Jim Cramer says, just move the UAW jobs to Mexico.
https://jalopnik.com/jim-cramer-has-weig...1850838159
The average pay of a union auto worker in Detroit is $25/hour ($52,000 annual). The average pay for a non-union auto worker in Mexico is $3.25/hour (after their recent $0.25 pay raise from $3/hour) --- this equates to $6,800/year.
NOW, the UAW workers are asking for a 40% increase which would take their average pay to $35/hour ($73,000 annual). They are also requesting pension compensation (like 401k but they don't have to contribute) be brought back. As info, pension offerings have pretty much been eliminated by companies 15-20 years ago.
I know the thought of moving jobs to Mexico is pretty much taboo but the US has been outsourcing our preferred jobs (IT & technology related) to India and other countries so I'm interested to get your perspective on the subject matter.
Personally speaking, I think it's costly to close down a plant and build a new one of the same status in another country, however, given our migration to the EVs, could we see a much greater manufacturing transition to MX take place over the next 5-10 years?
.... on a side note, I also found it interesting that China is now building manufacturing plants in Mexico for 2 reasons: 1) Low labor costs, and 2) less costly transportation costs to make products in Mexico and ship them to the US
https://prosperousamerica.org/chinese-co...ndshoring/
I think my question would be how much of your money do you want to give to the united auto workers in order to save American jobs?
(09-16-2023, 10:59 AM)The Real Marty Wrote: [ -> ]I think my question would be how much of your money do you want to give to the united auto workers in order to save American jobs?
That's a really good way to look at it since it will increase the cost of a US made auto by the companies being impacted (GM, Ford, Chrysler).
My initial response is $0 -- but we do have American vehicles and I can't do without my Jeep so I guess my true answer is not $0 so let's say +15% increase but from what I understand they will likely settle at 30% and no pension.
What I mean is how much less does a car made in Mexico have to cost, as opposed to a car made in the US, in order for you to approve of moving the jobs to Mexico? How much of a price difference is enough for you to say OK, move the jobs to Mexico?
Here's another way to look at it. If you had a choice between two identical cars, one of which is made in Mexico and cost $30,000, and one of which is made in the United States and cost $40,000, which one would you buy?
In addition to the UAW demands listed above, they also want a 32-hour work week. They've lost their minds.
It's cute you all think those savings will be passed onto the consumer. We'll get a fraction of that benefit. The union is only half the problem.
(09-16-2023, 12:08 PM)Lucky2Last Wrote: [ -> ]It's cute you all think those savings will be passed onto the consumer. We'll get a fraction of that benefit. The union is only half the problem.
But here is my question. If you have two identical cars and you can buy either one but one costs $10,000 more than the other because it is made in the US and the other is made in Mexico, which one would you buy?
I'll support an American before I support a foreigner if I can help it. Debt is temporary if you manage your money the way you should. Then the question becomes a moot point. One of the problems with the mindset of this country is it's all about having the latest and greatest with no regard to how much it costs. People get so far in debt that they're forced to have to choose the $30k car over the $40k car.
Of course, right now everyone except the elites are sucking wind thanks to inflation. Some are hurting more than others. Yet the mindset is still there. I know folks who buy an iphone every single time Apple releases the newest model. I know others who buy a newer model car as soon as the manufacturer makes obvious changes because they don't want to be seen driving something "old". I can give other examples but it's nauseating to think about. These kinds of people are always in debt and wonder why both adults have to work 100 hours a week and never see their kids.
(09-16-2023, 11:26 AM)homebiscuit Wrote: [ -> ]In addition to the UAW demands listed above, they also want a 32-hour work week. They've lost their minds.
Don’t forget getting paid for a 40 hour work week.
This grab is ridiculous.
(09-16-2023, 03:55 PM)The Real Marty Wrote: [ -> ] (09-16-2023, 12:08 PM)Lucky2Last Wrote: [ -> ]It's cute you all think those savings will be passed onto the consumer. We'll get a fraction of that benefit. The union is only half the problem.
But here is my question. If you have two identical cars and you can buy either one but one costs $10,000 more than the other because it is made in the US and the other is made in Mexico, which one would you buy?
Sure, that was the reasoning that took all our jobs overseas. I think before there was a corporate hegemony, that made sense. Now, they will send the jobs to Mexico, conspire with the other car manufacturers and pocket $9,999 extra bucks. 55 brands of car are owned by 14 companies. That number gets even smaller when you consider who owns the majority stake in most of these companies. It's not just about a car company beating the competition; it's more about are they making their stockholders money.
While I think the automotive workers are asking for too much (common in negotiating), I think we're foolish to think we are going to see the benefits of jobs moving overseas. Maybe your portfolio, but, I mean, really... that's peanuts.
