Posted on 12/14/2007 11:09:24 AM PST by Ernest_at_the_Beach
France's Alstom a maker of high-speed trains and power turbines, this week became the latest European firm to unveil plans for a facility across the Atlantic. The group said it will build a $200 million plant in Chattanooga, Tenn., to mitigate the impact of the weak dollar on its margins and to get closer to some of its biggest customers.
n recent months, companies ranging from car makers Fiat Spa and Volkswagen AG , to German steel behemoth Thyssenkrupp AG and South Korean consumer-electronics maker Samsung Electronics , have either publicly debated or set in motion plans for a U.S. plant.
(Excerpt) Read more at marketwatch.com ...
I don't assume it's zero-sum, or that this kind of foreign investment is undesirable, if you'll read my post carefully. Just that there are some comparative trade-offs.
If it's a publicly owned company, such as Alstrom, the profits eventually go to the stock holders. You can be one if you like or if you invest in Mutual Funds or a 401k, you probably already are an owner.
2.)likely foreign sourcing of component materials,
No more likely that an "American" owned company sourcing foreign parts. Both are in business for the same reason and if they can save costs on purchases, both will do so.
3.)possible compromising of our economically strategic technology
If an American turbine company built a factory in France, would that also 'compromise' economically strategic technology? If anything, Alstom is transfering their technology knowhow to an American workforce.
4.) further inordinate influence by foreign interests upon state and federal governments etc. here ...
I would think just the opposite effect would be the case. When you sink a lot of money in a foreign country, those countries politicians have far more influence on you than you have on them. They have you by the short hair.
Keep this in mind. They will be paying Fed, State and local taxes --- lots of them. In heavy manufacturing, the single largest expense is payroll and they will be paying lots of it -- to Americans. For average industrial levels, for every dollar they get to take back to Paris or wherever, they are spending $70-$80 in the US.
The larger point is this. These companies aren't coming here to open 3rd world sweat shops. They are coming and providing just the types of employment that people have been screaming that we are losing too much of. While not the entire story, the low dollar is surely part of the reason for that. I see noting but positive news here, and quite frankly, it matters nothing to me where the company CEO happens to live.
good response.
What I’m saying is that they need not be trade-offs, since whether investment comes from here or abroad is not an either-or issue.
Foreign investment in the US helps spur American investment in the US. They don’t crowd each other out.
Thank you.
"ThyssenKrupp has said the mill will mean 29,000 jobs during construction, and 2,700 jobs paying an average of $50,000 to $65,000 annually once the plant is operational in 2010."
The mill would produce high-grade carbon steel and stainless steel for sale primarily into the North American automotive industry.
"Due to its high cost efficiency, Mount Vernon is the ideal location," the company said in a written statement on its choice. ThyssenKrupp's Executive Board Chairman Ekkehard Schulz called the project "a central element of the Group's strategy for the Steel and Stainless segments, aimed at achieving profitable growth in Europe and North America. It will considerably strengthen ThyssenKrupp's position in North America."
“It’s all relative and the slide in the dollar has been a very good thing for the US manufacturing and exporting sector. -— Well, that’s good. Because for the rest of us, it’s been a nice little pay cut.”
I happen to be paid in dollars and actually live in Europe. This has not been a “little pay cut” for me. My purchasing power has gone down at least 20% in the last two years. That’s not a “little” pay cut -— it is a huge pay cut. In that sense, in the short term I taking it in the shorts.
But I see it very different than you do. My long term interest is in the U.S. economy, and I can see that the low dollar/euro rate now is encouraging heavy investment in the U.S. Just as one of many examples, the other day I read about how the German company ThyssenKrupp was constructing a 4 Billion dollar plant in Alabama. I’m sure ThyssenKrupp expects to profit from that investment, but I’m also sure that a lot of U.S. families will be putting a lot of bread on the table building the plant, and then working in it. It is not like the Germans will later pick up their plant and take it home with them.
For personal reasons I would like the dollar to go back up, and fast! For the good of the U.S. economy, the low dollar will pay big dividends in the future, and I’m more concerned about that.
While I was composing my post, Blam happened to be posting the facts about ThyssenKrupp. See Post 46.
The good part...most of the dirty work, smelting, etc. will be done in Brazil and the 'clean' bulk metal will be shipped across the Gulf Of Mexico to Mobile.
Remember Gerry Ford's "WIN" buttons? (Whip Inflation Now) Unfortunately, neither he, nor Jimmah were able ta whip it!!!
Sure glad I "whipped" the lions share of my mutual funds to the sidelines on November 27!!! I'm gonna just watch till around March 12 of next year, thank you very much!!!
I remember the Japanese coming into TN and KY and Bavarians movin some BMW and Porsche to appalachia in the late 70's and early 80's cause the dollar dropped with Reagan, too!!! (it wasn't so bad then, either)
I am sure also for those Americans that will eventually find jobs that otherwise may have stayed flipping hamburgers in some fast food in some strip mall.
