Why Tesla’s Mexico Plant Got Lalo & Andy Fired Up

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Annik 0:00
Surprise, simply trade listeners every Sunday, we’re gonna spice things up with a shot of adrenaline pumping news. We know you come to simply trade for top notch education and insider knowledge, straight from trade professionals. But let’s face it, the world never stops spinning, and things happen every week that affect our daily lives. So we’re bringing you the biggest stories in the trade world served up fresh and hot with a side of entertainment from your favorite host, Andy and Lalo. I’m Annick, and I’ll be moderating this news show. So let’s get it all started. You

I simply trait listeners, we are back for another News episode. Very exciting. I hope you enjoyed the last one. If you haven’t checked it out, go check it out and all of our other episodes. Of course, you don’t want to miss any so today we’re bringing you three more articles that we’re going to talk about. I would think they’re a little bit more entertaining than the other three, but might just be my opinion. So let’s get straight into it. So the first one is kind of something that actually affects me, or, I mean, many other people, millions, probably, and it’s a phishing scam that’s been going on with some brands such as DHL, FedEx, USPS, you know where we receive our packages from, and you know, I’m not sure if anyone deals with that, but you know how you get those emails, and they’re kind of weird, and they tell you to click a link and your package is here, or you have to, I don’t know, you have to do all this stuff. Well, it’s a phishing scam. And this is what the article is kind of talking about. And we want to go in what these companies can do to maybe secure it, or, I actually don’t even know, understand it, what they can do to kind of fix this problem. So let’s talk more about it. I’m excited to hear from Lalo and Andy. So let’s get straight into it. Let’s let

Andy 2:06
our tech guy go with it first, because I’ll give

Lalo 2:10
you, I’ll give you my, my end of the, my perspective of this. It’s not so much what DHL or FedEx or the Express carriers can do about it. It’s more about what companies who are getting these phishing scams need to do about it. Not not not do about it, but need to do about it is with cybersecurity and all these concerns with with supply chain security and you, you need to have. And again, we’ve talked about this in many episodes Andy about getting trade compliance into the mix of the whole corporate decision and, and, and not just being the no person and all this and that, right? I mean trade compliance, I guess, because, obviously, because we are a trade compliance related podcast, I want to talk about that aspect, and saying that that trade compliance person should be saying, Look, Listen, guys, we have a breach in our security. Is be it cyber security in this case, because this is a phishing scam. It’s going to really screw up our supply chains. It could, it could slow them down, etc. That’s the way I saw it. I mean, I mean, and again last week, we talked about CT pad, and I hate to bring it up again, but best practices in CT pad are make sure you have it airtight, or as good as airtight security. So something like this doesn’t happen. I know of several companies, they go and do fake phishing, you know, like the IT department will go and send out a fake phishing scam, just to see who opens it. And then they make them, they put them in, in cybersecurity jail, you know, they have to go through training, etc. Oh,

Andy 3:56
yeah, you’re isolated.

Lalo 4:00
Kind of hilarious. Yeah, they make actually, it’s like a placebo. Yeah? No, they make you. They make you take classes on cybersecurity.

Andy 4:07
Well, I, I will say this. I’ve been in some companies where people have clicked on the links. And here’s the deal to your point in what’s in the article is that something to come across? Hey, we’ve been, you know, we need to reach you or talk to you about your package. We’re trying to deliver it comes across as if it’s from a UPS, DHL, FedEx, USPS, or whatever. It could come across, as you know, that’s just one example that could come across. As you know, attaches your invoice for whatever, please, you know, process for payment and, you know, and you gotta, you’ll click on something, or what appears to be a PDF, and you click on it, and it actually has an embedded something in there, you know, virus to whatever else, you know, yeah.

Annik 4:58
And also, I mean, this is. From a marketing perspective, I think these companies, if they know some something like this happening while we see it on the news, which is great. I think these, these companies, can do a lot of marketing and say, You know what, if you see this, don’t click on like, kind of inform your your customers in that way.

