Snyder reveals Hyundai expansion in Michigan

Where does this fit in the American made discussion?

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Michigan Gov. Rick Snyder highlighted a $15 million expansion of Hyundai’s Superior Township technical center as evidence of a sound job creation strategy in the state. The addition of an advanced hot/cold temperature testing facility at the Hyundai center near Ann Arbor will create 50 high tech R&D jobs over the next three years.

Michigan taxpayers will be kicking in $2.5 million in incentives to help fund the project.

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http://blogs.detroitnews.com/overdrive/2012/01/10/gov-snyder-reveals-hyundai-expansion-in-michigan/

Nothing is "American" anymore. Parts come from everywhere. GM builds some cars in Mexico, Toyota has plant in the US, and Chrysler is 51% owned by a European entity.

It's a global economy and nothing is black and white.

If you want to help out this country, then be sure to buy a car that's assembled here. I don't care where the profits go, I care much more about feeding a line of workers.

2012 NAIAS car of the year Hyundai Elantra, imported from sweet home Alabama and built with parts from all over the globe. Like a new Ford Mustang, Imported from Flat Rock with a manual transmission made in Nanchang, China

I don't know or particularly care about the question posed in the thread title, but stuff like this, as routine as it is these days, is freaking insane public policy:

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Michigan taxpayers will be kicking in $2.5 million in incentives to help fund the project.

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We're directly shelling out 50 grand per job created, and that's what Snyder calls "a sound job creation strategy?"

I saw this on a show about inventions. This is a made-in-Detroit product.The show tested this box bass against orchestral instruments and they couldn't tell the difference.

http://www.edencompanies.com/bogdon/

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Originally Posted by antongast

I don't know or particularly care about the question posed in the thread title, but stuff like this, as routine as it is these days, is freaking insane public policy:



We're directly shelling out 50 grand per job created, and that's what Snyder calls "a sound job creation strategy?"

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When polled that is what the general public wants government and pols to do "create" jobs. I dont understand the logic that its governments job to "create" jobs but billions in corporate welfare are handed out to companies by pols and gubmint to lure employers. Alabama gave $253 million for 2500 jobs.

Politicians base these subsidies on the "velocity of the dollar" theory - that every dollar paid out to employees and put back into the local economy generates some multiplier of economic activity. Conventional wisdom says it's 1:10 - for every $1 spent in the local economy $10 of economic activity gets created. That's how they justify these huge subsidies for relatively small numbers of jobs created - the idea is that the $10 million in wages will blow up to $100 million in overall regional profits.

Problem is, most economists think the actual number is between $0 and $8, depending on what people spend their money on [[buying bread from a local bakery is closer to $8, buying a video game from Amazon is closer to zero). For reference, Obama's stimulus "success" calculations were based on $18 per dollar spent - which is optimistic to say the least.

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Originally Posted by JBMcB

Politicians base these subsidies on the "velocity of the dollar" theory - that every dollar paid out to employees and put back into the local economy generates some multiplier of economic activity. Conventional wisdom says it's 1:10 - for every $1 spent in the local economy $10 of economic activity gets created. That's how they justify these huge subsidies for relatively small numbers of jobs created - the idea is that the $10 million in wages will blow up to $100 million in overall regional profits.

Problem is, most economists think the actual number is between $0 and $8, depending on what people spend their money on [[buying bread from a local bakery is closer to $8, buying a video game from Amazon is closer to zero). For reference, Obama's stimulus "success" calculations were based on $18 per dollar spent - which is optimistic to say the least.

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The other problem is that we keep laying off public-sector employees, who generally are creating broader social benefits by doing the work they do, in order to pay for more tax breaks to create private-sector jobs to help Hyundai make a bigger profit.

Assembly is only a small part of the total creation of a product from drawing board to showroom floor.

Oshawa car and truck, St. Catharines engine [[Ont.) -- General Motors
Oakville Assembly, Windsor Engine [[Ont.) -- Ford
Brampton Assembly, Windsor Assembly [[Ont.) -- Chrysler

"American" auto plants producing "American" cars and trucks?

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Originally Posted by douglasm

Oshawa car and truck, St. Catharines engine [[Ont.) -- General Motors
Oakville Assembly, Windsor Engine [[Ont.) -- Ford
Brampton Assembly, Windsor Assembly [[Ont.) -- Chrysler

"American" auto plants producing "American" cars and trucks?

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[[Disclaimer: I'm Canadian) Canada has been part of Big 3 production since the very beginning and generally buys a Big 3 vehicle for each one if produces. When someone says they are buying "foreign" my bigger issue is how level is the playing field? Are they [[usually Japan/Korea) open to North American brands? Do they manipulate their currency? Do they have high tariffs? A level playing field is what's important.