So I guess that will employ some dock workers in Mobile too (although I can’t say that I’m a longshoreman’s union fan -— but their kids need braces too).
Thanks for posting the details on the deal. I read a little blurb about it on Instapundit the other day, but I had not seen the numbers involved.
Gotta love it. Heavy, relatively clean industry.
They're building some new docking facilities to accommodate the uniqueness of the material, etc. The metal will be off-loaded from the ships at Mobile and moved up river to the factory on barges.
A major accomplishment for a county that is less than 400,000 population. The whole state has a population less than Houston, Texas.
This area is booming.
A big reason for these going to America has little if anything to do with exchange rates.
What the French, German and other foriegn companies are trying to do is get away from the outrageous benefits given to France, German and other Euro countries.
Like 2-4 weeks off at Christmas besides 4-6 weeks off for vacation, 3-6 months of family leave for new babies and on down the line besides health insurance costs which make ours look cheap.
In the last decade I did some consulting for some health care firms. One had been headquartered in France and Germany. The CEO and board had moved most research and backup/services to America.
I asked the CEO how they could afford that, and he said simple. I can hire a top Gene Splitter in America for about the same basic salary in Europe. He/She will work 48 to 50 weeks a year versus less than 40 weeks in Europe with excellent American Health Benefits at about 1/3 the cost of insurance in Europe.
They were planning to move most production to America for the same reasons.
Also, the pay and benefits were so good for Americans, the American workers didn’t want to mess with unions.
There were tax benefits, also, that he didn’t want to go into.
“There is also a certain attraction to productive, relatively literate, 40-hour-a-week workers who don’t take three months’ vacation and don’t go on strike every time the government says something the unions don’t like. OTOH, every single one of the workers in Europe speaks a foreign language... ;-)”
Exactly. I had not read your reply when I made a reply with similiar comments:
A big reason for these going to America has little if anything to do with exchange rates.
What the French, German and other foriegn companies are trying to do is get away from the outrageous benefits given to France, German and other Euro countries.
Like 2-4 weeks off at Christmas besides 4-6 weeks off for vacation, 3-6 months of family leave for new babies and on down the line besides health insurance costs which make ours look cheap.
In the last decade I did some consulting for some health care firms. One had been headquartered in France and Germany. The CEO and board had moved most research and backup/services to America.
I asked the CEO how they could afford that, and he said simple. I can hire a top Gene Splitter in America for about the same basic salary in Europe. He/She will work 48 to 50 weeks a year versus less than 40 weeks in Europe with excellent American Health Benefits at about 1/3 the cost of insurance in Europe.
They were planning to move most production to America for the same reasons.
Also, the pay and benefits were so good for Americans, the American workers didn’t want to mess with unions.
There were tax benefits, also, that he didn’t want to go into.”
If the dollar is going down in value, the seller will want more $’s to earn the same profit. The price of oil went up ,in part, due to the drop in the $
Well, as tempting as that is.... they will look for who’s got the best tax deal for them. While NY is union friendly, not every company that operates here is union.
Notice that the company in question went to Tennessee, low taxes, right to work state, compliant political environment.
Let’s look at those sterling jems of liberalism: NY, MA, MI
NY is a mess, MI is an even bigger mess, MA is equivelent to both. The young are fleeing, businesses are closing and moving to TN or China, slashing jobs and yet the liberal nitwits continue to tax the folks to death.
Forget about China, the U.S. is the new hot spot for global firms looking for lower production and transport costs, increased supply-chain flexibility and a crack at wooing the world's most demanding customers. France's Alstom a maker of high-speed trains and power turbines, this week became the latest European firm to unveil plans for a facility across the Atlantic. The group said it will build a $200 million plant in Chattanooga, Tenn., to mitigate the impact of the weak dollar on its margins and to get closer to some of its biggest customers.Bush's fault. ;')
You obviously have no understanding of commodity markets. Contrary to popular belief, neither the Saudis or all of OPEC combined can dictate the price of oil.
They can, within relatively narrow limits and time frames , control the amount of oil put on the market, but overall, market forces that no individual or cartel can control, determine the price of oil.
The dollar can be up or down relative to other currencies at any given time and still have no impact in and of itself on the 'price' of oil.
What we have at this point in time is oil production around the world at all time peaks. But demand around the world is also at all time highs. That demand is driven by a global wide prosperity we are now experiencing including nearly 3 billion people in China, India and other emerging economies in Asia crawling out of subsistence economies and entering consumer economies.
These are the good times my friend and you should pray that they continue. Considering the world wide demand, $100 / bbl or $3 gasoline, when adjusted for inflation is a damn bargain.
BTW. I don't know if you are old enough to recall the so-called gas shortages back in the late 1970s Carter debacle. I recall them very well and the gas that I couldn't get at any price probably cost me $100 a gallon in lost work.
$3 a gallon today is damn cheep for the value I gain from it. IMHO, keep the $3 gas pumping and I'll keep buying. It's a steal.
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