Andy 5:18
And the thing is, remember that this could be a side thing, but remember, it’s also something manic that you don’t know when they’re sending it, so they’re not going to they may be trying to use it, and all the three big ones I just mentioned are really protective of their brand. So I think this is a scenario. A lot of this happened, but still, you’ve got to be smart and so be wary of something like that. So in a sense, phishing, whether it’s they use the guise of a trying to track and trace a package or something like that, or it’s something else, whatever it all is, from a standpoint of getting that email into your inbox, you click on it, now you’re on the inside of the system, and it’s going to get you, yeah,

Annik 6:05
yeah. It’s a very I mean, it’s a continuous problem, and it’s been a problem, so let’s hope that this will be something that will not be continuing in the future. So, yeah, that’s for this one great insights, things that I had not heard before. But the second one is even, I mean, this one I really connected with. It was the Tesla’s new manufacturing plant in Mexico. We had an electric car, or electric battery, whatever, last week, and now we’re here talking about Tesla. So what about this manufacturing plant in Mexico? What I got is they’re wanting to reduce manufacturing costs. Who doesn’t obviously want to sell the cheapest product right to whoever it’s what I got, and it’s a co pro corporate union decision that was made. I wonder how that affects Tesla’s image, or if it does, and really, what are the motives, what are your guys’s perspectives on that?

Andy 7:12
You want me to take that one initially? Or, well,

Lalo 7:14
you can start Andy, but I, I kind of have a strong objection to how it was written. It was seemed a little biased to me the article, because personally, being so close to the border, number one and number two, having worked in Mexico and selling software out there for trade compliance, no less, for 2425 years, so I have a different perspective of it. But go ahead Andy, and then I’ll I can probably

Annik 7:43
before we go, since you said it was bias, I just want to say that this article came from N A cla.org, so, okay, just for reference. Okay. Now go ahead.

Andy 7:53
Well, as far as Tesla setting up a plant in in Mexico, couple things going on. One is for Tesla, you being an auto manufacturer taking advantage of the US, MCA or NAFTA. 2.0 it’s the US, Mexico, Canadian trade agreement with that. The there are some strong positives with that. So you know, labor rates are going to be lower, probably in Mexico than they are in Canada or us. However, with the usmca, specific to automotive, there are labor rates at a bare minimum that they have to adhere to in the manufacturing of that. So that’s one thing, as far as, yeah, it’s still probably, you know, lower manufacturing rates. There’s also probably, though, a lower transportation rate, though, that’s something to give thought to. Where are these vehicles going to be delivered to the market is going to be in North America. So your transportation rates, if they are manufacturing those, you know, China is a huge, there’s a huge Tesla plan over there and all that. Well, rather than putting those in, they’re going to be, you know, right down the road, if you will, from in Mexico. So I think transportation rates will be lower. The labor rates will be decent. And third, it will with to qualify for usmca, you have to have it went from 60% up to 75% of the raw goods have to be North American content. So you’re looking at not only Tesla, but then supporting vendors that in North America that are going to be providing things for this. So I’m Hey, I’m all for this. I think it’s going to be great,

Lalo 9:41
yeah, and I agree with that part of the objections that I had to the article, again, it seemed a little biased to me, only again, of course, I’m Mexican and or not Mexican, I’m of Mexican descent. I’m actually American. But anyway, of Mexican descent and. And having been in in Mexico, like I said, working a lot there, I mean, personally, I’ve seen it firsthand, people in Mexico are incredibly hard workers. So they have really good skilled labor. They have skilled labor. They’re not going to put out like a, you know, like just a bad car or anything but bad quality. First of all, secondly, I’ve seen it where, for example, and I’m going to use this as an example, the aerospace in the aerospace industry, back when I was selling software, like, let’s say, 1012, 13 years ago, were starting to move into Mexico, and they’ve created an incredibly high tech, advanced aerospace programs in Mexico, where the local universities are even adapting those curriculums so that they can punch out these amazing engineers out there. So it’s not just a theme of, yeah, I’m gonna put my cars over there and they’re gonna assemble them. And, haha, I’m taking advantage of their labor rates. Number or, like you said, Andy, number one, they can’t because of usmca, there’s a minimum labor cost requirement for it to have qualified for that. Secondly, they I’m willing to bet, by doing this, there’s going to be a lot of people or engineers coming out of the local universities that are going to learn and know, like LiDAR, you know, sonar, I mean all this self driving and sensing stuff. Battery we talked about this last week, EV battery technology, and they’re going to be some of the most well trained people, like they are in the aerospace and I keep on trying to say aerospace engineering, aerospace industry. That’s just my opinion, again, only from what I’ve seen personally. So it’s not all bad. I mean, I as bad as I thought. I felt I heard it on the article. But, you know, and as far as trade is concerned, I mean, it’s good for the trade industry. I mean, these are going to be very likely, because they’re being manufactured in Monterey. That’s That’s where the Giga plant is going to be,

Andy 12:16
which Monterey, for those that may not be aware. It’s roughly a two and a half hour drive from the border. In it

