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Death of Manufacturing
The American Conservative ^ | 8/23/03 | nonglobalist

Posted on 08/23/2003 7:42:02 AM PDT by cp124

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1 posted on 08/23/2003 7:42:02 AM PDT by cp124
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To: cp124
Yeh, Pat. It's clear that the UAW no longer exists because all our cars are being made in Indonesia. This explains why there are so many hamburger flippers where Detroit used to be. Riiiiiiight.
2 posted on 08/23/2003 7:49:25 AM PDT by Ronly Bonly Jones
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To: Ronly Bonly Jones
DCX mandate: 'World prices'
132 suppliers told to cut - or get cut

By Robert Sherefkin
Automotive News / June 16, 2003

DETROIT The Chrysler group is getting tough on parts makers that fail to deliver the world's lowest prices.

Chrysler has targeted suppliers that have a gap between their price to Chrysler and the lowest price that can be found anywhere in the world - prices that suppliers say come from low-wage Asian nations.

The automaker told 132 suppliers to cut prices by today, June 16. Chrysler also has demanded that the price cuts be made retroactive to Jan. 1, according to letters from Chrysler to the suppliers. Automotive News obtained a copy of one letter sent this month.

The new deadline is the latest move in Chrysler's campaign to establish the lowest possible "world price" for each component. Typically, world prices include the cost of transporting components to the assembly plant.

This effort has gained a new sense of urgency in the wake of Chrysler's warning that it will lose nearly $1.2 billion in the second quarter.

In recent weeks, Chrysler has delayed merit pay raises, reduced health care benefits for white-collar employees, limited overtime pay and canceled plans for a new assembly plant in Ontario.

Chrysler's letter to suppliers is part of a three-year effort to cut annual purchasing costs by $4.4 billion. In 2001, the company announced across-the-board price cuts of 5 percent, then made those cuts retroactive.

Next the automaker told of plans to save an additional 10 percent by the end of 2003. To achieve that goal, Chrysler is redesigning components. The company also has asked many suppliers to match prices set by factories in low-wage nations such as China.

Chrysler says most of its top 850 suppliers have responded with substantial price cuts. The recent letter targets 132 suppliers that Chrysler says have failed to match its world price.

Those who fail to respond could lose contracts. Over the past three years, Chrysler has re-sourced $5 billion in contracts.

Not happy

Suppliers were not pleased to receive Chrysler's warning. "It's just an effort to use Chinese prices against us," says one supplier.

But a senior Chrysler executive insists that the automaker is not arbitrarily slashing prices.

"We tell them there is a (price) gap, and we ask them to come up with cost reductions," says Peter Rosenfeld, who was named Chrysler group's executive vice president of procurement and supply, effective Dec. 16.

Rosenfeld says he sent letters to the 132 suppliers because they have not responded. "We are saying, 'You have to fix this. If you don't, here are the consequences.' "

Keeping score

Rosenfeld also notes that pricing is not Chrysler's sole measure of performance. Chrysler keeps scorecards for 850 major suppliers. Those suppliers are graded according to cost, quality, delivery and technology.

Chrysler characterizes its scorecards as a scientific way to measure each supplier's performance.

But one supplier's president complains that Chrysler's world prices sometimes exclude engineering costs. The president, who asked not to be named, says he lost a contract after Chrysler gave his blueprints to a rival company.

He says the bid was unfair because the rival did not have to pay any engineering costs. The executive says Chrysler told him: "We don't pay engineering costs."

Rosenfeld says Chrysler does pay engineering costs: "Any supplier with an issue should see me."


3 posted on 08/23/2003 7:52:54 AM PDT by cp124
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To: cp124
It seems Pat forgot about Toyota, Nissan, Honda, BMW, and Mercedes, building car manufacturing plants in America to take advantage of our superior productivity and lower costs.

Even Korea's Hyundai is building a plant in America.

4 posted on 08/23/2003 7:54:48 AM PDT by magellan
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To: Ronly Bonly Jones
VW Group to source parts in China

By Alysha Webb
Automotive News / July 16, 2003

SHANGHAI, China — Volkswagen, which has complained frequently about the high cost of auto parts in China, will follow the example of Ford Motor Co. and General Motors and begin sourcing parts here for its global operations.

Peter Wolters, head of finance for FAW-VW Automotive Co., a joint venture in the north China city of Changchun, has been named head of purchasing--China for VW Group, a new position.

“At the moment, Chinese suppliers are too expensive,” Wolters said in a brief interview. “But bringing in new cars to China on a common platform will achieve economies of scale.”

China is VW’s largest market. It expects to sell more than 600,000 cars here in 2003.

