Snyder reveals Hyundai expansion in Michigan

[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.

[davewindsor]

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.

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.