor costs:

Lower labor costs are the biggest advantage. At around $3 an hour, the average Mexican wage is less than one-eighth of those in the U.S.’s $25.34 and one-seventh of Canada’s $21.38, according to Sergio Ornelas, the president of industrial park operator Intermex, which provides real estate services to auto and car-parts producers. Ornelas cited information compiled from the Boston Consulting Group, the U.S. Department of Labor and The Economist Intelligence Unit during a recent conference in San Luis Potosi.

Auto companies contribute to a government-run health system and mandated individual retirement accounts for each worker, which keep health and pension-benefit costs low compared with the U.S., Ornelas said.

There are other factors in determing the low cost producer of an automobile than labor costs. But given the huge absolute advantage Mexico has in this area and the large absolute advantage than the United States has in fields such as computer programming, is it that much of a stretch to believe Mexico has a significant comparative advantage in automobile production?

If it does then I see no way the automobile manufacturing industry can survive in the United States (or Canada) without regular and continued bailouts and massive subsidies to encourage the building of automotive plants. I live in Canada's automotive manufacturing heartland, so it pains me to say this, but I currently do not see how a bailout is just slightly delaying the inevitable.