The automaker will boost its production capacity in China to close to 1.5 million cars and light trucks over the next five years by building a new plant in Changchun and adding capacity at Shanghai Volkswagen.

Ford has said it will source $1 billion in parts from China this year, while GM has announced plans to source $10 billion in parts here, without naming a timeline.
Read more about...
5 posted on 08/23/2003 7:55:16 AM PDT by cp124
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To: magellan
Assembling a product is only a fraction of the benefit to the economy. These parts are supplied from Japan, Taiwan, and China. Producing the parts makes a trickle down effect on the economy. Part manufacturers buy machine tools, tooling, etc. The machine tool and tooling companies buy machinery and tooling. etc,etc,etc.
6 posted on 08/23/2003 8:01:48 AM PDT by cp124
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To: Ronly Bonly Jones; cp124; Willie Green; harpseal
http://www.freerepublic.com/focus/f-news/959787/posts
Lawmaker predicts defeat for 'Buy American' language (Defense Department procurement update)


"But, in general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade." ~ Karl Marx, On the Question of Free Trade, January 9, 1848
http://www.marxists.org/archive/marx/works/1848/01/09ft.htm#marx


"Communists and socialists feel sure that setting up international “free” trade systems which impose regulations chuck full of intrigues, redistribution plans, arbitrary law, and interdependence schemes, will win out against the conservative interests of every free nation. What could be better than to use “free” trade to reverse the advantage of the relatively free, moral, prosperous,
and strong nations of the Earth, so that the tyrannical, amoral, poor, and weak nations of the socialist bloc might get the upper hand? What could be a more cunning approach than to market the idea that those who oppose “free” trade are enemies of freedom?" http://www.newsmax.com/commentarchive.shtml?a=2000/6/27/105655


http://www.freerepublic.com/focus/news/954156/posts

http://www.freerepublic.com/focus/news/957315/posts

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7 posted on 08/23/2003 8:25:24 AM PDT by RaceBannon
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To: cp124
Industry official: U.S. manufacturing will never be the same
Overseas competition killing low-skill jobs
Rich Rovito

The prolonged economic slump has forever changed the manufacturing sector, forcing companies to re-evaluate the way they do business as they face intense competition from around the world.

This was the message delivered to a select group of manufacturing executives invited to attend a roundtable discussion that kicked off the "Manufacturing Matters" conference May 5-6 at the Midwest Airlines Center in Milwaukee.

"This isn't just another business cycle. Nothing will ever be as it was," said Phyllis Eisen, vice president of The Manufacturing Institute, a Washington, D.C.-based arm of the National Association of Manufacturers. "This is a period of transition."

The recovery is the slowest on record, Eisen said, and has created a crisis in the manufacturing sector, with U.S. companies permanently losing business to low-cost overseas competitors.

Although there are signs of hope, such as increased factory orders, the manufacturing sector "is still hemorrhaging jobs," she said.

Wisconsin manufacturers alone have shed 88,000 jobs over the past three years.

"Some of these jobs are gone forever," Eisen said. "What's left are high-skilled jobs."

It's "fantasy" to think that low-skill jobs that have been lost to Mexico, China and other countries will ever return to the United States, she said.

"I don't know what's going to happen to poor people," she said. "If they don't have skills, they won't be part of society."

Although low-skill jobs are disappearing, manufacturing jobs that require higher-skill levels are in demand, Eisen said. The challenge is turning young people on to careers in the sector, she said.

Most students view factory jobs as "dark and dirty," unaware that manufacturers can provide family-supporting jobs, she said.

High school students are pushed by teachers and counselors to attend college, with little thought given to technical or trade schools, she said.

"The thought is that you're first-class if you go to college and you're a loser if you go to trade school," Eisen said.

Students must be allowed to see the relationship between manufacturing and technology, she said.

"I wouldn't let a kid out of eighth grade without visiting a modern manufacturing floor," Eisen said.

In order to secure the long-term health of the country's manufacturing sector, funding needs to be preserved for organizations like the Wisconsin Manufacturing Extension Partnership, Eisen said. The Madison-based organization provides small and midsize manufacturers with consulting services on advanced manufacturing technologies and business practices that are intended to boost revenue and overall efficiency. It has been battling to maintain federal and state funding.
Concerns about China

The discussion also touched on perhaps the most immediate threat -- low-cost manufacturers in China.

"China is going to be to this decade what Japan was to the 1980s, but blown up to 20 times the size," Eisen said.

The threat is heightened by China's undervalued currency, she said.

Chinese manufacturers are quoting projects at less than the cost of raw materials for U.S. manufacturers, said Paul Ericksen of the Wisconsin Supplier Development Consortium, a manufacturing group that fosters relationships between the state's suppliers and original equipment manufacturers.

