China Now Comes to USA for Cheap Labor?

Re: [spiers] China Now Comes to USA for Cheap Labor?


On Tue, 18 Jul 2006 14:22:00 -0400, "Pete Holt" wrote :

>
> Another few points:
> 1) You say "labor cannot be critical.".... Labor costs vary among the present
US automakers
and a new company entering the system, with no legacy pension costs, etc., would
be
expected to have lower labor costs than many existing manufacturers.

***AS USA automakers and their suppliers go bankrupt and reneg on their pension
and
medical plans, they have no legacy costs either... the truckers in the 80's,
the pilots in the
90's...eventually they'll get around to everyone.***

> 2) You say "USA pays the most for everything". But US costs of goods are
generally not
higher and in many cases lower than in other western societies. If you have
been to Europe
lately, you will find that costs of goods (both in dollars and in the local
currency) are often
higher than here.

***The europeans love their taxes...prices are higher for say gas, due to taxes,
not costs.
Telephone bills in USA have gone up as costs have dropped partially due to huge
increases in
telephone taxes.***

> 3) Your thesis that labor costs are irrelevant is absurd. Labor costs are one
component of
final total product costs. To the extent that labor is a large component of
final total product
costs (vs. materials, transportation, etc.) labor will be a relatively important
factor in the cost
of the good, its price competitiveness and ability to compete in the
marketplace.

***Little of what USA imports has a component cost of labor more than 5%... but
that is not
my main thesis, the cost of management to make baskets in USA is too expensive,
management oversas is cheaper. People with Ag degrees go into govt, while
mexicans
manage the farms, since mexican management is cheaper than usa management. The
thing
is management cost,***

> 4) Let me know when you mag-lev it to your front door, either here or in
China. Mag-lev
(which I have ridden in China) is, as you know, a form of heavy rail and
comparable to our
train or subway systems. Not anytime soon to replace all other forms of
transportation, but a
possible substitute for heavy rail in the future.

*** The history of heavy rail suggests otherwise... lighter and lighter, rail
roads, auto roads,
mag-lev could follow the same trjectory if govt was to get out of the road
biz... in 1971 a
book predicted there would never be a need for a small computer, only huge
computers... it's
only a matter of who goes first.***

John
>
> ----- Original Message -----
> From: John Spiers
> To: spiers@yahoogroups.com
> Sent: Tuesday, July 18, 2006 10:43 AM
> Subject: Re: [spiers] China Now Comes to USA for Cheap Labor?
>
>
> Exactly... China is going to do exactly what USA has been doing... "So they
will take a
> respected name (MG), build it with high priced labor, use Chinese-sourced
parts, and
make
> good margins" Since USA pays the most for everything, they can do this.
>
> But a couple of points... if the Chinese can use high priced USA labor and
make money,
then
> labor cannot be critical. If they turn a nice profit, how so? since USA
automakers cannot. If
> they do, the difference will necessarily be Chinese management, since all
other factors will
be
> the same.
>
> Another reason to make cars in USA is China has a labor shortage right now,
and
> unemployment is rising in USA if you take govt jobs out of the picture. With
inflation, USA
> labor has been getting cheaper.
>
> I agree China will sell these cars inside usa, because they will cost too
much to sell
outside
> the USA, any more than any other USA car will sell well outside of usa.
>
> Finally, the Chinese market is growing rapidly, so saturation is hard to
gauge, I suspect
there
> will be new car companies yearly in china, until the decide to leapfrog USA
and go
completely
> mag-lev.
>
> John
>
> On Mon, 17 Jul 2006 18:26:02 -0700, Paul Snyder
wrote :
>
> >
> > I don't think it supports your theory about management. It's just an
> > investment decision. The Chinese auto market is super-saturated, so
> > Nanking Motors is looking to put their money somewhere it will grow
> > better. So they will take a respected name (MG), build it with high
> > priced labor, use Chinese-sourced parts, and make good margins. The
> > car will sell only in the US, I predict.
> >
> > On Jul 17, 2006, at 1:18 PM, John Spiers wrote:
> >
> > > Folks,
> > >
> > > If you believe cheap labor is a factor in int'l trade, then what do
> > > you make of China to build
> > > British cars in USA?
> > >
> > > http://tinyurl.com/lu9fq
> > >
> > >
> > > John

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