Doc…"One item that is still unabashedly American is my wife’s table top radio made by Bose."
My wife’s Bose was made in Mexico. So the only item I can vouch is still “unabashedly American”, is my wife…I think.
Well, the Ford Ranger WAS made in Minneapolis. Now it may be made in Thailand, but it isn’t available for sale in the US. We might as well rant that the Ford Bantam is made in South Africa.
Personally, I find that some items you have no choice - they simply aren’t made in the US. Cars, though, are easy enough to find made in the US or from a company that employs enough Americans in development and through exporting products to allow for the import and still find quality and reliability.
My company makes most everything we sell in the US right here in the US - though there are some exceptions. Some products we make in Canada, for example… but for every one of product A we import from Canada, we’re selling products B, C, D, E, etc in Canada that were made in the US. We simply can’t afford to make every product in every single country - the cost of the facilities and production lines would kill us.
As for Ross Perot’s “giant sucking sound”, it certainly hasn’t been that big of an impact on the domestic auto companies, who have closed far more factories in Canada and Mexico since its passage than they’ve opened - its the import brands are the ones that have expanded in Canada and Mexico…
I wonder why that is?
Well, I’d have to give the UAW some credit here - I’m not a fan of them in general, but they have demanded the movement of some production as part of their contracts.
Some of it is simple practicality, though - Something quite a few people don’t understand is the level of investment needed to keep factories up to date. You don’t build them and then just run them forever without massive injections of new capital and equipment. The tooling in the factory is what costs a lot of money (the paint shops in particular can be extremely expensive), and every few years you’ll end up replacing good amounts of equipment to keep it productive. There’s a Ford powertrain plant near me that has had nearly $600 million in new investment over the past 8 years… which is more than Honda spent to build their new assembly plant in Indiana. So when you make a decision which plant to close, it often can come down to age. Many Mexican plants were VERY dated and inefficient. When Ford built F-series trucks in Cuautitlan and shipped them to the US, they took well over 100 man hours per vehicle to build, while Kansas City was doing the same job in about 21, and at much higher quality (better tooling to help there). It was a no brainer which plant to stop F-series production in… The Canadian plants were similar - most were built in the 1960s after the US government sold out its own citizens in a trade agreement with Canada that unlike NAFTA, actually forced US automakers to build plants in Canada or else get hit by high taxes. They were pretty dated, having run the same products for years and years without new investment.
So caving to the UAW became easy there, especially since the labor cost differential between the US and Canada is very, very small…
I wouldn’t say the changes were ones of a great sense of patriotic duty - rather they were just the practical decisions. When it comes to that “giant sucking sound” people seemed to forget that for the auto industry, at least, building a new plant and closing another is an extremely expensive proposition.
dagosa; our Bose radio must be older than yours. Mine says “Made in USA from domestic and imported components”.
eraser: the plants originally built under the USA/Canada Auto Pact have either been closed (GM’s Camaro/Firebird at Ste Therese, Quebec, Mack’s truck plant, Ford’s Crown Vic plant, Hyundai’s Bromont Sonata plant) or completely renovated. The Big Three have built cars in Canada since the early 1900; those plants had capacity for just the local market, and were high cost operations. The Auto Pact, signed by LBJ in 1964, allowed free trade and larger and more efficient plants.
NAFTA opened the market completely for US, Mexican and Canadian prodcution to be rationalized. The foreign firms took adavantage of this as well, but Toyota still builds Corollas and Camrys both sides of the border, as does Honda with Civics and Odessey minivans. The Ford Edge is only built in Canada for both markets as are some Buick models by GM.
The continental market share is now 20% Mexican, 17% Canadian and 63% US for vehicle assembly. Canada’s share has gone down the most. That country used to assemble about 3 million vehicles while the domestic market only absorbed about 1.3 million, resulting in a $35 Billion trade surplus per year.
Ive managed to do quite well for myself by doing exactly what you say people can’t do on their own.
But there are MANY people in the lower income brackets who can’t.
Mike, let’s not drift off topic. We’re discussing UNION negotiated compensation packages for their members. Let me know when you can find even ONE instance of a union employee being in a “lower” income bracket and not being able to afford to put away 10% (remember, 10% is a RELATIVE amount). I have personal experience working in shops that had UNSKILLED union people making >$100k as they knew how to work the provision in their contracts regarding overtime pay.
“NAFTA opened the market completely…”
http://www.nafta-sec-alena.org/
.That’s the generally accepted but incorrect in my opinion, description. Everyone it seems at times is willing to jump on the “blame NAFTA” band wagon. In reality it is a comprehensive agreement between the nations involved designed to settle, not create trading imbalances. It’s execution all depends upon the motivation and directive of the administrations on either side elected to oversee it.
