Worryingly: GM To Slash Jobs And Production, Cancel Some Car Models

General Motors Co will cut car production, stop building several slow-selling models, and slash its North American workforce, its biggest restructuring in North America since its bankruptcy a decade ago.GM plans to halt production next year at three assembly plants - Lordstown, Ohio, Hamtramck, Michigan, and Oshawa, Ontario. The company also plans to stop building several models now assembled at those plants, including the Chevrolet Cruze, the Cadillac CT6 and the Buick LaCrosse. GM said it will shift more investment to electric and autonomous vehicles. The issue will be addressed in talks with the United Auto Workers union next year. GM Chief Executive Officer Mary Barra made calls early on Monday to disclose the plan. “We are right sizing capacity for the realities of the marketplace” CEO Mary Barra said, adding that the cuts prompted by auto industry changes. GM shares were last up 2.2 percent at $36.72 before being halted. Cost pressures on GM and other automakers and suppliers have increased as demand waned for traditional sedans. The company has said tariffs on imported steel, imposed earlier this year by the Trump administration, have cost it $1 billion. A Canadian union, Unifor, which represents most unionized auto workers in Canada, said Sunday it was informed by GM that there would be no product allocated to the plant in Oshawa, about 37 miles (60 km) from Toronto, after December 2019. According to Reuters, the No. 1 U.S. automaker signaled the latest belt-tightening in late October when it offered buyouts to 50,000 salaried employees in North America, with the aim of reducing headcount by 18,000. It plans to trim executive ranks by 25 percent, the source said.

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Entire communities could be devastated because I'm sure these were good paying jobs.

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And Ford is planning mass layoffs... This is a terrible warning sign. So, after holidays, welcome to the reality

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Someone wants a bailout....as a small farmers...Oh, wait- maybe to many SOS calls

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Auto industry cannot survive without (cheap) imported parts.I'm not optimistic

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I believe that when an auto manufacturer closes up like this there are something like 4 times as many secondary jobs lost at supplier plants for every primary job lost. This will have a huge impact.

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High tariffs on steel have pushed costs throughout the car industry and this has resulted in cost cutting initiatives. 14,700 jobs (to slash) — about 15% of it's US workforce

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Some economists have warned that the steel and tariffs on steel and aluminum could cost 400'000 jobs. It’s true that steel producers in the US may see a slight rise in jobs due to tariffs. However, the (much larger) industries that depend on imported steel will suffer, like automakers, construction groups and even financial services. Just over 400,000 people in the US work in metal-producing jobs, but 4.6 million work in jobs that depend on metal. 16 jobs could be lost for every job created by the tariffs.

https://qz.com/1297697/trumps-steel-tariffs-will-cost-the-us-400000-jobs-says-economists-now/

This article was issued in June. Since June a lot of additional tariffs have piled up in the escalating trade war.

 

 

 

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General Motors had roughly $145 billion in revenues last year.  OK, so that is not the cost of goods sold, that is gross receipts, so let us assume that manufacturing costs were 60% of total revenues. At that clip, manufacturing costs run to $90 billion, and a $1 billion upcharge for steel has added roughly one percent to the total costs of manufacture of a car. 

OK, so car building is a tough business, lots of other guys out there with nice cars and they all are hustling for your customers.  But that 1% is not going to put you out of business.  Legacy healthcare and labor costs might, absence of an internal financing stream might, but the steel upcharge?  Not so much. 

Much more interesting is the decision to close the Oshawa assembly plant.  At one time GM, along with the other two (Ford and Chrysler) - had assembly and casting plants in Canada. The reason was that Canada had this 17-1/2% import duty, so to get around that you put up a car plant inside Canada, shipped in some portion of the parts that you did not  want to stamp or cast locally, and assembled the car with local labor.  At that point the determinant to the profitability of the plant would be the labor costs and the relative exchange rate.  As today most of the output was sent to the USA, the exchange rate was the overriding factor, and as long as the Canadian Dollar traded at a nice discount, those plants could be profitable, even with the inflated wages being paid in Canada. 