Lalo 12:26
right from Laredo, from Laredo, Texas, and it’s considered the most industrial city in Mexico. It is their Monterey tech, their logico de Monterrey is considered like the MIT of Mexico. I’m telling you, I spend a lot of time in Monterey. I mean, industrial technology. There was a big IBM facility there that, that’s where, that’s who I used to be partners with, so, et cetera, you know. I mean, besides going into much more into it, I just feel like you said, Andy, it’s a good thing. Yeah,

Annik 13:01
see, I was, I mean, when I heard that, I thought it was awesome at first, and that was my own perspective, because obviously, El Paso is very close to Mexico, so it just seemed great. But then I read the article, and I was like, huh, this is a total negative spin on everything. So that’s how much the news can affect you or reading just one article. I’m sure there’s others out there that have a positive spin on it. I mean, we’re posting this on LinkedIn as well, so comment under what you think, what your views are, because I would love to hear it, because obviously there’s a lot of different standpoints. Sorry about that. So moving on. We have, we’re keeping we’re on the roll with Mexico lately. So this is a good, this is a positive article, actually, yeah, it is. Mexico bans importation of goods produced with forced labor,

Lalo 13:55
yeah. Well, what happened? It was, it was enforced, or it was not enforced. I’m sorry. It was ratified. Three months, okay, May 18. It’s coming into effect. But it was 90 days before that, so it was published.

Annik 14:09
But why did it, why did this decision take so I mean, take so long. What takes country so long

Andy 14:15
now, some of that you have to have so many days, you know, 90 days, 180 days, or whatever from you know, you’re vetting the legislation. You’re open for comments. They go through all that, they refine it, it gets passed, then you still have a given time frame for things going on. So, yeah. I mean, governments move about as fast as molasses on a winter day, but you know it is moving.

Annik 14:43
I know. I mean, I’m glad they did it. So we’re here now. This is great. What are the next steps from Mexico? So obviously, do you have to weed out some importers?

Lalo 14:54
And I bet Andy’s gonna is probably thinking this. I don’t know, but we’ve had several people talk. About forced labor, but so here it is. A lot of companies knowingly or not, inadvertently or on purpose, I guess, any way you want to put it, bring in products from Mexico to bypass the fact that they’re Chinese. One good example is Chinese cotton, for example, that that they that it’s that it’s weaker cotton. Okay, so that’s obviously banned from from being imported, but they bring it into Mexico, produce something off of it, and bring it into the US, hoping that it’s not going to be

Andy 15:35
well in the article, in or in the well in the article, as well as in the new rules, it says, All right, in general, the new rules provide a blanket prohibition on imports into Mexico of goods produced in whole or part with forced labor and goes on. So the point being is that what’s happening and what has happened is literally the very thing, the example we just mentioned that Lalo and I were talking about there was Uyghur raised, or cotton raised by in the Uyghur region, let’s put that way, which was forced labor. That’s the northwest quadrant of China. Was sent down to Mexico. They manufactured a bunch of shirts. They literally came across the border. Customs now the country of origin on it said Mexico, or country manufacturer, whatever. And then customs in the in us, CBB took samples and literally tested the cotton and found it was cotton from the we grew region, and rejected the whole thing. So what this kind of legislation now is doing in Mexico is dealing with that, to help cut that off at the source. So this is going to be another positive in an anti slavery. When we’re saying forced labor, it’s you’re talking to slavery. So anti slavery type deal. So I think this is a very strong positive, and it’s just another thing where is a trade ally, Mexico and us are aligning their efforts so that our goods are not fighting each other in this row.

Annik 17:12
That I mean, this is awesome. This is an awesome way to kind of wrap up our News episode. Have a quick fact that I’m going to keep adding now, going to find some fun facts. Not sure if you guys drink boba tea. I do love boba tea. They’re good. People are like, weird about the texture, but boba tea is the top food imported from Taiwan, and it’s a Gen Z thing. But it started. It got more popular in the pandemic, and so they call it a pandemic era success. So there you go. That’s our last fact of the episode. This was far too long, but you know what? We had lots of good things to talk about. So, um, this is very interesting, and I hope you guys had fun listening to us and got some new knowledge, because I’m sure I did. And yeah, if you have any questions, comments, write them to us. Find us on LinkedIn. Find us anywhere. And you know, like comment and subscribe. Of course, we’re on all podcasts, and so let’s wrap it up, and we hope to see you next week. Happy Easter, if you do celebrate bye, guys, see you next week.