When we elect a federal administration, we are in essence electing the facility whose duty is to do this. The administration at the time of the signing actually attempted to do that job, the last Bush administration sold out to the highest bidder or worse, did NOTHING when imbalanced occurred (which is their non regulatory mantra.) Canada and Mexico reacted accordingly.
NAFTA is not to blame any more than any agency is…it’s all about the competence and motivation of the people running them and how willing or smart enough they are in using it’s provisions for the benefit of the people they represent. The complete unwillingness for certain elected parties to address or even deal with illegal immigration mirrors this trading imbalance. Beware when representatives say it’s all about the money and not fairness…it’s all about THEIR money, not ours…
Right, the plants built under that plant have been closed or renovated… a plant that old is positively obsolete in the auto industry unless it has been renovated and had significant capital injections every few years. The Canadian plants were simply some of the least up-to-date in the automakers’ inventories, and therefore the ones closed. But prior to the auto pact, the US automakers produced far less in Canada than they sold there, and that was the Canadian governments’ gripe. Under the agreement, if you built at least as much as you sold in Canada, you got free trade across the border. If you didn’t, you got hit with hefty tariffs. The automakers already had a presence in Canada, but not enough to avoid the tariffs, thus forcing them into a building spree.
BTW, Toyota currently doesn’t build the Corolla in the US - just in Canada and Japan (for the US market), and the Camry is built in the US, but not in Canada.
FWIW, If you look at Table FT-900, published by the US Census Bureau, you can get a measure on trade balances in the Auto Industry (Parts + vehicles) by Country (Exhibit 18, p.23 of the October Report).
Ranked in order, positive meaning a US surplus, negative a deficit, we get the following for 2011, year to date:
- Saudi Arabia: $3.406 billion
- “All Other” : $2.907 billion
- Australia : $2.854 billion
- Canada : $665 million
- Brazil : -$49 million
- Belgium : -$527 million
- Sweden : -$845 million
- Austria : -$1.679 billion
- UK : -$1.742 billion
- Taiwan : -$1.825 billion
- Korea : - $11.575 billion
- Germany : -$16.517 billion
- Japan : -$34.645 billion
- Mexico : -$34.760 billion
The Corolla is currently being built a few miles from my home. The Blue Springs, MS plant was originally planned to build the Prius but somehow the economic downturn slowed the plant’s opening and changed to production of the Corolla. Local press releases indicate that about 1,200 are currently employed directly at the assembly plant and several hundred more at outlying component suppliers. The state spent $millions on infrastructure to accommodate Toyota. Local politicians have stuffed their hats full of Toyota feathers and businesses are begging for employees who are bilingual Nippon/English. Certainly locals hope that the effort is successful.
Rod -
I stand corrected. The Blue Springs plant just started 3 weeks ago.
In my little corner of the world we brag on getting a traffic light in the neighborhood. When the first Corolla came off the line at Blue Springs the Governor, 2 senators and a dozen mayors could be heard cheering at my house 12 miles away. The rush of industry from America to the Orient was actually incremental and the steps were choreographed between Wall St and congress. Small, seemingly insignificant changes in tax laws regarding depreciation, deductions for foreign taxes and freedom to declare profits in another country even though the sale was in the U.S. has left corporations a great deal of flexibility to avoid American taxes and the freedom to spend $billions to further reduce their tax burden. Unless we find ourselves with a benevolent dictator with unlimited power the solution will require the public being as informed and determined as the corporate lawyers or possibly a rebirth of the Bull Moose Party.
eraser; I know all about why there was an autopact. I even knew the professor, Dr Bladen who submitted the famous “Bladen Report” on the car industry and suggested that integration US and Canadian manufacturing and have product specialization that would be good for both sides
Starting in 1964, production got gradually rationalized as well as parts production. The St. Catharines engine plant in Ontario produced 3300 V6 engines per day for shipment to plants both sides of the border.
Until the 2007 recession, Canadian plants were doing well, even with “obsolete” equipment. The quality was very good and productivity was high enough to merit new models to be built there.
The real cost advantage, however was the low Canadian dollar, as low as $0.62US 15 years ago, and the $8US per hour wage advantage due to government paid health care.
With the GM and Chrysler bankruptcies and the recession, the Canadian dollar rose to close to par due to the energy-based Canadian economy. Health care costs were also renegotiated with the UAW. At that stage, with the US and Canadian goverments bailing out GM and Chrysler, the decison was made to let each country build the car numbers proportion to their market size. That ment that the Canadian plants of the Detroit 2 would be building 10-12% of their total US and Canadian market, and not the much higher % they did in the past.
