Can a RTW Michigan Compete with Mexico?

**Patrick** · December-11-12, 10:14 PM

While remaining neutral on the RTW issue, I noticed that many RTW supporters hold the belief that numerous businesses will relocate to Michigan. There is a belief that Michigan's industrial output will soar with RTW. I read the following article and wondered about a few things....

Even after years of Mexico’s cost of living inching up and American wages going down, Mexico’s labor rates are still a fraction of U.S. rates. Mexico’s auto assemblers nowadays pay $4 to $5 an hour. U.S. rates differ all over the map now, from $28 an hour in wages for the Detroit 3, to $14 an hour for new Tier 2 Detroit 3 workers, to hourly wage rates at the transplants that vary from $15 into the high $20s.
But all of them are far higher than Mexico’s $5. And the going rate at Mexican parts plants these days is about $2 an hour. Throw in the benefits that are standard in Mexico, and a parts worker’s hourly compensation package is closer to $3.

Read more: http://www.autonews.com/article/2012...#ixzz2EnsukKnD

So I wonder just how can Michigan compete with Mexico even that it is now RTW? Many Japanese and German manufacturers are skipping the southern RTW states altogether and setting up shop south of the border. Will Michigan be able to compete now that it is a RTW state?

**rb336** · December-11-12, 10:17 PM

yeah, the good ol' race to the bottom is on

**Patrick** · December-11-12, 10:22 PM

The problem I have is that even now, Michigan still holds onto manufacturing while failing to pursue other industries. Sure, we have token sectors, but Michigan still has its heart set on factory jobs. Not trying to knock industrial work...I just fail to see how RTW will help Michigan attract new non-industrial interests to the state. How will the RTW issue help with IT, healthcare, R/D and other knowledge-based fields?

**Patrick** · December-11-12, 10:25 PM

http://blog.al.com/businessnews/2012/05/post_142.html

The rise of Mexico as a center of auto manufacturing, as well as a dearth of existing auto assembly plant projects at the moment, has some wondering whether Alabama is nearing a topping-out of its automaking potential.

There are three key regions of the world for auto production -- Asia; North America and South America; and Europe -- and each is going to have a low-cost location. In the case of North America and South America, that's become Mexico, she said.

Even Alabama, with all its tax incentives, is a bit scared of Mexico's rapid pace. So if the southerners are worried, how will that fare for Michigan?

**Det_ard** · December-11-12, 11:47 PM

There's already been some "reshoring", the transfer back to the US of manufacturing that was formerly done offshore. Recent studies by BCG and MSU's Dept. of Supply Chain Management both showed 37% - 38% of large manufacturers have or are considering reshoring.

Several factors are at work. Higher wages in China and other "low wage" countries, increased transportation costs, transport risk [[customs delays, piracy), political risk, intellectual property theft, product quality issues, communication and coordination issues, currency exchange rate changes, decreasing labor content in products, higher tech manufacturing that requires higher skilled workers, and lower energy costs for energy-intensive industries [[plastic feedstock production, fertilizer production, chemical processing, metal foundries).

The BCG study predicted growth of 2.5 million to 5 million US manufacturing jobs due to reshoring and increased exports.

Interesting take on China's transition to "Rust Belt" http://www.forbes.com/sites/gordonch...next-rustbelt/

**leapfrog** · December-13-12, 04:13 PM

Originally Posted by rb336

yeah, the good ol' race to the bottom is on

But..but my Governor and Legislator tell me this is going to make Michigan a paradise!

**rb336** · December-13-12, 06:14 PM

Transportation costs are a big factor when it comes to bulkier products.

Ford's decision to move Fusion production to Flatrock was partially based on that, partially on the higher productivity and quality at the Flatrock plant.

**poobert** · December-13-12, 08:05 PM

Originally Posted by Patrick

While remaining neutral on the RTW issue, I noticed that many RTW supporters hold the belief that numerous businesses will relocate to Michigan. There is a belief that Michigan's industrial output will soar with RTW. I read the following article and wondered about a few things....

Read more: http://www.autonews.com/article/2012...#ixzz2EnsukKnD

So I wonder just how can Michigan compete with Mexico even that it is now RTW? Many Japanese and German manufacturers are skipping the southern RTW states altogether and setting up shop south of the border. Will Michigan be able to compete now that it is a RTW state?

In terms of quality of life, Michigan is absolutely on par with Mexico. We've finally caught up the Third World here. Mission accomplished. Now how do I get out of this godforsaken hellhole of a state?

JVB · December-13-12, 08:08 PM

Originally Posted by poobert

In terms of quality of life, Michigan is absolutely on par with Mexico.

If that's where the unions have taken us, shouldn't we want a change?