Right now some 85% of Canadian auto production heads straight to the USA, so if GM is busy chopping plants - and GM Ste-Therese outside Montreal has already shut down - then you have to ask yourself:  what is the driver behind those changes?  It is (this time) not the exchange rate, as the Cdn. Loonie is deeply depressed, down to below 70 cents.  I conclude that GM has concluded that there is no long-term percentage in manufacturing in Canada;  that the "input costs" are simply too expensive to justify the Oshawa plant, notwithstanding the depressed Canadian currency.  

So I have some bad news for you:  if GM has come to that conclusion, and they have a century of Canadian manufacturing under their belt, then it tells me that Canadian manufacturing is priced out of the world market.  And that is unsurprising:  successive governments of ONtario have continued to shovel their Provincial budget costs onto the manufacturing sector, and continued to shovel electric costs onto the industrial sector, and continued to levy a huge administrative burden to satisfy the overreaching Administrative State.   You had the same thing happen in the big industrial sector in France, and today when you go to the historical French manufacturing cities in the North you see plant after plant shut down, just rotting away abandoned, you cannot even sell the building. 

You also have to wonder just how much is spliced into the possibility that the Trump Administration will hit imported autos with a 25% duty.  That is not as far-fetched as you might think.. Specifically, the heavy-duty truck sector already is protected with a 25% tariff, and has been for decades.  These are the "class 8" or 80,000-lb. rated tractors that pull those big semi-trailers, the workhorses of the highways.  This does not stop a trucker from purchasing a Mercedes or a Volvo truck; somebody just has to eat the duty, that's all.  And that is why the US heavy tractor market is dominated by Paccar, International, and Mack.  It is a protected market. 

Will the US auto market also become a protected market?  Yup, sure could. And it is precisely that fear that drove companies from Japan, Korea, Germany and Italy to go assemble product inside the USA.  They were just planning ahead.  When you see a Rolls with a "Proudly Made in Indiana" sticker, you will know the cycle is complete. 

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26 minutes ago, Jan van Eck said:

General Motors had roughly $145 billion in revenues last year.  OK, so that is not the cost of goods sold, that is gross receipts, so let us assume that manufacturing costs were 60% of total revenues. At that clip, manufacturing costs run to $90 billion, and a $1 billion upcharge for steel has added roughly one percent to the total costs of manufacture of a car. 

OK, so car building is a tough business, lots of other guys out there with nice cars and they all are hustling for your customers.  But that 1% is not going to put you out of business.  Legacy healthcare and labor costs might, absence of an internal financing stream might, but the steel upcharge?  Not so much. 

Much more interesting is the decision to close the Oshawa assembly plant.  At one time GM, along with the other two (Ford and Chrysler) - had assembly and casting plants in Canada. The reason was that Canada had this 17-1/2% import duty, so to get around that you put up a car plant inside Canada, shipped in some portion of the parts that you did not  want to stamp or cast locally, and assembled the car with local labor.  At that point the determinant to the profitability of the plant would be the labor costs and the relative exchange rate.  As today most of the output was sent to the USA, the exchange rate was the overriding factor, and as long as the Canadian Dollar traded at a nice discount, those plants could be profitable, even with the inflated wages being paid in Canada. 

Right now some 85% of Canadian auto production heads straight to the USA, so if GM is busy chopping plants - and GM Ste-Therese outside Montreal has already shut down - then you have to ask yourself:  what is the driver behind those changes?  It is (this time) not the exchange rate, as the Cdn. Loonie is deeply depressed, down to below 70 cents.  I conclude that GM has concluded that there is no long-term percentage in manufacturing in Canada;  that the "input costs" are simply too expensive to justify the Oshawa plant, notwithstanding the depressed Canadian currency.  

