The expansion of Drotos Electronics, by building a new manufacturing facility in Mexico, has both positive and negative impacts. As an aspect of globalization, various factors influence this plan. They include: the increasing power of drug cartels, the immigration and labor laws, and the North American Free Trade Act (NAFTA), among others, as highlighted herein. Besides, the paper gives an in-depth evaluation of the effects of this expansion plan on the environment and the people of Mexico and Latin America at large.
The immigration and labor laws
Establishing the manufacturing plant in Mexico has greater potentials of reducing the rapid immigrations into United States. The number of immigrants entering U.S every year in search for jobs is estimated at 500,000 Mexicans (Villarreal, 2010). This plan would create job opportunities right within Mexico, thus curbs or greatly reduces the immigrations. This ultimately improves the country’s domestic growth. The company would also adhere to the labor laws of Mexico, thus Mexicans would not be subjected to the unfavorable foreign labor laws.
NAFTA
NAFTA fully favors Drotos Electronics expansion plan. As a free trade agreement, NAFTA has no protections to maintain both environmental standards and labor standards. It has neglected most protection measures as it fully concentrates on eliminating trade barriers. The effects are vast, and are both positive and negative. They include: increase in trade, creation of employment, growth of the export industries, and growth of the economy. The expansion would enable Drotos Electronics to enjoy the cheap labor force in Mexico. The negative impacts include economic imbalance, income inequality, and the suppression of the real wages and collective bargaining power of the production workers. Studies suggest that by enjoying the cheap labor, workers are paid peanut wages which cannot cater for their purchasing power (Villarreal, 2010). Thus, the companies continue to excel while the people of Mexico continue to wallow in poverty; a direct result of cheap labor. However, the expansion of Drotos Electronics is most likely to put an end to this. Its true Mexico lacks educational infrastructure which has hindered the development of lucrative and sophisticated manufacturing; however, Drotos Electronics trains its workers adequately and makes them competitive globally. This favors the development of sophisticated and lucrative manufacturing, and improves the income and living standards of the employees.
The increasing power of drug cartels
The increasing power of drug cartels has resulted into a rapid increase in brutal drug trafficking-related violence in Mexico such as beheadings, killings of innocent bystanders including children and young people, torture, car bombs, and assassinations (Beittel, 2011). This has greatly impacted negatively on trade. The violence causes insecurity and threatens trade and industrialization. It has led to the departure of business leaders and managers, and has made the foreign direct investment (FDI) to sharply decline. While the company is aware of such threats, it shall take necessary measures to ensure the security and safety of its employees. Besides, the significant increase in the U.S.-Mexico security cooperation and the implementation of the Mérida Initiative has improved the security of the region (Beittel, 2011).
Environmental impacts
The expansion plan has both positive and negative environmental impacts. The main positive impacts include improved environmental awareness, proper use of resources, and adoption of greener technology. By promoting growth through development and improving the incomes, the use of resources is likely to improve (Allvoices, 2010). The company’s research and use of energy efficient methods of production greatly enhance the environment. However, the negative environmental impacts are vast and far much outweigh the benefits. They include: overuse of the natural resources, global warming and climate change. The manufacturing plant emits greenhouse gases which cause global warming (Allvoices, 2010). Besides, the increased trade, as a result of this expansion, causes local pollution. The dumping of industrial waste and the disposal of the non-biodegradable components from the manufacturing plant, all degrade the environment.
Socioeconomic impacts
Building a manufacturing plant in Mexico directly creates a lot of opportunities to the Mexicans. Such opportunities include creation of employment and increase in trade, which subsequently improves the living standards of the people. However, the main problem facing the people of Mexico is the reduction in real wages and under employment. The Mexicans lack access to stable well paying jobs. This results in continuous poverty. This expansion plan in Mexico is intended to solve this problem. Most of the problems facing the people of Mexico are a direct result of the internal economic policies of Mexico (Villarreal, 2010) and not globalization. For instance, the nation has failed to train its workforce adequately and this has led to cheap labor force. The result is that, companies continue to benefit, while the disadvantaged group is the enormous majority of citizens that form the workforce. Their income and job quality is likely to reduce. The labor force provided by this disadvantaged group helps directly into promoting the development of the companies. According to Bacon (2004), this has allowed for the people of Mexico to be subjected to dehumanizing work for miserably low wages. With the company’s adequate training, things are likely to change to the best.
Allvoices, Inc. (2010). The effects of globalization on the environment. Retrieved 10 May 2012 from http://www.allvoices.com/contributed-news/6301040-the-effects-of-globalization-on-the-environment
Bacon, D. (2004).The Children of NAFTA: Labour wars on the U.S./Mexico Border. Berkeley: University of California Press.
Beittel, J.S. (2011). Mexico’s Drug Trafficking Organizations: Source and Scope of the Rising Violence. Retrieved 11 May 2012, from http://www.internal-displacement.org/8025708F004CE90B/%28httpDocuments%29/91B4ABF57B905971C125783A00390FBB/$file/Congressional+research+document.pdf
Villarreal, M. A., (2010). NAFTA and the Mexican economy (RL34733). Washington, DC: Congressional Research Service. Retrieved 10 May 2012 from http://www.fas.org/sgp/crs/row/RL34733.pdf