"The Chinese have the power to take away our manufacturing base," he said.

It's key for small and midsize suppliers to enlist the help of original equipment manufacturers if the state's manufacturing sector is to remain viable, Ericksen said.

"If I can save 30 percent by going overseas, I have to do it out of responsibility to our shareholders," Ericksen said.

However, manufacturers that are flexible to customers' needs often are able to win orders away from companies that compete on cost alone, provided they are "ballpark competitive" when it comes to pricing, Ericksen said.

Keith Peterson of Humane Manufacturing in Baraboo said he can retool his manufacturing operation in about half an hour, which gives his company an advantage over inflexible, low-cost competitors. By running a more efficient operation, Humane Manufacturing, which makes rubber flooring from recycled products, is able to charge higher prices than its overseas competitors, he said.

State Rep. Terri McCormick (R-Appleton), who hosted the roundtable discussion, said there are also domestic threats to Wisconsin manufacturers. Other states offer incentive packages that make it attractive for manufacturers to relocate their operations. Government regulations and high business taxes also pose hardships for Wisconsin companies, she said.

"We must, as a state, be collaborators and supporters of jobs," she said.

Eisen claims the Bush administration has vowed to make manufacturing a priority, a pledge Peterson said he has heard from prior administrations with few results.

"There are more roadblocks than assistance," he said.
8 posted on 08/23/2003 10:10:38 AM PDT by cp124
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To: cp124
Part of the blame lies with US cities. The confiscatory level of property taxation first drove many companies out of cities, but there are NO or nominal property taxes in other countries. All you need do is cross a little ocean, which is not the obstacle it used to be.

Just think, you dream up some idea for a widget you want to manufacture. You look to locate your plant in, say, New Haven, Connecticut. The mil rate there is over 8 mils, that is, for every $1 million you invest in your factory, you have to pay the dunderheaded lazy thieves in city hall $80,000.00 per year. Say your factory costs a modest $5million. You will have to pay the thugs in city hall $400,000.00 per year just for the privelege of locating your plant in the midst of the squalor known as New Haven.

Do you know how hard it is to make an extra $400,000.00? One must stay up pretty late at night to earn such a sum. It doesn't come easy, and in fact, it's simply easier to leave town, or not show up in town in the first place. They wonder where the businesses have all gone. Where the jobs have all gone...

Then you have to worry about the lawyers.

Now, put your factory in sunny Mexico, or Guangdong, and you don't have any of those worries. No little old ladies will slip on your sidewalk, or if they do, no lawyers will come knocking. Oh, and property taxes? Guess again.
And you just might find more people there who speak English and who can read a ruler than you will in New Haven.

Why would anyone in their right mind put a manufacturing plant in an American city? Because they erected nice billboards to "attract business"? Right.

Low costs will attract business. Low risk of litigation, a business friendly environment.




I'm really surprised at the nitwits that run our cities. They steal and tax and run violent filthy slums right into the ground, then they spend taxpayers' money on billboards as if someone is going to actually be fooled by such misguided blather... like this one:

Hey suckers! Put your factory here! We can tax you, sue you, inspect you, steal you right out of business!! Step right up...
When a city has to put up a billboard, it's time to get out of town!

9 posted on 08/23/2003 10:16:30 AM PDT by Bon mots
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To: RaceBannon
I've heard of voodoo economics, but this is the first time I've ever encounterd cargo-cult autarky economics.

The world economy is here to stay. If you want to live in a world where cave men sell rocks to each other, you're free to move to North Korea and live under the joyful principles of ju-chi (self-reliance) at your convenience.
10 posted on 08/23/2003 10:16:47 AM PDT by Ronly Bonly Jones
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To: clamper1797; sarcasm; BrooklynGOP; A. Pole; Zorrito; GiovannaNicoletta; Caipirabob; Paul Ross; ...
Now my big question when China fishes the nationalization of the rights to the technology transfered to them by some of these automobile makers will they demand a lsicese fee for the use of that technology?

On or off this list let men know

11 posted on 08/23/2003 10:18:38 AM PDT by harpseal (Stay well - Stay safe - Stay armed - Yorktown)
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To: Ronly Bonly Jones
No why should you suggest to Race that he move to North Korea he is clearly not an internationalist or a Marxist as clearly anyone who subscribes to the current governing priciples of what is called Free Trade by its advoxates sometimes a the World Economy by otehr advocates or those who have not examined the deatils of what we are talking about.

Clearly if you had any positive evidence to provide of teh current trade policies providing a NET benefit you would provide that.

I for one would look forward to seeing sucvh evidence of a NET benefit but I am not going to be convinced by any arguments of the like that we saev a couple of cents on every washclosth sold so that is good for consummers so teh rest of teh economy be damned. I would like sound and rational reasons why national policy should allow any Chinese access to American markets whatsoever given their current policies.