So I have some bad news for you:  if GM has come to that conclusion, and they have a century of Canadian manufacturing under their belt, then it tells me that Canadian manufacturing is priced out of the world market.  And that is unsurprising:  successive governments of ONtario have continued to shovel their Provincial budget costs onto the manufacturing sector, and continued to shovel electric costs onto the industrial sector, and continued to levy a huge administrative burden to satisfy the overreaching Administrative State.   You had the same thing happen in the big industrial sector in France, and today when you go to the historical French manufacturing cities in the North you see plant after plant shut down, just rotting away abandoned, you cannot even sell the building. 

You also have to wonder just how much is spliced into the possibility that the Trump Administration will hit imported autos with a 25% duty.  That is not as far-fetched as you might think.. Specifically, the heavy-duty truck sector already is protected with a 25% tariff, and has been for decades.  These are the "class 8" or 80,000-lb. rated tractors that pull those big semi-trailers, the workhorses of the highways.  This does not stop a trucker from purchasing a Mercedes or a Volvo truck; somebody just has to eat the duty, that's all.  And that is why the US heavy tractor market is dominated by Paccar, International, and Mack.  It is a protected market. 

Will the US auto market also become a protected market?  Yup, sure could. And it is precisely that fear that drove companies from Japan, Korea, Germany and Italy to go assemble product inside the USA.  They were just planning ahead.  When you see a Rolls with a "Proudly Made in Indiana" sticker, you will know the cycle is complete. 

Jan, 

In your opinion - will the tarifs create or lose America jobs? And why?

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Excellent write up, Jan.  I'm sure you could have gone into much more detail covering many more areas, but you hit the big ones for now.  IMO, companies that blame Trump are companies that refuse to admit that they have mismanaged one of the most business friendly financial eras of modern times, with government bailouts, zero % interest rates, and other government handout programs not seen in modern times.  President Trump can attempt to right the trade imbalances, but he cannot right the incredible mismanagement of GM and many others.  Sad days are indeed coming for workers, and I absolutely cringe at what that will mean for so many families across the nation and the globe.

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(edited)

15 hours ago, Rasmus Jorgensen said:

Jan, 

In your opinion - will the tarifs create or lose America jobs? And why?

The Trump tariffs will, ultimately, expand the American workforce base. but only if the tariffs are steep enough.  In the very short term, not so much, as manufacturing has a long-encrusted supply chain and it takes quite a bit of oomph to push a supply chain over to a newer model. 

Remember that the USA lost about 50,000 factories to tariff-free "Free Trade" treaties.  The bulk of the factories were lost to China.  In many cases the Chines simply bought the US plant using Chinese government dollars.  The Buyers would send over a team of CHinese technicians to assist in the dismantling, and that team would measure the installation and relative location of every piece of machinery, and they would "bag and tag" every single bolt and nut that attached the machine to the floor.   Then the Chinese would exactly re-assemble the plant back in China, providing an exact duplicate of the US plant - but now with Chinese workers. 

At that point the Chinese plant has not just a "relative competitive advantage," but an Absolute Advantage.  There is nothing that any US entrepreneur can do to operate a competing plant and sell its US output in competition with the CHinese;  he is simply over-priced. And that is the part that free-trade academic theorists simply do not comprehend.  It does not get inside their skulls that their model of "free trade" is fundamentally broken, and cannot be fixed.   The Chinese themselves, interestingly, understand this perfectly, and in order to protect against the big advantages of the USA - trained management and access to capital- instill non-trade barriers to their markets.  These usually involve "customs inspections" and free land (remember, in a Communist country nobody owns the land; it all belongs to the State) and free capital from Chinese-government industrial banks.  So the Chinese are quite clever in their handling of the US market. 

You would think that manufactured goods having to be moved from the other side of the planet into the US market would price themselves out simply by the shipping costs.  Nope: China went out and built huge shipyards, lots of them, to absorb the steel plate  made in CHinese steel mills, and went into the building of the containerships, but with a vengeance - those shps got larger and larger and larger, so that CHina Shipping now runs these monster 15,000-TEU-equivalent containerships in their own shipping line, some up to 22,000 TEU, so they can drive the cost of shipping into the US down and down and down.  When you start seeing pricing as low as $200 a container to move from CHina to Europe, or $260 from China to Long Beach, California, you know that battle is lost. 

