Posted on 06/20/2015 7:37:03 AM PDT by dennisw
Mexico has become the most attractive place in North America to build new automobile factories, a shift that has siphoned jobs from the United States and Canada, yet helped keep car and truck prices in check for consumers.
The past two years, eight automakers have opened or announced new plants or expansions in Mexico. In April alone, Toyota announced a new plant in Guanajuato to build the popular Corolla, work now done in Canada, while Ford unveiled plans for Mexican engine and transmission factories.
Low labor costs and fewer tariffs are the swing factors. A worker in Mexico costs car companies an average of $8 an hour, including wages and benefits. That compares with $58 in the United States for General Motors and $38 at Volkswagen's factory in Tennessee, the lowest hourly cost in the country, according to the Center for Automotive Research, an industry think tank in Ann Arbor, Mich. German auto workers cost about $52 an hour.
Mexico also trumps the United States on free trade. It has agreements with 45 countries, meaning low tariffs for exporting globally. That, along with low labor costs, convinced Audi to build an SUV factory in the state of Puebla. The German automaker will save $6,000 per vehicle in tariffs when it ships a Q5 to Europe, compared with building the same vehicle in this country, says Sean McAlinden, chief economist at the Center for Automotive Research.
Audi also sells the Q5 in the States, where tariffs on cars built in Mexico were dropped under the North American Free Trade Agreement.
The cost savings also should allow automakers to add expensive fuel-saving features to meet stricter U.S. government gas mileage requirements without raising car prices. Two-thirds of cars made in Mexico are shipped to the United States.
(Excerpt) Read more at providencejournal.com ...
The great depression was extended because tariffs were placed on many goods.
Great Depression
https://en.wikipedia.org/?title=Great_Depression
Excerpt: Frantic attempts to shore up the economies of individual nations through protectionist policies, such as the 1930 U.S. Smoot–Hawley Tariff Act and retaliatory tariffs in other countries, exacerbated the collapse in global trade.
Did the Smoot-Hawley Tariff Cause the Great Depression?
http://americastradepolicy.com/did-the-smoot-hawley-tariff-cause-the-great-depression/#.VYY85clNvFQ
Compared to the rest of the world, the U.S. is very much an aging, shrinking market. Every major company in every industry knows this, and conducts their business accordingly.
According to the article, Germany apparently does ... or at least allows them in with much lower tariffs than they charge for cars built in the U.S.
This is utter and complete bullsh!t. There are new auto plants being built in the U.S. even as we post these messages.
One big difference is that they don't hire union workers. The U.S. auto industry was gutted by exorbitant costs and poor quality ... which means it was responsible for its own demise.
And still the largest market in the world, for any and every thing.
Exactly. Getting cheap trinkets and electronics doesn’t send your kids to college and if it does it doesn’t pay for them to move back in after college which is happening more today than ever before.
I voted for Perot the first time I voted and I don’t regret it. The focus of US leaders should be first and foremost to make sure as many jobs regardless of type are in the US and being done by US Citizens. If they spent more time making sure the corporate tax code encouraged Businesses to keep jobs in the US and create more of them in the US and incentified them to hire and train US Citizens then our economy would be booming. Instead we are growing the Chinese and Mexican middle classes and while that is all good it shouldn’t be at the expense of US Citizens and it is.
Some have touted the idea that we should focus on being “service economy” but what has happened as we have? Yes those at the top are still making more money in the highest paid jobs but those in the bottom half have been and are being forced to transition to lower paying service/retail jobs where as one manufacturing job could with overtime and residual benefits allow a family to live fairly well usually on one income but now they have few options and to make ends meet both mother and father have to work in crap jobs and then have not much extra to show for it. Financial difficulties are the number one contributing factor to divorce and encourages the delay of marriage and pregnancy so this feeds the social disintegration we see which results in demand for bigger government which far outstrips any benefits of cheaper TVs from China or Cars from Mexico.
Most of the “US” plants are just assembly plants, and virtually all of the feedstocks to those plants are coming from overseas suppliers, and most of those suppliers are in china.
And the only reason the Japanese, Germans, Koreans, and the chinese set up plants in the US, is to skirt tariffs, and utilize cheap labor in the southern states.
Why do you think so many companies want to move to texas?
Mainly because they are moving closer to their suppliers bases in mexico, where most of the US auto industry moved to.
All of those jobs that are in mexico were once here, now they are not.
All of the Americans who used to have those jobs, are now unemployed.
Now, all of the illegals and H1-B laborers are being brought in by the boatload, to supplant all of those former autoworkers who lost their jobs, and had to resort to working at McDonalds to make ends meet.
Tell me, I don't care what you do for a living, but think about when YOU will be replaced by some foreign national, because somebody decided that you CAN be replaced by someone who WILL work cheaper than you do.
I've worked in three different industries during my lifetime, and I've been marginalized and cast aside in every one in the quest for cheap labor.
At the rate that we are going, we'll surpass the EU in the near future, and when TPP passes, expect the US to beat Venezuela in the race to the bottom, and mexico will be forced to keep all of the illegal Americans out of their country.
The former American Big Three plus Japanese, Korean and German automakers have been making vehicles in the US as well as other locations for decades.
Don Trump he be importing and exporting slot machines from Nevada to New York to New Jersey.
Toyota is #1, VW is #2 and GM is #3 in world sales volumes.
There is a whole lot more involved, besides tariffs.
Any discussion about these labor issues is a complete waste of time unless it recognizes the following two facts:
1. If Americans are paid what they think they are worth, then very few Americans would be able to afford the things they produce.
2. If Americans want to buy things at the prices they are willing to pay, then very few Americans would be willing to work to produce them.
This dilemma is at the heart of almost every challenge that is faced in our economy, including not only trade policy but taxation, government mandates, social issues, etc. Everyone wants to use cheap labor, but nobody wants to BE the cheap labor.
That is actually a very good arguement.
I may whine, cry, piss, and moan about the plight of the state of American industry, but what can one do to reverse to the exodus of work and technology, and the brain drain out of the US?
How do we compete with first world knowledge, that is being paid with third world wages?
Either you raise them to our level, or, we have to sink to their level to compete.
Either way, at this point, the US devolves either into a chinese communist regime, a socialist mexican oligarchy, or we become the EU of the western hemisphere; weak and diluted.
If I were you I wouldn’t agonize over it too much. It’s an important issue, but a lot of what is discussed here is pretty much the inevitable consequence of living in a powerful nation with a very high standard of living. Eventually you reach the point where you realize you can have a lot of people working or you can have a very high standard of living, but you probably can’t have both.
I suspect a lot of these vehicles aren’t sold in large quantities in Europe anyway, which explain why Audi would produce an SUV here but wouldn’t produce sedans here.
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