12 posted on 08/23/2003 10:24:52 AM PDT by harpseal (Stay well - Stay safe - Stay armed - Yorktown)
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To: cp124
"As a former Friedmanite free trader, let me say it: free trade is a bright shining lie. Free trade is the Trojan Horse of world government. Free trade is the murderer of manufacturing and the primrose path to the loss of national sovereignty and the end of our independence."

Thanks for posting.
13 posted on 08/23/2003 10:25:31 AM PDT by LibertyAndJusticeForAll
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To: harpseal
For any who would be interested in proposal to address the structural defects in teh American economy introduced by teh Internationalists.
14 posted on 08/23/2003 10:26:09 AM PDT by harpseal (Stay well - Stay safe - Stay armed - Yorktown)
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To: Ronly Bonly Jones
Yeh, Pat. It's clear that the UAW no longer exists because all our cars are being made in Indonesia. This explains why there are so many hamburger flippers where Detroit used to be. Riiiiiiight.

Now please explain what light this brings to the issues raised?

Clearly a higher percentage of the work on Automobiles sold in the USA is done outside the USA compared to Jan 1, 1993.

15 posted on 08/23/2003 10:28:08 AM PDT by harpseal (Stay well - Stay safe - Stay armed - Yorktown)
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To: Ronly Bonly Jones
You posit an utterly false dichotomy.

As for your remark about Detroit, the Detroit of 1960 was a nice place. The post-deindustrialization Detroit of today is not. In fact, none of the cities of the Northeast have recovered from deindustrialization. When the factory closed, the supply chain of firms that fed it collapsed. A high tech firm, on the other hand, needs only phone lines. Financial services could not replace the jobs lost when the factories closed.

And you ignore a key result of the destruction of those low-semi skilled stable jobs. A huge and growing underclass as it is impossible to work your way out of the ghetto the way the Italians and Irish did. The explosive growth of vice industries such as stripping, porn, and gambling in a world where labor is cheap, life is cheap, and flesh is cheap. A pervasive culture of violence and depravity in urban America as honest labor and deferred gratification are not rewarded but crime and hustling are.

Pat Buchanan sees where free trade is taking America. Somewhere like Brazil where the well off live behind walls and everyone else treads water.
16 posted on 08/23/2003 10:29:31 AM PDT by Tokhtamish
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To: Bon mots
Yes, we're in a world economy but any fool should be able to realize that when a country runs huge trade deficits, ever-growing fedgov budget deficits, debt exploding at the personal, corporate & gov't levels, increased regulation and taxation, open borders that allow millions of non-Americans to attach themselves to our system...sucking out billions in services, then it should be obvious that the US approach to this "new world" is patently suicidal. Anyone who cannot fathom the de-construction of this country as a result of these disastrous policies suffers from ultra severe rectal-crainial inversion.
17 posted on 08/23/2003 10:34:24 AM PDT by american spirit (ILLEGAL IMMIGRATION = NATIONAL SUICIDE)
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To: Ronly Bonly Jones
My post #17, was intended for you.
18 posted on 08/23/2003 10:36:11 AM PDT by american spirit (ILLEGAL IMMIGRATION = NATIONAL SUICIDE)
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To: cp124
According to Pat, when Dell Computer imports parts for assembly in the U.S., that's bad.
According to Pat, when GM exports parts for assembly in Mexico, that's bad.

I wish he'd make up his mind.

19 posted on 08/23/2003 10:38:36 AM PDT by 1rudeboy
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To: cp124
It is clear Chrysler can ask to pay whatever it wishes for parts just as I can ask to pay $100 for a new mercedes from Daimler Chrysler.

Now for those who are aguing for the rights of private property as an excuse for Chrysler trying to tie things to the chinese auto parts industry. I note one little part of this reply that has a great deal of significance.

But one supplier's president complains that Chrysler's world prices sometimes exclude engineering costs. The president, who asked not to be named, says he lost a contract after Chrysler gave his blueprints to a rival company.

Please as part of your defense include the right to steal intellectual property and how that is part every individual's natural rights. I can only go on what is replied with this one. Also while we are it would someone explain Chrysler's retroactive contract revisions is this soem new part of freely negotiated contracts I have no heard about that one party may retroactively revise the terms of a contract without the consent of another. Now can I use this with the bank that hold's my home's mortgage and tell them they must retroactively refund all mortgage payments from January 1 and lower my future payments to zero? Or do I have to be Chrysler to qualify? Just asking.

20 posted on 08/23/2003 10:39:15 AM PDT by harpseal (Stay well - Stay safe - Stay armed - Yorktown)
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