The USA is about 25% of global GNP.  It is a market so huge that other players will stop at nothing to sell in it.  Look at Volkswagen and the diesel emissions issue; VW could have walked away and paid zero to the US federal regulators.  Instead they paid $15 BIllion in fines in order to continue to have access to that huge US market.  Academics, who seem to drive policy, all overlook this market size when making their academic pronouncements on US business and tariffs. 

Can foreign manufacturers ever compete in that US market if tariffs are in place?  Sure they can.  They either pay the tariff, taking the hit, or they build specialty items that no US builder has come up with.  Specifically, auto parts for foreign cars sold in the US also provide a market for specialty aftermarket parts for those same cars.  I recently bought cam-eccentric bolts machined in Australia for my German car, and suspension spring lifters injection-molded in neoprene for that German car, those were manufactured in Novosibirsk, Siberia, and were of great quality.  Indeed, I am so impressed that I am chasing the US Distributorship rights as a little sideline.  The Russians only access the US market by way of E-Bay, so each Order has to be individually prepped and shipped from Novosibirsk, at substantial cost.  Interestingly, the internal Russian postal system does a great job getting the product to Leningrad for export; the big delay was once the package got to the USA, where inefficient handling really upped the shipping time..

So, short answer:  yup, the Trump Tariffs will have an overall positive effect.  The academics are absurd Clintonites, ignore them.

Edited by Jan van Eck
typing error
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7 hours ago, Dan Warnick said:

Excellent write up, Jan.  I'm sure you could have gone into much more detail covering many more areas, but you hit the big ones for now.  IMO, companies that blame Trump are companies that refuse to admit that they have mismanaged one of the most business friendly financial eras of modern times, with government bailouts, zero % interest rates, and other government handout programs not seen in modern times.  President Trump can attempt to right the trade imbalances, but he cannot right the incredible mismanagement of GM and many others.  Sad days are indeed coming for workers, and I absolutely cringe at what that will mean for so many families across the nation and the globe.

 

7 hours ago, Rasmus Jorgensen said:

@Dan Warnick

@mthebold

what is your take on this? How does it fit with MAGA? I am being serious.

@Jan van Eck makes some good points here, as does Dan.  

To that, I would add that US automakers have been struggling for a long time: Chrysler has gone bankrupt twice already, and GM once.  I worked for once of these post 2009; in retrospect, the US economy would have been better off letting them collapse and rebuilding them under new management.  Instead, UAW political clout ensured that they would continue their incompetence.  On that note, having worked with the UAW, I wouldn't touch anything they build.  There's an off chance Ford is OK, but the good people have long since left GM and Chrysler.  

That brings us to Trump.  Trump doesn't have to help every company; just enough to keep the economy humming - and preferably those who hire his voters.  The UAW has been historically democratic, which puts them low on Trump's priority list.  

I've also noticed that, in America, corporations and organized groups weaponize the federal government against each other.  E.g. Big Tech didn't want Net Neutrality because it was a good thing; they wanted it because it protected them from ISPs.  Similarly, the ranchers, farmers, medical device manufacturers I've spoken to - traditionally conservative industries - listed specific actions Obama took to attack them.  At least since Obama, federal policy has become economic warfare.  At the very least, Obama broke precedent to increase the scale of that warfare. 

With the Big 3 in particular, Obama's administration ignored bankruptcy law to steal from investors and give to the UAW - a dangerous precedent.  After that stunt, I imagine Trump et al. would love to watch the UAW shrivel.  I know I would.  

