The New Mexican Town

A few months ago I wrote about Fordlandia – a new town built by Henry Ford in Brazil to try and control the delivery of rubber to his factories in the US. This was his second attempt after trying to build another town in Muscle Shoals in Alabama.

There is another attempt at building a town for workers – this time in Mexico. Audi has built a plant in the middle of nowhere, literally. It is near San Jose Chiapa in the Puebla State, smack in the middle of Mexico. The assembly plant that covers 1,000 acres and cost $1.3B has a development nearby called Ciudad Modelo (“Model City” in English). The idea (like Ford’s) is to create a community that assembles cars or the supplier components that are expected to be made nearby.

No one lives in Ciudad Modelo yet – there is a hotel and a conference centre already and there are plans to build a multi level school. Multi level in that it has many levels in the construction and that it will cover kindergarten to university education. Further plans will include a shopping mall.

The assembly plant builds the Q5 SUV and expects to have a capacity of 150,000 cars per year employing 4,000 direct workers and a hoped for booming employment at the supplier facilities. The car manufacturer is not funding the new town – that money comes from the State Government as it did to encourage Audi to build in their State. 1,500 of the initial 5,000 houses to be built will be paid for by the Government and the scope is to house over 100,000 residents. As there are no houses yet, the workers are currently bussed in from the State capital, Puebla, even though it is 40 miles away and takes 90 minutes each way due to the poor roads.

The project will be built in 3 phases with an expected finish in 2030. Not everyone is happy with the State Government because the area is actually quite poor and needs more investment in infrastructure and health benefits. If the Government could help educate the locals, perhaps the investment being put in to Ciudad Modelo could help the existing population. There has to be some knock on effects – as long as the factory and new city do not cause a split in the local community along wealth lines.

This is a concern because there is a reason that Audi built here – factory workers are cheap, however, the workers earn nearly double the other local industries such as farming or the local canneries. Unfortunately, the Audi workers still do not earn enough to buy a house or apartment in the new city! Also for Audi, they are being afflicted by similar issues that affected Ford in Brazil: worker unrest over wages. A quote from one worker was “we should get a premium wage for building a premium car”.

On the positive side, the State Government has learned from the mistakes made by themselves and other Mexican States in that they planned the new city when they were in talks with Audi. They had seen urban issues arise when foreign factories were built with a lack of local infrastructure around them. In the late 1960s, Puebla had VW build a factory to assemble the Beetle and now builds the Golf and Jetta models, however the Government didn’t plan for the growth of the factory – now assembling 500,000 units a year.

Ciudad Modelo is a response to the lessons learned. Like Fordlandia and Muscle Shoals, the local Government want this new city to be a model of modern living. To do that, wages will need to rise to enable the assembly workers to buy because without residents, there is no community!

The State Government wants this project to succeed – they want to educate the population to be able to create more homegrown companies rather than relying on foreign entities or investment.