Despite Trump, Ford moves ahead with plans for Mexico plants

[Vizardlorde]

Of course they will. What do you think Ford's biggest market is.

Rednecks would die w/o f150s

[Uvwaex]

t e n c h a r s

s o e d g e

Im all for good american manufacturing jobs, whatever jobs, good jobs. I just don't see how you get them out of a tariff. I think the businesses should be investing in making their own workers more productive, maybe this will be incentivized if production has to be at home? Possible.

Using this : https://www.quora.com/What-percentag...l-car-is-labor
Average auto worker makes about $65-95 an hour? The average mexican manufacturing worker makes $2 an hour? So I guess I dont see the small benefit, it seems like a huge one potentially, though, I of course dont know the levels of productivity for these different workers, just their wage rates. But so even if labor cost is currently only 10%, aren't we trying to add more of these jobs? Won't there be a point in the calculus where the labor slack is no more? Where wages rise and therefore that 10% rises?

All not factoring in at all that current production levels are a mixture of different places. 50% of the production cost is in making the new plant. Not to mention the 20-30% cost of materials. Where do the now american only produced cars get their materials from, only at home? I don't even think we have the raw resources for this I could be totally wrong though. If theres a 30% tariff or even the 20% import tax across the board, all those materials, used in american production, would also be more costly no?

About 6 million vehicles were made in the US. About 2 million were "cars", while the rest are commercial vehicles. (http://www.oica.net/category/production-statistics/) Nearly 7 million were bought, from what I can tell these are regular passenger cars.(https://www.statista.com/statistics/...es-since-1951/). Thats a lot of calculus to change. A lot of input prices to figure out and labor levels to optimize for given you want to produce 5 million more cars and will probably have to incur capital costs to up your level of domestic production. Of course look at car production around the world. The us makes way more motorized vehicles than mexico. You will notice though, that more passenger, instead of commercial vehicles, are produced in Mexico. Theres your comparative advantage, not the tariff. Advanced manufacturing sectors that are more productive but offer fewer jobs are also an american comparative advantage currently (and to come).

I suppose you can say the tariff is needed to make sure these jobs dont go to mexico? Ok sure maybe. But remember, only 1.7 million cars are produced in mexico. 12 million produced in China. Oh look we produce many more commercial vehicles while they produce more passenger...interesting. I understand wanting to protect the well being of the people in your country. But when all you look at are raw aggregate numbers youre not doing that. Youre not accounting for the nuance of how we can be the second largest car producer in the world, and still import more in terms of dollars of passenger vehicles. You're not accounting for that, if you really want to shut off, ok, but the kinds of cars and production capacity we have here is different from other countries. We can definitely produce 7 million passenger cars a year. The question is the cost. The question is how will the now tapped (after we increase passenger car production by 5 million) labor supply and need for capital investment to raise production capacity changes the costs within the American market. Unless we are assuming our current production can be traded one for one with no cost? maybe.

Anyway Id love to see you actually doing the calculus problem, if you have access to these production functions in a way most don't.

Your short run calculation probably works. The long run (in which capital can change, ie number of factories ie 50% of the cost) is why the 30% tariff is not enough, and the ensuing change in production techniques and labor market, and changes in consumption and price levels. Also again, if we are shrinking the pie of the world, who will buy our exports? You can make a closed market I suppose, but have you calculused out the options and costs of that?

TLDR you are not accounting for how exogenous parameters will change in the long run and then influence the endogenous variables of the optimization problem

[Azadina]

Are you suggesting that a democratic state does not have the right to choose not to buy from other countries?

If we discovered another continent filled with people that would work for free tomorrow, you would destroy the economies of the entire known world. It would be suicide to trade with them.

It does. And the last I checked, the democratic state is not buying cars for it's citizens from other countries. Nor is it buying cars for it's citizens made in it's own state.

[Uvwaex]

Are you suggesting that a democratic state does not have the right to choose not to buy from other countries?

If we discovered another continent filled with people that would work for free tomorrow, you would destroy the economies of the entire known world. It would be suicide to trade with them.

Where in the fuck would you find that kind of island? Of course itd be suicide to trade with them. Theyre probably interdimensional aliens bent on destroying america

On an alternative note: did slave labor help or hurt the slave owners?

[minteK917]

lmao at people that think 30% will do anything. Ford is making shit parts for their car, 30% to ship them back and assemble them is literally nothing. An american worker is not paid only 30% more then a mexican worker lol. If ford increase prices in any substantial way, every other company will. Also point us out to car companies that build every in america. Whats that it doesent exist... awww!

[Deleted]

Going to suck for Ford when less people buy their cars due to higher prices and knowledge of them being unamerican.

That's a plus everywhere else :P

[Breccia]

There are multiple effects of driving down the Mexican peso. One of them, is doing business in Mexico becomes a lot cheaper.

[primalmatter]

Well at least the states will benefit from the tariffs

[DSRilk]

How do American workers get jobs in automated factories, apart from dozen to oversee it? Aka, statistically irrelevant. Also, I don't think a corporation is going to take 30% hit to their profits just because you want to try making it so. They won't.

According to the Wallstreet Journal, there is currently a 15,000 person shortage in Mexico when it comes to auto jobs. They are expecting (barring moves by Trump) to create 30,000 more auto related jobs in Mexico over the next 4 years. One day it'll all become automated, but that's a long way off. Until then, we're not talking about a statistically irrelevant number of jobs. It's a very large number of jobs. I don't like Trump. I think the tariff idea is very poorly thought through. However, don't Trump (read: deny) the reality of things. A crap ton of jobs are moved over seas and the number is still increasing, between manufacturing in Mexico and tech in India. Why? Because those workers in Mexico make between $1.15 and $2.30 an hour. Putting a tariff WILL bring jobs back to the US (though it'll take time for this to happen). If it's cheaper to manufacture here, the jobs WILL return. The problem isn't that Trump's lying about that. The problem is that tariffs will drastically increase the cost of consumer goods, so while people may get jobs back, no one will be able to afford what they used to and eventually that has an additional negative impact on the job market itself as people buy less and less. The question is, is it worth the trade off at this point?

