By David Hendricks
San Antonio Express-News
SAN ANTONIO — Large industrial investments could be headed to the United States and Mexico, some of it foreign, partly because of cheap energy supplies, the chief economist of Chicago-based Mesirow Financial Holdings Inc. said Tuesday.
Diane Swonk, often quoted in the business press and on broadcasts, visited San Antonio with Mesirow Chairman and CEO Richard Price to make presentations to existing and potential clients.
Swonk said North America is becoming more attractive to foreign investors because of new, reliable and cheaper energy supplies and because of the continent’s supply chains.
“With Canada and Mexico, the United States has the most diversified and integrated supply chain in the world,” Swonk said in a telephone interview.
Announcements of new industrial projects, especially related to automobiles, could be coming to the U.S. and Mexico, she said.
“The question is whether we will be prepared for it. Gridlock in Washington has hurt trade talks,” Swonk said, referring to the Trans-Pacific Partnership and U.S.-Europe trade negotiations.
Meanwhile, trade talks between other countries are progressing and haven’t been delayed by political gridlock and government shutdowns, Swonk noted. “We don’t want Mexico turning to Europe without us,” she said.
Manufacturers are moving operations to North America from Asian countries, including China, partly because of wages and for better patent protection for new technologies, Swonk said.
“Mexican wages are now lower than Chinese wages, when adjusted for productivity,” Swonk said. Cheap energy in North America is a contributing factor, she added.
Natural disasters overseas, such as the Japan earthquake and tsunami in 2011, also make North America more attractive, she said, citing the widespread automotive assembly plant shutdowns that occurred because of supply-line disruptions.
The Texas economy also could benefit from proposed reforms in the Mexican energy sector that would allow foreign companies to form partnerships in Mexico for the use of hydraulic fracturing and deep-water drilling technologies.
Like other Latin American countries, Mexico has been “a closed energy market.” But Brazil is opening its market. “Mexico could be the next Brazil,” Swonk said.
However, the proposed reforms in Mexico have not been approved yet, she said. “Does the Mexican government have the will to get to where it needs to be?” she asked rhetorically.
Texas trade with Mexico has zoomed in recent years, partly at the expense of Arizona, which Mexico has shunned because of that state’s punitive immigration laws. The trade shifts to Texas have been in the tens of billions of dollars, Swonk said, referring to research by the Dallas Federal Reserve Bank.
Tuesday’s delayed monthly U.S. jobs report said 148,000 net new jobs were created in September, lower than expectations of 180,000.
“My forecast was for weaker” than 180,000, Swonk said. Job growth declined on average throughout the summer. “A deceleration is not welcome news at this stage” of the economic recovery, she said.
Mesirow provides services in municipal bonds, insurance and other areas, including investment management for individuals and companies.
“San Antonio is one of the best economies in the country,” she said of her company’s visit here.