About 13,000 U.S. auto workers have stopped making vehicles and headed for the picket lines. Their leaders have been unable to bridge a giant gap between union demands in contract talks and what Detroit’s three automakers are willing to pay.
Considering less than a sixth of a vehicle’s input cost is labor, they could double their pay and still make 25% more profit than what it would cost for truck import taxes…
They could but they are after maximizing profit. Why else would be corporates moving their factories to the other end of the world? To give poor people a job? Or to reduce costs because domestic labour is much more expensive?
If we’re still talking about trucks, you would need to find some place where not only do you pay them less than what someone would make in a Chinese vehicle manufacturing plant, you also need to make sure that shipping and getting the right materials doesn’t eat into that savings. It just isn’t really economical anymore, unless you find more and more obscure countries with more instability and less infrastructure.
Managers of these companies are good at doing that and are richly rewarded for doing so.
Instead of China it might be other cheap labor place like Vietnam, India or even eastern Europe.
Just take Ford as example, they made trucks in Turkey, imported trucks as passenger vehicles to get around chicken tax, de-mounted passengers seats in states to sell it as protected trucks.
Eventually they got caught. But do you think they would to this gray business if it wasn’t profitable ?
Even if we look at it as having $1.3 billion USD “loan” without a mortgage, because they eventually had to pay back these taxes, it’s still profitable because these $$$ allowed them to build more and sell more in less time + they saved costs on cheap labor.
Considering less than a sixth of a vehicle’s input cost is labor, they could double their pay and still make 25% more profit than what it would cost for truck import taxes…
They could but they are after maximizing profit. Why else would be corporates moving their factories to the other end of the world? To give poor people a job? Or to reduce costs because domestic labour is much more expensive?
If we’re still talking about trucks, you would need to find some place where not only do you pay them less than what someone would make in a Chinese vehicle manufacturing plant, you also need to make sure that shipping and getting the right materials doesn’t eat into that savings. It just isn’t really economical anymore, unless you find more and more obscure countries with more instability and less infrastructure.
Managers of these companies are good at doing that and are richly rewarded for doing so. Instead of China it might be other cheap labor place like Vietnam, India or even eastern Europe.
Just take Ford as example, they made trucks in Turkey, imported trucks as passenger vehicles to get around chicken tax, de-mounted passengers seats in states to sell it as protected trucks.
Eventually they got caught. But do you think they would to this gray business if it wasn’t profitable ?
Even if we look at it as having $1.3 billion USD “loan” without a mortgage, because they eventually had to pay back these taxes, it’s still profitable because these $$$ allowed them to build more and sell more in less time + they saved costs on cheap labor.