[Uvwaex]

Well at least the states will benefit from the tariffs

They might

[Draco-Onis]

Give him time, he can always just increase the taxes, and make Ford not worth buying in comparison to their competition. You don't really think that if people have to fork more money, where they could pay less they would still go for Ford?

The Trump administration has always been for cutting corporate taxes, also most of the jobs Trump has claimed to saved have been a lie just to get headlines. I am obviously anti-Trump but I think all his supporters are being unrealistic in expecting him to stop automation and globalism. You will never get those jobs back, Trump' strategy seems to be corporate welfare at which point may as well give those unemployed people the money directly since it's much cheaper.

[Edge-]

Well at least the states will benefit from the tariffs

The individual states? How? They don't levy tariffs, that's the federal government.

The Trump administration has always been for cutting corporate taxes, also most of the jobs Trump has claimed to saved have been a lie just to get headlines. I am obviously anti-Trump but I think all his supporters are being unrealistic in expecting him to stop automation and globalism. You will never get those jobs back, Trump' strategy seems to be corporate welfare at which point may as well give those unemployed people the money directly since it's much cheaper.

The issue is they're not even thinking about automation, because Trump doesn't even acknowledge that it's one of the primary things killing manufacturing jobs. It's literally not even a part of the discussion Trump has with his supporters.

[Paranoid Android]

Going to suck when they have to pay a 30% tariff.

I know you don't agree, but Ford is giving a middle finger to all of the laborers and "shit kickers" in Michigan that built that company, and to the US citizen/government that provided the incubator in which it grew. It's the right move for those same people to tell Ford to get fucked and pay the tariff.

Wow! You do not understand tariffs, do you?

[Uvwaex]

According to the Wallstreet Journal, there is currently a 15,000 person shortage in Mexico when it comes to auto jobs. They are expecting (barring moves by Trump) to create 30,000 more auto related jobs in Mexico over the next 4 years. One day it'll all become automated, but that's a long way off. Until then, we're not talking about a statistically irrelevant number of jobs. It's a very large number of jobs. I don't like Trump. I think the tariff idea is very poorly thought through. However, don't Trump (read: deny) the reality of things. A crap ton of jobs are moved over seas and the number is still increasing, between manufacturing in Mexico and tech in India. Why? Because those workers in Mexico make between $1.15 and $2.30 an hour. Putting a tariff WILL bring jobs back to the US (though it'll take time for this to happen). If it's cheaper to manufacture here, the jobs WILL return. The problem isn't that Trump's lying about that. The problem is that tariffs will drastically increase the cost of consumer goods, so while people may get jobs back, no one will be able to afford what they used to and eventually that has an additional negative impact on the job market itself as people buy less and less. The question is, is it worth the trade off at this point?

Yes, how do we know if 30% will be enough? Honestly its companies like Ford that have the people already paid to do this kind of math. If theyre signaling theyre still going to produce some there it seems like the tariff will have to go up. What opportunity cost is there as well in the long run of incentivizing jobs that simply aren't as cost effective as others? What sort of industries won't rise because we're just focusing on keeping manufacturing people employed? The tariff would bring back jobs if it was cheaper: the question is really at what point does it get cheaper. For us arm chair economists we need more to actually measure and track those effects. Theres absolutely an argument that you could design a specific tariff at a specific percent to maximize utility and consumption for the US at higher than it is now. The question is if the assumptions and specifics of that stay that way for long, and the fact that the currently proposed tariff is not nuanced in this way whatsoever.

[primalmatter]

The individual states? How? They don't levy tariffs, that's the federal government.



The issue is they're not even thinking about automation, because Trump doesn't even acknowledge that it's one of the primary things killing manufacturing jobs. It's literally not even a part of the discussion Trump has with his supporters.

I am not really sure what you are asking me... ?

[Uvwaex]

The individual states? How? They don't levy tariffs, that's the federal government.



The issue is they're not even thinking about automation, because Trump doesn't even acknowledge that it's one of the primary things killing manufacturing jobs. It's literally not even a part of the discussion Trump has with his supporters.

primary thing killing jobs and driving productivity. The US is better at advanced manufacturing than most places in the world. But this is high wage and lower job than the old manufacturing system (which, am I in the wrong here to feel like people want for any unskilled person to be able to do? such a world would be great...I cant help but think its fantasy)

[Draco-Onis]

The issue is they're not even thinking about automation, because Trump doesn't even acknowledge that it's one of the primary things killing manufacturing jobs. It's literally not even a part of the discussion Trump has with his supporters.

It's much easier to rile people up talking about barbarians at the gates rather than robots taking their jobs. A lot of people have lost their jobs to automation but they still blame Mexico for it, it's always easier for people to blame foreigners.

[Edge-]

I am not really sure what you are asking me... ?

You said "at least the states will benefit", how will a tariff benefit them? Or did you mean "the US" when you wrote "the states".

[Halicia]

You said "at least the states will benefit", how will a tariff benefit them? Or did you mean "the US" when you wrote "the states".

The state I live in thrives off its exports, so a tariff war will !@#$ us over bigtime if foreign markets start turning protectionist towards their own products in return.

[minteK917]

People trying to live in the past, never won in the end. Remember that for the next 4 years.