How to stop Off-shoring - Move Detroit & Michigan production to low wage states

[Lowell]

"Trump disclosed in an interview with The Detroit News Wednesday that Ford CEO Mark Fields wrote to him explaining the automaker’s planned $2.5 billion investment in Mexico after Trump criticized Ford in June. And Trump suggested one way to stop automakers’ expansion to Mexico is by moving some production out of Michigan to lower-wage states."

Trump suggests moving some car production from Michigan

Um I thought that had been done already and those wages weren't low enough either.

[DetroiterOnTheWestCoast]

Can we please off-shore some CEO's?

[ndavies]

Stupid suggestion from someone who doesn't have a clue about manufacturing.

Domestic auto plants in the south pay exactly the same as in the north...... Due to the UAW. Foreign manufacturing plants in the south are cheaper since they don't have to worry about the UAW. [[well, VW might end up with a union. Even with that the Tennessee plant would still be cheaper than building in Germany.)

The only reason to go to the southern US, is to get away from higher State taxes and higher utility bills. Michigan handed the OEMs huge tax incentives to stay during the recession. It's the reason Michigan ended up with $0 in business tax income this year. They gave out more in tax incentives than they collected.

Even the foreign auto plants in the southern US pay way more than the Mexican plants. This is the Reason the assembly plants go to Mexico.

[401don]

Can we please off-shore some CEO's?

Starting with Trump.

[SDCC]

Starting with Trump.

I'll second that motion

Stupid suggestion from someone who doesn't have a clue about manufacturing.

Domestic auto plants in the south pay exactly the same as in the north...... Due to the UAW. Foreign manufacturing plants in the south are cheaper since they don't have to worry about the UAW. [[well, VW might end up with a union. Even with that the Tennessee plant would still be cheaper than building in Germany.)

The only reason to go to the southern US, is to get away from higher State taxes and higher utility bills. Michigan handed the OEMs huge tax incentives to stay during the recession. It's the reason Michigan ended up with $0 in business tax income this year. They gave out more in tax incentives than they collected.

Even the foreign auto plants in the southern US pay way more than the Mexican plants. This is the Reason the assembly plants go to Mexico.

Correct, hit the nail right on the head.

[Johnnny5]

At least Trump realizes and freely admits that American workers are getting the short end of the stick on these "Free Trade" deals. Hillary fully supported NAFTA and strategically back peddles only when courting Sanders supporters or other blue collar voters. There's no reason to think that the offshoring will slow or stop with her in the White House.

Trump's suggestion to move production around the U.S and somehow follow cheap labor is ridiculous, but that is just one line from the article. The rest of his statements about the offshoring of U.S jobs are IMO right on target, but I guess those should be ignored for the sake of a good click bait title.

[Bobl]

Mr. Trump contradicts himself and ignores facts as much or more than most politicians, yet his followers say they like him because "he tells it like [[sic) it is."

[canuck]

Mr. Trump contradicts himself and ignores facts as much or more than most politicians, yet his followers say they like him because "he tells it like [[sic) it is."

Donald The Rump would do to the US what a Sidewinder missile does to your Grand Caravan.

[Bobl]

I think you may be correct, canuck. In the meantime, I am looking forward to spending next weekend, enjoying Canadian beer in your fine country on the eastern shores of the Church Of The Great Lake Huron.

[canuck]

I think you may be correct, canuck. In the meantime, I am looking forward to spending next weekend, enjoying Canadian beer in your fine country on the eastern shores of the Church Of The Great Lake Huron.

Good for you bobl. Enjoy!
We have a long holiday weekend here to do so. Cheers with the beers!

[Wesley Mouch]

At least Trump realizes and freely admits that American workers are getting the short end of the stick on these "Free Trade" deals. Hillary fully supported NAFTA and strategically back peddles only when courting Sanders supporters or other blue collar voters. There's no reason to think that the offshoring will slow or stop with her in the White House.

Trump's suggestion to move production around the U.S and somehow follow cheap labor is ridiculous, but that is just one line from the article. The rest of his statements about the offshoring of U.S jobs are IMO right on target, but I guess those should be ignored for the sake of a good click bait title.

Trump's a fool, but I think this stupid comment of his isn't such a big deal.

He's advocating keeping jobs in America. I don't see what's wrong with that. For every worker in Michigan who hear pains, elsewhere someone hears sympathy with their need for a good job. I wonder if newspapers elsewhere picked up on this as a anti-worker statement. Its not. Its an America First statement.

[Hypestyles]

more manufacturing plants need to move up north.

[Honky Tonk]

more manufacturing plants need to move up north.

To the UP?

[Canadian Visitor]

Let's laugh off Trump; then treat the question seriously.

