For american cars at least, I read that one of the reasons this process exists is because car companies want to work around union rules for manufacturing by outsourcing components of the cars to subcontractors that they can make deals with.
Ultimately it's a price control strategy to pit these suppliers against each other to lower costs. But it means that designing these electronic sub-systems isn't just a question of the design itself, but also of managing all of these supplier relationships as well, they all have different contracts, you would have to coordinate all of them at once to make sure things are interoperable, etc.
>price control strategy to pit these suppliers against each other to lower costs
Apparently that rabbit hole goes super deep in which the large auto manufacturers in the US throw their weight around and force suppliers into selling parts at cost or with razor thin profit margins. And on top of that, they force the suppliers to eat the loss when it comes to cyclical business demand (e.g. storage costs for over-producing during low demand and increased labor costs during times to under producing from high demand)
You'd think the overhead of managing the supplier relationships would be more expensive than well-managed vertical integration. I'm guessing it's a failure on the part of admin to count their own costs.
I can't speak to car electronics design or anything about the capabilities of Tijuana or Ciudad Juarez, but your comment had me reflecting that in the mid/late 90s those of us who were in b-school went from all about Mexico to all about China overnight. With NAFTA et al, American manufacturing was going to be all about developing factories in Mexico and moving good back and forth between the US and Mexico for design and finishing. Then once China joined the WTO it was absolutely an instantaneous pivot to China instead. Maybe all that's old is new again?
Right. The unwritten story of the last three decades is the Mexican people in general have lost out on the huge generational opportunity they theoretically should have from being a (comparatively) low-wage manufacturing and R&D option on the US's doorstep ("friendshoring").
On paper Mexico reaped enormous gains from NAFTA(/MCA) but those went to a small slice of the population, and people on fixed incomes/not in manufacturing/services objectively got worse due to inflation and rising cost-of-living, property prices. The share of GDP effectively lost due to corruption is also an issue.
Ultimately it's a price control strategy to pit these suppliers against each other to lower costs. But it means that designing these electronic sub-systems isn't just a question of the design itself, but also of managing all of these supplier relationships as well, they all have different contracts, you would have to coordinate all of them at once to make sure things are interoperable, etc.