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11 hours ago, Pavel said:

High tariffs on steel have pushed costs throughout the car industry and this has resulted in cost cutting initiatives. 14,700 jobs (to slash) — about 15% of it's US workforce

11 hours ago, rainman said:

GM said it will shift more investment to electric and autonomous vehicles. 

hmm... it sucks when there are two mouthwatering excuses to use for just one event. Which to choose this time? I guess we can just pick whichever one lends the most credence to our own version of reality. Big bad tariffs or EVs. I guess if we're promoting EVs I'd pick the latter, and anti-Trumps should pick the former. 

Thanks, @Jan van Eck for your sober view.

 

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@Jan van Eck @mthebold

Thanks for the insigth. Really. 

@Jan van Eck

I disagree on the comparative vs absolute advange theory. I just returned from NL. Incidently, I saw there how Dutch shipyards are competing against the chinese even on larger steel vessels, by specializing and using automation. 5 if not 6-digit employment in an industry that should be dead (European wages are way higher than American and especially Chinese). Otherwise good point that China is not practicing free trade. 

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7 hours ago, Rodent said:

Thanks, @Jan van Eck for your sober view.

 

Readers may keep in mind that I am a staunch Monarchist, and as such have the luxury of being completely indifferent to whether it is the Democrats or the Republicans or the socialists or the Populists that are running Washington.  I try to focus on the hard realities of the day.

In the above exchanges I would note, however, that the obligation of the President, as the head of the Administration, has the duty to do what is best for the country at large, not some specific part or voter bloc.  The consistent pattern of goring one group in favor of another really got going under BIll Clinton, whom I consider to be a man with no leadership qualities.  He was the consummate politician, who would stick his wetted finger up into the breeze to see which way the wind was blowing.   Clinton set the US off on the path of the destruction of the US manufacturing base.  Personally, I find that unforgivable.  He also abandoned US military leadership, as was so painfully demonstrated with the Serbs shelling Sarajevo for two years, slaughtering the civilians from that ridge overlooking the city.  One wave of carrier jets striking that ridge and it would have been all over for those murderers working for Ratko Mladic in less than three minutes.  Clinton did nothing. 

Edited by Jan van Eck
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6 minutes ago, Rasmus Jorgensen said:

@Jan van Eck @mthebold

Thanks for the insigth. Really. 

@Jan van Eck

I disagree on the comparative vs absolute advange theory. I just returned from NL. Incidently, I saw there how Dutch shipyards are competing against the chinese even on larger steel vessels, by specializing and using automation. 5 if not 6-digit employment in an industry that should be dead (European wages are way higher than American and especially Chinese). Otherwise good point that China is not practicing free trade. 

Damen Shipyards has bought other yards in low-wage ports, and builds the heavy-steel hulls in their yards in Romania for example, then tows the hull up to Holland for expert outfitting.  The fit and finish of Dutch yards is beyond reproach.  The heavy diesels are sourced from machining and casting foundries in Switzerland, France (Pielstick), and Denmark (Caterpillar having bought out Ithink the MAN engine plant), and Wartsila in Finland.  Those monster engines are typically assembled by expert personnel in pieces inside the ship, being too big to be lowered into place as one finished engine.  There is a logic to spreading out the work to the level of skill needed to do that segment of the shipbuilding. 

I think you will find that if a customer wants to order a ferryboat from Damen, it will be built in either Poland or Romania.  Romanian wages rune at about one-tenth those of Holland.   Polish shipyards are perhaps double in wages to the Romanians.  Turkey has a large yard to the SE of Istanbul with historically good quality and very low wages.  It is going to be very tough to justify building up the ship hull in Western Europe's high-wage yards when those low-wage yards are around the corner.  

All that said, nobody is going to build a bulker or a containership or a tanker cheaper than a Chinese yard.  They even underbid the Koreans!  And Korea was for years the low bidder in the shipbuilding game.   Even with all that, many Chinese yards have gone under in the last two years, due to chronic over-capacity in the industry.  Cheers.