To do so, we need to understand that whatever one's politics, YES, free [[or free'ish) trade is the direct cause of jobs moving.

That is to say, in the pre-free trade [[not merely NAFTA, but low-tariff WTO world) most affluent nations had trade barriers through duties in place that made economically un-feasible to shift large numbers of jobs to the developing world.

The shift isn't merely a function of wages, though to be sure, that matters, its also a function of land cost, currency value, reduced transport costs in some cases, lesser environmental regulation, and labour that in some cases may be compelled to work longer days, in harsher conditions than what would generally be accepted and/or legal in the developed world.

***

Can 'Free Trade' particularly between developed and developing nations be rolled back? Sure, but if one is being realistic, that's rather unlikely. First and foremost there would be many interests adversely affected, well-monied interests at that.

But there is also the problem that if you did repatriate many of these jobs, they would no longer pay what people remember, and/or there would many fewer of them, due to automation.

As such, the material rollback of 'free trade' is probably neither likely, nor desirable.

Though a strong case could be made against further expansion of such trade, outside the developed world.

****

What can be done then?

There are a few things; one is to impose some variant of a carbon tax on the distance goods are moved. ie. a tax of $1 per tonne per mile. To be compliant w/trade laws this would have to apply to good shipped within the U.S. [[or Canada) as well.

If one did that, and was moving a 200lbs appliance across the ocean, you might increase its price by $400 or more which might make it more economical to 'assemble' closer to the final market.

That would not fully address the Mexican problem, particularly in respect of wages, which being as low as $5 per day, among the lowest in all of the Americas constitute a real problem.

A problem not just for those who would like to see such jobs further north, but also for Mexicans who even with a lower cost of living find $5 per day pretty anemic.

Some sort of diplomatic and/or economic pressure must be brought to bear on Mexico which needs to at least double its min. wage in the short term and raise it substantially in the years thereafter too.

***

Corporate taxes are not the issue some make them out to be; though the U.S. 'sticker' rate is high by global standards at roughly 40%. By comparison the Canadian rate [[Ontario + Federal) is 26.5%; Germany is 29.6%, France is 33%.

However, the U.S. rate has so many loopholes that it does not really reflect taxes as paid.

As such something that really should be done is to eliminate a host of deductions and credits, but lower the 'sticker' rate, as this would remove the idea that this is the material issue.

The resulting simplicity would benefit smaller business disproportionately.

[Canadian Visitor]

I think we should also say, at this juncture, and that due to modernization there will be fewer low-skill jobs as time goes on.

That means there is 2-pronged need to be addressed.

1) Skilling up workers to handle at least moderate-skill jobs, through some mixture of offering, mandating, subsidizing or making free, such skill upgrading, particularly to younger workers.

2) There remains a need to understand that whatever job someone holds, they need to be able to 'survive' on it, and that does mean raising minimum wages and/or using the tax system to top-up low earnings; mostly likely a combination of both.

[Wesley Mouch]

...snip...2) There remains a need to understand that whatever job someone holds, they need to be able to 'survive' on it, and that does mean raising minimum wages and/or using the tax system to top-up low earnings; mostly likely a combination of both.

I completely agree that the social changes have made the effect of wage-loss too severe -- and our social systems do need to adapt. [[Watch as Mouch comes out of the closet as a socialist!)

The basic minimal salary seems very effective to me. Once, you could survive on zero. Live with parents, eat from garden, do odd jobs around your neighborhood. But we have structured employment where its very difficult for low-income people to do odd jobs. To get hired to do lawn work, you need insurance. You must pay your helpers minimum wages. You must withhold taxes. You must track their hours and ensure they're paid overtime, and so on. Sure, there are exemptions for some things -- but staring a small business or doing your own one-person shop is much more difficult that it was once -- due to our regulation and licensing of everything. As a result, we no longer think about how someone down of their luck should just go downtown and offer to work a couple hours at Comerica Park. There's no such thing as hiring on the spot for work. You need a job. And jobs are metered out by employers because they have to be well-defined. The system discourages casual labor. This hurts young people and the unemployed.

A basic minimum income with no claw-backs would allow people to survive while they seek employment. And every dollar you earm above that minimum should be yours to keep.

This is very different than a minimum wage. Minimum wages actually discourage employment -- because you can't just hire someone you want to help to mow your lawn -- unless you pay a 'minimum wage', or even worse, a 'living wage'. This discourages casual hiring, and the hiring of less-qualified people. That's why Unions like MW. Keeps the riff-raff out. Pushes wages up. I disagree on keeping wages up without value -- but you can try that if you wish. However the distortions of the workplace by MW are mostly harmful to the poor, and mostly helpful to the middle class. Its very different than a minimum income, and should be avoided.