Concrete evidence.

Photographer: Susana Gonzalez/Bloomberg

Two Reasons the U.S. and Mexico Rise Together

Matthew A. Winkler is a Bloomberg View columnist. He is the editor-in-chief emeritus of Bloomberg News.
Read More.
a | A

Leave it to a couple of Mexican cement and metals companies to expose Donald Trump's calumnies about the relatively buoyant American economy, its resurgent workers and the advantages of free trade.

Trump overwhelmed 16 rivals in the Republican presidential primaries by vowing to build a wall across the southern border and scored his best debating points against Hillary Clinton assailing the North American Free Trade Agreement. While that was happening, global investors favored two suppliers of materials to the U.S. that tell a completely different story. They are Industrias Penoles, a producer of refined gold, silver, lead and zinc; and Cemex, the largest cement maker in the Americas. Both are creating U.S. jobs and lifting American manufacturing.

Mexico's Best Stocks
Total return so far in 2016
Source: Bloomberg

Penoles, which exports 73 percent of its products to the U.S. and receives only 18 percent of its revenue from Mexico, has returned (income plus appreciation) more than 165 percent in pesos since Dec. 31, 2015. Cemex, whose biggest market also is the U.S., surpassed analyst forecasts with a peso-denominated return of 81 percent in the same period, according to data compiled by Bloomberg. Their success is directly correlated with U.S. growth. 

"Our solid second-quarter and first-half 2016 results demonstrate the resilience of our portfolio, which is largely comprised of high-growth markets that are experiencing attractive supply-demand conditions," Cemex Chief Executive Officer Fernando Gonzalez said in July.

Laila M. Kollmorgen, managing director of leveraged finance at PineBridge Investments in Los Angeles, said "the Cemex rally is a reflection of commercial real estate development in the U.S.," adding, "There's a lot of construction going on right now." 

A Trumpist might deplore the success of these Mexican companies in profiting from rising U.S. prosperity. But then he'd have to consider American firms like Kansas City Southern, the Missouri-based railroad freight company whose almost-50 percent Mexico-sourced revenue is the largest such percentage in the Standard & Poor's 500 Index. It rallied 20 percent this year, or more than triple the S&P 500's gain. About 48 percent of the industrial shipping firm's sales came from Mexico last year, up from 44 percent in 2011 and demonstrating Nafta's free-trade benefits as Kansas City Southern increased its workforce by more than 9 percent during the five-year period, according to data compiled by Bloomberg.

Many market watchers have focused in recent months on the correlation between the peso and Trump's ups and downs in the polls as a bellwether of the November election. That's because Mexico has been a focus of Trump's bigotry and xenophobia as he has sought to assign blame for lost American jobs.

In truth, there are many causes for lost manufacturing jobs. Advances in technology and China's rise as the No. 2 economy are among them. Nafta was neither the killer nor creator of employment that its enthusiasts and detractors predicted. It did make the U.S. economy more efficient and therefore stronger. That's what global investors like about it. 

More Construction Jobs
Number of U.S. workers in construction
Source: Bureau of Labor Statistics

The appreciation of Penoles, Kansas City Southern and Cemex this year provides a benign perspective of Mexico's relationship to the strengthening U.S. job market, where unemployment has fallen below 5 percent from a high of 10 percent in October, 2009. Housing starts have more than doubled, to an annual pace of 1.05 million since April 2009 after the worst recession since the Great Depression, according to Bloomberg data. Construction spending increased 51 percent to $1.142 trillion in August from the same month in 2011 when they'd fallen to the lowest level since 1999, while the number of workers in U.S. construction climbed 23 percent to 6.7 million, according to the Bureau of Labor Statistics.

Trump excoriates American auto makers for using Nafta to create jobs in Mexico instead of the U.S. He recently attacked Ford Motor Co. for moving production of Focus compact cars from Wayne, Michigan. But the Wayne factory will continue to operate with no loss of its 3,700 workers, producing the profitable trucks and sport utility vehicles most in demand.

More Assembly-Line Jobs
Number of U.S. workers assembling motor vehicles and making parts
Source: Bureau of Labor Statistics

The American auto industry belies the Trump assertion of manufacturing peril under Nafta. On the contrary, the number of workers assembling motor vehicles and making parts increased 50 percent to 924,100 today from the recession-low of June 2009, according to BLS data. The manufacturing rebound occurred when non-farm payrolls increased 10 percent during the same period to 145 million jobs, according to Bloomberg data.

Since Barack Obama became president in 2009, manufacturing jobs increased 7 percent, a greater gain than for any of his predecessors since the 27 percent when Harry S. Truman was in office between 1945 and 1953, according to data compiled by Bloomberg. California, which created more jobs than Florida and Texas combined last year, saw the equivalent of its gross domestic product rise 5.7 percent to $2.5 trillion in 2015. The largest of the 50 states, with more than 39 million people, just supplanted the U.K. as the world's fifth-largest economy -- based on the 1.5 percent GDP forecast for the U.S., the 1.8 percent forecast for U.K. growth and the pound's 17 depreciation against the dollar this year.

In case anyone is wondering, a lot of Mexican cement and refined metals are contributing to the U.S. expansion.

(With assistance from Shin Pei)

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Matthew Winkler at

To contact the editor responsible for this story:
Jonathan Landman at