Yep, we went there. Supply chain leaders on both sides of the Mexico-U.S. border attending a recent summit hosted by Inbound Logistics and Inbound Logistics LATAM introduced the issue of The Wall and NAFTA while discussing the impact on trade of Brexit and the populist trend that sparked it.
Some might consider discussing such a contentious topic politically incorrect. But the purpose of the summit was to discuss ways that Mexico and the United States could work closer together to improve relations, and promote supply chain integration and cross-border security, while keeping in mind the mutual interests of both countries. Attendees shared the overriding sentiment that discussing The Wall is politically direct—intelligent business and political leaders hashing out differences and working to find mutually beneficial ways to move forward. Papering over differences with platitudes won't stand the test of time.
Borders between countries should be secure to safely promote commerce and trade. To some, the border discussion is a metaphor for the cries of displaced workers. The U.S. government cites estimates that 94 million people in the United States are not in the labor force, and an unemployment rate of 4.7 percent. But the true unemployment rate is more like 9.7 percent, or nearly 31 million people, say economists.
We shouldn't ignore the cries of those workers, most honest observers would agree, whatever the direction of the political winds of today or tomorrow. If policies continue as is, and we gloss over these issues instead of addressing them with actions, the voices of the disenfranchised will continue to influence policy with political passion rather than clear-headed political directness.
Another discussion at the summit jumped off The Wall and on to NAFTA. Many attendees said that it's time to update NAFTA. Surprising? Not when you consider the global competitive context. Chinese prescription lens design and production company Carl Zeiss Vision Technologies illustrates that point.
In 2012, facing labor costs in China that were twice as expensive as in Mexico, and four times that in India, Zeiss replaced workers with robots, dropping production costs even lower. "The installation of machines to carry out tasks has seen the workforce shrink from 440 workers who were producing 4 million lenses every year to 370 in 2015, with output increased to 5 million," says spokesperson Zeng Zhiyong. "Cost per lens is the lowest of all the Zeiss factories in the world."
That is a timely reminder of the importance of our summit discussions and what is at stake. Our formidable trading partners outside NAFTA are not standing still. Mexico and the United States share a common border, a culture, and much commerce. When we speak directly, and strive for true trade reciprocity, mutual respect, and understanding, we stand a better chance as economic competitors in the global market.