Does anyone else disagree with 48091 regarding everything he posts?

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Originally Posted by 401don

[[Disclaimer: I'm Canadian) Canada has been part of Big 3 production since the very beginning and generally buys a Big 3 vehicle for each one if produces. When someone says they are buying "foreign" my bigger issue is how level is the playing field? Are they [[usually Japan/Korea) open to North American brands? Do they manipulate their currency? Do they have high tariffs? A level playing field is what's important.

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401don, your last statement is spot on! We're allowed to sell cars in Japan.... were just prevented from opening dealerships without an agonizing amount of trouble. It's crap like that that our leaders [[both countries)... need to get their heads out of the sand on.

It's way more than just free trade agreements... there needs to be more followup on the "hidden obstacles"...

Why did Toyota, Honda, etc., never locate major plants here in Michigan? :confused:

So, fifty jobs created by 2.5 Million worth of State Investment.

Really.

50 Jobs.

Yep Yep. I'll say it.

"If JennyEngler did this all of you would run her straight out of office, right?"

"Guess now that a Republican created 50 jobs in this State we're finally on the road to recovery".

Yep Yep.

Japanese auto companies have other advantages over many other car companies. They are usually organized into large affiliated industrial entities called zaibatsus. Usually there will be a chemical company, a steel company, an electronics company, an industrial supply company, and a bank. Imagine GM, GE, Dow, and Bank of America all rolled into one affiliated organization. Each arm gives the other arms preferential pricing on equipment and supplies, lowering their overall costs and ensuring a certain level of demand for their products.

The main benefit, however, is the Japanese government can dump money into the banking arm, and the bank can, in turn, prop up the other arms of the zaibatsu without running afoul of free trade agreement rules barring direct government investment in certain companies.

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Originally Posted by Hypestyles

Why did Toyota, Honda, etc., never locate major plants here in Michigan? :confused:

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I've always wondered that too. You'd think if they don't at least put some near Detroit, maybe near some other towns around Michigan. I'm guessing it has a lot to do with taxes and "incentives".

When I travel down South, I see foreign automaker facilities all over the place. It's not hard to guess that it's probably cheaper to build down there than it is up here. Or maybe it's some unspoken code of conduct not to build so close to the big three. I dunno, I'd assume to former is more likely.

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Originally Posted by JBMcB

Japanese auto companies have other advantages over many other car companies. They are usually organized into large affiliated industrial entities called zaibatsus. Usually there will be a chemical company, a steel company, an electronics company, an industrial supply company, and a bank. Imagine GM, GE, Dow, and Bank of America all rolled into one affiliated organization. Each arm gives the other arms preferential pricing on equipment and supplies, lowering their overall costs and ensuring a certain level of demand for their products.

The main benefit, however, is the Japanese government can dump money into the banking arm, and the bank can, in turn, prop up the other arms of the zaibatsu without running afoul of free trade agreement rules barring direct government investment in certain companies.

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Wasn't that Henry Ford's idea behind "the Rouge"? It employed over 100,000 people in over 16 million square feet of buildings vertically integrating all areas of production under Ford's ownership? Then, the government let the unions in and it had to be broken up to remain competitve. This kind of vertical integration is only an advantage if the government doesn't legislate laws that make such an entity inefficient. What America has is a government created mess. Sorry to say, but the Japanese have got it right with Ziabatsu and their wages are still very similar to North America's non-union automotive workforce, not a couple bucks a day like in China or Mexico which the Big 3 were forced into doing to remain competitive, so I can't blame the Big 3 for getting half their parts using Mexico or China's cheap labour.

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Originally Posted by animatedmartian

I've always wondered that too. You'd think if they don't at least put some near Detroit, maybe near some other towns around Michigan. I'm guessing it has a lot to do with taxes and "incentives".

When I travel down South, I see foreign automaker facilities all over the place. It's not hard to guess that it's probably cheaper to build down there than it is up here. Or maybe it's some unspoken code of conduct not to build so close to the big three. I dunno, I'd assume to former is more likely.

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I think they just don't want to get their plants unionized by building in a pro-union state.

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Originally Posted by 1953

Does anyone else disagree with 48091 regarding everything he posts?

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It's hard to disagree with the factual statements.

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Originally Posted by antongast

I don't know or particularly care about the question posed in the thread title, but stuff like this, as routine as it is these days, is freaking insane public policy:

We're directly shelling out 50 grand per job created, and that's what Snyder calls "a sound job creation strategy?"