The NAFTA agreement opened up the North American market to allow manufacturers to decide whether to build something in the US, Canada, or Mexico. In this industry the Mexicans came out ahead in my opinion.
eraser, manufacturing stats change all the time; this is a very fluid industry. The car industry has changed dramatically since the 2005 year. Years ago, GM closed their old Camaro/Firebird plant in Quebec, but won the contract to build the new Camaro in their “obsolete” Oshawa plant.
I’m glad to read that Saudi Arabia has a $2 billion surplus in automotive trade. Please explain what is in these figures.
Those figures, simply put, include automobiles and parts.
We’ve got small surpluses with a few countries, and big deficits with Korea, Germany, Japan, and Mexico.
Of course, all those deficits are not the fault of the manufacturers you would immediately think of - SOME of the Korean, German, and Japanese deficits are caused by US automakers buying parts from there (of course, at least in the case of Germany, they export good numbers of parts and vehicles, too).
Mexico? Well, about 60% of the imports from Mexico are GM/Ford/Chrysler vehicles, with the rest being Toyota/Honda/Nissan/VW. Even the surplus with Canada can’t be evenly credited to all companies. Take Ford. Given their November sales, with only the Edge, MKX, MKT, and Flex coming from Canada anymore, that would be about 14,155 vehicles per month. The F-series, Escape, and Focus alone sell nearly that many per month in Canada, and they’re all sent in from the US, along with quite a few other vehicles. Honda and Toyota pull significant deficits…
Thanks eraser, I misread the figures, I’m used to seeing a country’s own figures as positive (surplus) or negative (deficit). The Canadian $35 billion annual surplus of the past seems to have become Mexico’s surplus.
Ford did not have to meet the bailout conditions of producing a balanced number of cars with respect to the total US/Canadian market proportion since they took no bailout money. The other two have to build at least 10% of their vehicles in Canada.
Agree, Toyota does not build Camrys in Canada; those come either from the US or Japan whichever is cheaper. Toyota built a brand new plant in Woodstock, Ontario for RAV4 production and greatly expanded the Cambridge plant currently making Corollas.
Sorry if I was confusing. 
Naturally, those numbers don’t include other products, so if you thought it was an overall trade deficit, it might make sense considering the amount of oil we get from Saudi Arabia… but since its just cars and parts, it should be somewhat more obvious that we shouldn’t have a trade deficit with Saudi Arabia in that sector… on the contrary, since they love our big trucks and SUVs, we get a big surplus in that sector of the economy.
Eraser1998… You’re right, they love our military hardware too which we are happy to sell and service to just about anyone with the money. I’m hard pressed to think of any oil rich Arab country that has much of manufacturing base. We now have Iraq in the fold of oil rich dependents to the US. If they don’t do what we say politically, we let the warranties lapse on their (future) air force, construction and military hardware. They will need a GM outlet. Our get out of dept and reduction of trade surplus strategy.
dagosa, I owe you an apology for getting too exercised over your dismissal of my last comments. I think the UAW has a very difficult road ahead, and I hope they can work things out so that they don’t lose much. I know that I would not want to lose any of the compensation I worked for over the years But they need to find a way to make the cost value-added. The cost of shipping cars here by foreign-manufactured competitors reduces the impact, but it still appears that UAW-built cars cost too much. It may not be as simple as cutting pay and benefits for UAW members, but that is all we on the outside see. Maybe they can be a part of productivity improvements or new products that pay for the labor cost differential. But productivity cost improvements almost always mean fewer workers. That’s better than no workers, but still difficult for the union to stomach. American workers have faced similar problems for decades. How many textiles are manufactured in the US now? Not many, and it led to a loss of jobs in New England when the jobs moved to the American South, and the again when the jobs moved to Asia, Central America and South America. I really hope that they can solve their problems and retain their standard of living, but it is a difficult road ahead.
While reading the information that eraser1998 posted regarding domestic vs. foreign parts content, I noticed that the new Chevy Silverado / GMC Sierra pickup trucks contain 61% domestic parts content, while the new “Japanese” Toyota Tundra trucks contain 80% domestic parts content; For me, this seriously begs the question, which truck is truly more American nowadays? You have one manufacturer headquartered in the U.S. which imports many of the components for its trucks, and another headquartered in Japan that builds its trucks on U.S. soil and uses mostly domestic parts. At this rate, pretty soon the Toyota Tundra might soon be a “JINO” truck (Japanese In Name Only). I wonder if Tundras are even manufactured in Japan; anyone know?
I’m not so sure I’ll buy a new G.M. truck again, what with there being such a significant content of foreign-made parts. I’ll possibly buy an older one in the future, though, simply because I like some of the older body styles. My '02 Silverado, which was built in Fort Wayne, IN., still has about an 85% content of domestic parts, as far as I know. Next time I get a truck I’ll go for an older one with all-domestic content, even if I have to tinker with it from time to time; it’ll make a nice project.