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11 minutes ago, Jan van Eck said:

Damen Shipyards has bought other yards in low-wage ports, and builds the heavy-steel hulls in their yards in Romania for example, then tows the hull up to Holland for expert outfitting.  The fit and finish of Dutch yards is beyond reproach.  The heavy diesels are sourced from machining and casting foundries in Switzerland, France (Pielstick), and Denmark (Caterpillar having bought out Ithink the MAN engine plant), and Wartsila in Finland.  Those monster engines are typically assembled by expert personnel in pieces inside the ship, being too big to be lowered into place as one finished engine.  There is a logic to spreading out the work to the level of skill needed to do that segment of the shipbuilding. 

I think you will find that if a customer wants to order a ferryboat from Damen, it will be built in either Poland or Romania.  Romanian wages rune at about one-tenth those of Holland.   Polish shipyards are perhaps double in wages to the Romanians.  Turkey has a large yard to the SE of Istanbul with historically good quality and very low wages.  It is going to be very tough to justify building up the ship hull in Western Europe's high-wage yards when those low-wage yards are around the corner.  

All that said, nobody is going to build a bulker or a containership or a tanker cheaper than a Chinese yard.  They even underbid the Koreans!  And Korea was for years the low bidder in the shipbuilding game.   Even with all that, many Chinese yards have gone under in the last two years, due to chronic over-capacity in the industry.  Cheers.

I am talking about small and large OSVs. 

There are other shipyards in NL than Damen. And by the way they still build vessel in NL, whilst they also still outsource a lot of labour intensive work. 

Look at yards like Neptune and Dehoop (they build steel vessels in NL). NL has several midsized yards that are thriving. The key that they have engineering, design and fabrication close. That creates a competetive advantage. trust me on this one. It was why I was there.

The Norwegians specialize in high offshore construction vessels and offshore technology. And I could go on. 

The European yards aren't even interested in building bulkers or containerships. If they do seafreight would be so much more expensive because of the higher CAPEX. 

I realize this is only 1 industry, but in this industry comparative advantages work. 

Edited by Rasmus Jorgensen
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1 minute ago, Rasmus Jorgensen said:

There are other shipyards in NL than Damen. And by the way they still build vessel in NL, whilst they also still outsource a lot of labour intensive work. 

Look at yards like Neptune and Dehoop (they build steel vessels in NL). NL has several midsized yards that are thriving. The key that they have engineering, design and fabrication close. That creates a competetive advantage. trust me on this one. It was why I was there.

The Norwegians specialize in high offshore construction vessels and offshore technology. And I could go on. 

The European yards aren't even interested in building bulkers or containerships. If they do seafreight would be so much more expensive because of the higher CAPEX. 

I realize this is only 1 industry, but in this industry comparative advantages work. 

All true.  I would suggest the big money-makers in Dutch shipyards are those 100-meter-plus private yachts for billionaires!  The Dutch have no equal in that business!  And the customer is, shall we say politely, not that sensitive to price. 

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1 minute ago, Jan van Eck said:

All true.  I would suggest the big money-makers in Dutch shipyards are those 100-meter-plus private yachts for billionaires!  The Dutch have no equal in that business!  And the customer is, shall we say politely, not that sensitive to price. 

Jan, 

The Dutch yards are particularly good at: 

1) Dredging and dredging support vessels

2) Specialty designs for OSVs

3) shallow water support vessels

4) high-end deepwater pipelay vessels

and yes, yachts etc. 

The chinese cannot compete with them on these. End of. 

Incidently, the yard had import 4xCAT engines from America (order was done pre-tarif, I asked). So a Spanish shipowner buys a vessel from a Dutch yard, this has a positive economic impact on Spain (employment of seafarers), NL (obviously), USA (supply of parts), Denmark (supply of part), Norway (supply of parts), and probably a steelmill somewhere. 

Again, I know that this is only one industry, but it still paints the picture. 

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9 hours ago, Jan van Eck said:

The Trump tariffs will, ultimately, expand the American workforce base. but only if the tariffs are steep enough.  In the very short term, not so much, as manufacturing has a long-encrusted supply chain and it takes quite a bit of oomph to push a supply chain over to a newer model. 

