Wrong! You really missed the reality in that example. The factory in Mexico is not more "efficient", the labor is simply cheaper. In the immediate, it made the American worker slightly poorer and only provided the Mexican a job. The Mexican will receive no raises in the future and thus will remain poor. But maybe she'll make enough to pay for her husband or kids to come North. The surplus of illegal un/semi-skilled workers lowers the base wage in America. In the end, GST AutoLeather will not have done itself, its owners/shareholders, its workers, its state or country, a favor. GST will be bankrupt in five years.
Now if GST had invested in a more effecient factory in the USA......the benefits would have killed 'em!
I don't know the specifics of why a leather factory in Mexico is cheaper than the same one in Maryland, however, I suspect you are correct that the cost of labor is a significant factor. Regulationary onus is probably another one.
Why it's more efficient in Mexico is not my argument. It's indisputed that it's more efficient (meaning less expensive) there by virtue of the leather factory being located there by those folks whose money and capital is being risked. My argument is simply that allowing this to take place through a laissez-faire free market is the best outcome and will result in a net gain of wealth for Americans. The cost of leather products to Americans is less, and they spend the surplus money to employ other Americans to meet their other demands -- including, in the end, those laid off by the Maryland leather factory. Mexicans also benefit from this. A Mexican will take a labor job at the factor in Mexico precisely because it is the best available option (to his knowledge) for employment. The wage may be miserly, and by American standards it is, but if he elects to take that wage, then it logically must be better than what his alternatives are.
Trade is win-win, that's why free people do it, and do so much of it.