**stanman13** · December-13-12, 08:45 PM

There is no evidence that enacting RTW legislation has brought more growth into any state that has enacted it. There is no statistically significant increase in gdp for those states. There is, though, a marked increase in disparity of wealth distribution. So we just became more like Mexico and Mississippi. Yay!

**Jimaz** · December-13-12, 09:37 PM

Originally Posted by stanman13

There is no evidence that enacting RTW legislation has brought more growth into any state that has enacted it. There is no statistically significant increase in gdp for those states. There is, though, a marked increase in disparity of wealth distribution. So we just became more like Mexico and Mississippi. Yay!

Heh. Welcome to the forum, stanman13. Wear your asbestos longjohns. LOL!

The origin of the phrase "right to work" is discussed at
DetroitYES Home » Non Detroit Issues » Thom Hartmann » The American worker's life before unions

**poobert** · December-13-12, 10:09 PM

Originally Posted by JVB

If that's where the unions have taken us, shouldn't we want a change?

I should let you know that I don't keep company with base and vile men who celebrate the usurping of government in the name of ideology, so you ought to look to retch at someone else.

**Det_ard** · December-13-12, 10:18 PM

Originally Posted by poobert

In terms of quality of life, Michigan is absolutely on par with Mexico. We've finally caught up the Third World here. Mission accomplished. Now how do I get out of this godforsaken hellhole of a state?

Well, you just go. Unless you just want attention, then you post about it on the internet. So here's your attention. Look at you.

**Jimaz** · December-13-12, 11:49 PM

Originally Posted by poobert

I should let you know that I don't keep company with base and vile men who celebrate the usurping of government in the name of ideology....

That's pretty good.

I expected to find that quote on the internet by some great statesman but Google found nothing.

Keep doing that!

**oladub** · December-14-12, 12:31 AM

The question should not be whether a RTW Michigan can compete with Mexico. The question should be why does Michigan even have to consider competing with Mexico? Leading politicians of both parties have created a situation in which Michigan residents have to compete with Mexico. No one on this thread seems to upset about that. It isn't a coincidence that federal trade policies allow US corporations to import goods and move production abroad. It isn't a coincidence that young people and blacks are shut out of entry level jobs because employers can hire illegal aliens for less. These things are the direct result of top Republicans and Democrats' policies.

If FDR's ghost showed up tomorrow and re-instituted the Wagner Act and workers all raised their wages and benefits, the positive effects would only last until production was moved overseas. Everyone here is just wasting energy pretending that by keeping the RTW will, by itself, do much more than slow the destruction of unions. Thom Hartman can rattle on about the history of the Wagner Act but things like Buick engines, all of our electronics, and clothing weren't made in Mexico or China back in 1935.

No one is going to win a race in a leaky boat. Until we fix the leaks in our economic system, we will spent more time bailing than going forward. Meanwhile, the RTW or non-RTW discussion is a bit like moving the deck chairs to the high side of the deck to provide a few more minutes of comfort.

**detroitsgwenivere** · December-14-12, 12:39 AM

^^here here

**stanman13** · December-14-12, 10:35 AM

Originally Posted by Jimaz

Heh. Welcome to the forum, stanman13. Wear your asbestos longjohns. LOL!

The origin of the phrase "right to work" is discussed at
DetroitYES Home » Non Detroit Issues » Thom Hartmann » The American worker's life before unions

Thanks. I'll have to dig those longjohns out of the old clothing box lol. I try not to troll much but I will admit to having difficulty at times with keeping a lid on my sarcasm. Seems like others here suffer the same problem, though.

**rb336** · December-14-12, 11:51 AM

There is a strong inverse correlation between the decrease in union membership and the rise of income inequality. for a great review of the detrimental effects of high rates of income inequality [[including on those in the higher levels), I suggest you read The Spirit Level by Pickett and Wilkinson.

http://www.huffingtonpost.com/2012/0...n_1581897.html

and, from the National Bureau of Economic Research, working paper 9473:

http://faculty.arts.ubc.ca/nfortin/econ560/card04.pdf

**leapfrog** · December-14-12, 12:51 PM

Originally Posted by poobert

In terms of quality of life, Michigan is absolutely on par with Mexico. We've finally caught up the Third World here. Mission accomplished. Now how do I get out of this godforsaken hellhole of a state?

You can just follow the flood of traffic as others leave the state.
I've never had as many friends at once seriously talking about leaving the state and not just because of the recent moves by that abomination we call a Legislature, although its certainly a factor.

**noise** · December-14-12, 12:54 PM

Speaking of which...I just bought a house out of state and will be moving shortly, partly due to politics in Michigan. I'm fortunate that I have the ability to move rather easily, as I've taken the opportunity a few times.