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Why are they building new US car plants?
- Thread starter BoyBrutus
- Start date
It's not impossible that a big part of this move is strategic. This is a big "what if", but if GM becomes a shadow of it's former self, that/those manufactures at the ready to supply the gap left by a loss of another major manufacturer would be in a good position to take advantage. And certainly, the Japanese think VERY long term.
Quote from horribilicus:
Wouldn't you think somebody would invent a derivative product that allows people to hedge their currency risk? And wouldn't you think that businesses who face a lot of currency risk would be eager to trade this derivative product (hedging their exposure)? A forward contract or an option whose underlying is the EURUSD exchange rate, might have helped those German car makers.....
There are OTC forward contracts and options for the purposes you are describing, exchange traded derivatives aren't the only instruments that companies have access to.
Quote from bundlemaker:
It's not impossible that a big part of this move is strategic. This is a big "what if", but if GM becomes a shadow of it's former self, that/those manufactures at the ready to supply the gap left by a loss of another major manufacturer would be in a good position to take advantage. And certainly, the Japanese think VERY long term.
That's the most believable argument put forth so far.
Agree. Somewhere there is a little japanese been counter, with a 200 page spreadsheet, with thousands of variables, and the final cost to build in the US, to sell to US consumers, ended up lower than building it anywhere else. That simple.
Quote from Jayford:
Its simply cheaper to build them here. No transport cost, very favorable tax deals, and ultra modern and efficient plants in low wage areas (Tennessee, Carolinas).
That is the reason.
environment created to insure we have the industrial capacity to counter the "looming China". No conspiracy, but (chuckle), what do you think the boys at Fort Leavenworth do with their time in think tanks and strategic planning? China will become a global superpower (to include a formidable submarine fleet) by 2015.
Obvious. Part of it is a hedge against the U.S. debt they own. Itâs also better to open plants in Canada and America because the social and financial outcome is FAR more predictable.
China, as it grows powerful, has unresolved grievances with Japan. Added to that, Chinaâs labor force wonât be gleefully working for nothing forever. Americaâs labor force has been through all of that 100 years ago.
Brazil is one of the hopefuls in Capitalism but Latin America, as a whole, is a culture of Marxism, which always scares the best and brightest away. Latin American governments, as a whole, also place foreign investors and companies at the mercy of flash populism, which makes everything less predictable. India also has too much protectionism and bureaucracy to make anything work.
China, as it grows powerful, has unresolved grievances with Japan. Added to that, Chinaâs labor force wonât be gleefully working for nothing forever. Americaâs labor force has been through all of that 100 years ago.
Brazil is one of the hopefuls in Capitalism but Latin America, as a whole, is a culture of Marxism, which always scares the best and brightest away. Latin American governments, as a whole, also place foreign investors and companies at the mercy of flash populism, which makes everything less predictable. India also has too much protectionism and bureaucracy to make anything work.
Quote from BoyBrutus:
Why have Japanese and Korean car manufacturers announced plans for new car plants in the US and Canada? I thought they would invest new production dollars in China, India and Brazil, the cheaper alternative. Can anyone shed any light on this?
Honda says new US plant to have room to grow
TOKYO (Reuters) - Honda Motor Co. Ltd said on Tuesday its new U.S. passenger car plant in the United States would start small and have room to grow.
Honda last week said it would spend $400 million on a fourth U.S. assembly plant in the Midwest that is expected to come on line by 2008. The plant will raise Honda's North American output capacity by 200,000 to 1.6 million vehicles.
The plant is part of aggressive expansion plans that also include an engine plant in Canada and a new auto plant in Japan as Honda seeks to boost global sales to 4.5 million cars in 2010, up 34 percent from 2005 levels.
I don't know the automaking business, but it seems reasonable that auto manufacturing has become so highly automated that labor costs may very well be less than transportation costs. Especially in a rising energy cost environment.
Plus the fact that they have all these dollars they need to spend somewhere and this is the one of the few politically correct ways they can spend it!
Plus the fact that they have all these dollars they need to spend somewhere and this is the one of the few politically correct ways they can spend it!