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Totally agree, but as these sick subsidies go, $50k per job is pretty good. That'll come back in tax revenue within just a five years [[say at $10k per job / year taxes).

The $/job figures are usually much more disgusting.

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Originally Posted by downtown_racine

...Alabama gave $253 million for 2500 jobs.

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If accurate, Alabama paid $100,000. The Nerd was 20 times more efficient. Now that's smart.

Would someone on the left figure out how to stretch the constitution to use the 'equal protection' clause and stop this injustice?

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Originally Posted by antongast

The other problem is that we keep laying off public-sector employees, who generally are creating broader social benefits by doing the work they do, in order to pay for more tax breaks to create private-sector jobs to help Hyundai make a bigger profit.

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I think it would be difficult to define "broader social benefits".

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Originally Posted by ordinary

I think it would be difficult to define "broader social benefits".

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Obviously it depends on the job. But if, say, that $2.5 mil gets cut from revenue sharing to cities that could have been used to hire more local cops or keep a library open or something, IMO that's a terrible trade. The government should be in the business of collecting revenue and providing services, not making large corporations more profitable. Job creation and the resulting economic multipliers aren't a compelling argument here because regular public service provision and corporate welfare both create jobs.

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Originally Posted by antongast

The government should be in the business of collecting revenue and providing services, not making large corporations more profitable.

Job creation and the resulting economic multipliers aren't a compelling argument here because regular public service provision and corporate welfare both create jobs.

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I see what you're saying.

It's just a gut reaction with me but the phrase "job creation" just makes me uneasy.

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Originally Posted by Wesley Mouch

Totally agree, but as these sick subsidies go, $50k per job is pretty good. That'll come back in tax revenue within just a five years [[say at $10k per job / year taxes).

If accurate, Alabama paid $100,000. The Nerd was 20 times more efficient. Now that's smart.

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Guess that depends on what types of jobs they're going to be. Some techs to run a lab or some senior engineers working on high level thermodynamic issues. I believe the difference in pay scale is considerable. Your numbers assume a salary of $100,000 per job created.
The math works out to the employee needing to earn $1,162,790 to recoup the $50K. [[not counting the reduction in taxes due to applicable deductions)

Also, the Nerd was only twice as efficient. 50k vs 100k.

Agreed Kevgoblue.... also... using a lump tax figure doesn't take into account that most of those taxes are Federal and NOT State taxes...

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Originally Posted by antongast

The other problem is that we keep laying off public-sector employees, who generally are creating broader social benefits by doing the work they do, in order to pay for more tax breaks to create private-sector jobs to help Hyundai make a bigger profit.

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It took me a few moment here to realize that you were being sarcastic [[I hope).

I know it won't happen, but let us say Hyundai wanted to open a plant in Detroit and hire a few thousand....would anyone bitch about it?

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Originally Posted by Patrick

I know it won't happen, but let us say Hyundai wanted to open a plant in Detroit and hire a few thousand....would anyone bitch about it?

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Of course it'd be a firestorm of complaints -- especially about the congestion on the roads that will be caused -- the greater delays on Amtrak due to increased freight traffic -- not enough Detroit resident workers -- not paying enough taxes -- taking money to Korea -- giving the Koreans disproportionate vote on city council -- polluting the environment with smoke -- tearing down 'ethnicity'-town to build the plant -- not building energy efficient cars -- subsidized by US military defending their homeland at no cost to Korea -- and just plain not being America -- and for now being a UAW plant.

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Originally Posted by Wesley Mouch

It took me a few moment here to realize that you were being sarcastic [[I hope).

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Oh, fuck you.

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Originally Posted by Kevgoblue

Guess that depends on what types of jobs they're going to be. Some techs to run a lab or some senior engineers working on high level thermodynamic issues. I believe the difference in pay scale is considerable. Your numbers assume a salary of $100,000 per job created.
The math works out to the employee needing to earn $1,162,790 to recoup the $50K. [[not counting the reduction in taxes due to applicable deductions)

Also, the Nerd was only twice as efficient. 50k vs 100k.

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Sorry 'bout the math. I did use $100,000 as the cost per job. When I was doing corporate budgeting, we used that as our 'round-number' figure for the impact of an employee -- not just salary and benefits and pension funding [[$55-70k for auto workers I hear) with the rest being training, HR overhead, travel, parking lot space, toilet paper, bottled water, and so on.

I'll take twice as efficient -- while maintaining that tax breaks are bad policy in 100% of the cases, as this does shift the burden from industry to individual and small businesses.