Remember that the USA lost about 50,000 factories to tariff-free "Free Trade" treaties.  The bulk of the factories were lost to China.  In many cases the Chines simply bought the US plant using Chinese government dollars.  The Buyers would send over a team of CHinese technicians to assist in the dismantling, and that team would measure the installation and relative location of every piece of machinery, and they would "bag and tag" every single bolt and nut that attached the machine to the floor.   Then the Chinese would exactly re-assemble the plant back in China, providing an exact duplicate of the US plant - but now with Chinese workers. 

At that point the Chinese plant has not just a "relative competitive advantage," but an Absolute Advantage.  There is nothing that any US entrepreneur can do to operate a competing plant and sell its US output in competition with the CHinese;  he is simply over-priced. And that is the part that free-trade academic theorists simply do not comprehend.  It does not get inside their skulls that their model of "free trade" is fundamentally broken, and cannot be fixed.   The Chinese themselves, interestingly, understand this perfectly, and in order to protect against the big advantages of the USA - trained management and access to capital- instill non-trade barriers to their markets.  These usually involve "customs inspections" and free land (remember, in a Communist country nobody owns the land; it all belongs to the State) and free capital from Chinese-government industrial banks.  So the Chinese are quite clever in their handling of the US market. 

You would think that manufactured goods having to be moved from the other side of the planet into the US market would price themselves out simply by the shipping costs.  Nope: China went out and built huge shipyards, lots of them, to absorb the steel plate  made in CHinese steel mills, and went into the building of the containerships, but with a vengeance - those shps got larger and larger and larger, so that CHina Shipping now runs these monster 15,000-TEU-equivalent containerships in their own shipping line, some up to 22,000 TEU, so they can drive the cost of shipping into the US down and down and down.  When you start seeing pricing as low as $200 a container to move from CHina to Europe, or $260 from China to Long Beach, California, you know that battle is lost. 

The USA is about 25% of global GNP.  It is a market so huge that other players will stop at nothing to sell in it.  Look at Volkswagen and the diesel emissions issue; VW could have walked away and paid zero to the US federal regulators.  Instead they paid $15 BIllion in fines in order to continue to have access to that huge US market.  Academics, who seem to drive policy, all overlook this market size when making their academic pronouncements on US business and tariffs. 

Can foreign manufacturers ever compete in that US market if tariffs are in place?  Sure they can.  They either pay the tariff, taking the hit, or they build specialty items that no US builder has come up with.  Specifically, auto parts for foreign cars sold in the US also provide a market for specialty aftermarket parts for those same cars.  I recently bought cam-eccentric bolts machined in Australia for my German car, and suspension spring lifters injection-molded in neoprene for that German car, those were manufactured in Novosibirsk, Siberia, and were of great quality.  Indeed, I am so impressed that I am chasing the US Distributorship rights as a little sideline.  The Russians only access the US market by way of E-Bay, so each Order has to be individually prepped and shipped from Novosibirsk, at substantial cost.  Interestingly, the internal Russian postal system does a great job getting the product to Leningrad for export; the big delay was once the package got to the USA, where inefficient handling really upped the shipping time..

So, short answer:  yup, the Trump Tariffs will have an overall positive effect.  The academics are absurd Clintonites, ignore them.

“I’ll tell ya what — I rode through your beautiful roads coming up from the [Youngstown Warren Regional] Airport and I was looking at some of those big, once-incredible, job-producing factories and my wife Melania said, ‘What happened?’ I said, ‘Those jobs have left Ohio.’ Then he shouted, ‘They’re all coming back. They’re all coming back. Don’t move. Don’t sell your house.'"

Guess who said that?

And guess who's in their first year of power federal contractors sent 3 times the amount of jobs abroad compared to the last year of Obama?

Trump says what people want to hear and then does something totally different that's normally made up on the spot with no real idea of it's effects.

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Back to the auto industry. At the OPIS Octane and Future Fuels Conference in Houston this fall, it was mentioned that the auto industry is facing major changes due to - the electric car. The electric car has the potential to drive several major changes in the auto industry.

 First of all, the electric car lowers the bar for new companies getting into the auto business. Historically the auto industry was closed to new commers due to the magnitude of what it took to produce an internal combustion automobile. The electric car lowers the bar to allow startups like Tesla and others to enter the auto industry and compete with the established giants. So, in the past you had three or four large auto companies slicing up the auto market, in the future we may have more companies slicing up the market which could also be a smaller market for several developing reasons. 

Second, autos last longer now. When I was a teenager, if you got 100,000 miles out of a car, it was about done. Now I push my cars to 300,000 miles. The bodies and paint jobs are wearing out now before the engines. So, how far will electric cars go before they ware out, 500,000 + miles? I have no idea but longer lasting electric cars could reduce the need for replacements, shrinking the future auto market. 

The autonomous electric vehicle is expected to lower the need for car ownership in large cities. While still several years away, the autonomous vehicle is expected to be huge as it develops, further reducing the size of future car markets, perhaps shrinking the auto industry.

When the railroads switched from steam engines to diesel engines, the railroad steam engine industry disappeared. I have to believe that the electric car will be shrinking the present internal combustion auto industry. 

So, from what I have heard and read, the auto industry is in the mists of major change due to the electric car as it develops. I wonder if we've not seen anything yet as companies shift to face these new realities!

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56 minutes ago, Tom Blazek said:

Back to the auto industry. At the OPIS Octane and Future Fuels Conference in Houston this fall, it was mentioned that the auto industry is facing major changes due to - the electric car. The electric car has the potential to drive several major changes in the auto industry.

 First of all, the electric car lowers the bar for new companies getting into the auto business. Historically the auto industry was closed to new commers due to the magnitude of what it took to produce an internal combustion automobile. The electric car lowers the bar to allow startups like Tesla and others to enter the auto industry and compete with the established giants. So, in the past you had three or four large auto companies slicing up the auto market, in the future we may have more companies slicing up the market which could also be a smaller market for several developing reasons. 

Second, autos last longer now. When I was a teenager, if you got 100,000 miles out of a car, it was about done. Now I push my cars to 300,000 miles. The bodies and paint jobs are wearing out now before the engines. So, how far will electric cars go before they ware out, 500,000 + miles? I have no idea but longer lasting electric cars could reduce the need for replacements, shrinking the future auto market. 

The autonomous electric vehicle is expected to lower the need for car ownership in large cities. While still several years away, the autonomous vehicle is expected to be huge as it develops, further reducing the size of future car markets, perhaps shrinking the auto industry.

When the railroads switched from steam engines to diesel engines, the railroad steam engine industry disappeared. I have to believe that the electric car will be shrinking the present internal combustion auto industry. 

So, from what I have heard and read, the auto industry is in the mists of major change due to the electric car as it develops. I wonder if we've not seen anything yet as companies shift to face these new realities!

I fully agree. I have noticed an increasing number of new EV brands entering the market . Sometimes they even appear in countries with no previous car industry. A clear sign that it is now easier for new entrants.

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First, I doubt it is a coincidence that the possibility of plant closures was announced just as contract negotiations with the UAW are to be done in 2019.  This is more than a passive threat that a contentious contract negotiation could result of job losses for union workers. 

Second, auto sales and production have been on an up-tread since the financial collapse of '08/'09.  History shows that the automotive industry goes through ups and downs (8 year cycles?) so at some point there would be a slowdown.  I would suggest that if not for Hurricane Harvey, this slowdown would have come a year ago but sales were artificially propped up by that disaster and other storms last year.  Harvey alone probably generated an unexpected 500,000 new car/light truck sales in the Houston area. 

Lastly, the cost of new vehicles (including interest rates for loans) is driving potential buyers out of the market.  Zero interest loans allowed people with lower incomes to afford a new vehicle in the past, but with the Fed increasing interest rates, such loans are now few and far between.  The impact of loan interest on a monthly payment can be significant for many potential buyers. 

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