The economy just of this country is very complicated, let alone when it competes with other countries, it's simply beyond understanding. For two decades now, it's been routine for US factories to assemble cars from parts made in Japan and Korea, even while Japan and Korea assemble cars from parts made in the US. Classical global trade theory says that should never happen, that the whole point of global trade is countries will specialize. A CEO who says "that job will go to Mexico" is just like the union boss who says, "your profits mean you can afford paying us more." They're both just selling something. Neither of them know what will happen next.
It's proven that American style labor unions increase wages even for non members, but it's also proven that they stagnate upward mobility and innovation. If somebody has a better idea about how to make a certain car part faster or better, the union has to be on board with trying it out just as much as the non union engineering staff. I'm comfortable in my household income in part because UAW pension earners are clients of my wife's business. I'm also an engineer so as much as I agree that they should be paid more and get better pensions, it's the details that really get to me, how they lay claim to factory equipment and wont let non union staff experiement with it, and how they will get in the way of the ordinary hiring and firing process, even when their workers make dumb mistakes that lead to recalls.
(09-16-2023, 10:54 PM)Lucky2Last Wrote: [ -> ] (09-16-2023, 03:55 PM)The Real Marty Wrote: [ -> ]But here is my question. If you have two identical cars and you can buy either one but one costs $10,000 more than the other because it is made in the US and the other is made in Mexico, which one would you buy?
Sure, that was the reasoning that took all our jobs overseas. I think before there was a corporate hegemony, that made sense. Now, they will send the jobs to Mexico, conspire with the other car manufacturers and pocket $9,999 extra bucks. 55 brands of car are owned by 14 companies. That number gets even smaller when you consider who owns the majority stake in most of these companies. It's not just about a car company beating the competition; it's more about are they making their stockholders money.
While I think the automotive workers are asking for too much (common in negotiating), I think we're foolish to think we are going to see the benefits of jobs moving overseas. Maybe your portfolio, but, I mean, really... that's peanuts.
But which one would you buy?
Some perspective, during the bailouts of the auto manufactures in 2008 the UAW was approached and told to release the big three from Cost of Living Adjustments. They where promised after the companies recovered they would return but it was vital to keep them afloat to suspend the cola raises. The big three have denied bringing back cola raises on the last two contract despite making a full recovery decades ago.
Secondly labor cost are extremely minimal impact on the invoice price you pay for a vehicle. If they did have a major impact Hondas and Toyotas wouldn't be selling for the same price as the big three. Automotive prices are almost exclusively set by market demand.
The biggest cost of vehicle invoices is adjusting to cafe standards not manufacturing cost. The UAW is asking for the moon it's how negotiations work, doubt they're really stuck on 32 hour work week.
Unions are necessary to combat massive to big to fail corporations. Had we not had state sponsored corporations you wouldn't need unions but this where we are. I for one hope the UAW get the raises and cola returned along with medical and 401k contributions. I still won't buy American cars because they're mostly garbage but don't believe for a second the automakers can't afford to pay them better.
I did an internship in Germany. It was an international office with workers from all over Europe and they all spoke English. One day they told me that I needed to attend their union meeting. Just by being in this internship I was in their union. Management was excluded from the meeting, but workers had to attend as part of their job duties. The law in Germany says that every company has to organize a union and pay the workers to attend the union meetings. The workers are supposed to discuss how they can do their job safer or better. Sometimes they come up with ideas that they can just implement without involving management, sometimes they have to present the idea to management for approval, sometimes they complain about pay and threaten to strike, and sometimes they have no ideas and nothing to say but they still have to meet. Doesn't matter how happy you are with your boss in Germany. The boss has to organize you into a labor union, give you a time and place to meet during working hours, and leave you alone to do it.
Germany also has "trade unions" that connect workers with similar job duties across multiple employers, but these unions are not as important as they are here, in part because the workers already have a union, why would they want two?
Anyways, it seems like a good system. There is a benefit to unions beyond just better wages. We can't have that here, though. Our union laws are the opposite of Germany. Where Germany requires the employer to organize a union, the US forbids employers from organizing unions. All unions in the US have to be from the outside, which makes them inherently hostile and needing to tax their own workers to fund themselves.
A company should absolutely take advantage of cost cutting measures as they can assuming quality doesn't take such a hit to negate the benefit of the savings. It's a component of their main function which is to not only turn a profit, but to turn as big of a profit as they possibly can for as long as they can. It's really the government's job, as they are able, to create the environment that incentivizes companies to keep or create new jobs here at home. So to answer the question in a vacuum, from the company's and shareholders' perspectives, yes they should move the production to Mexico given the current situation.
(09-16-2023, 03:55 PM)The Real Marty Wrote: [ -> ] (09-16-2023, 12:08 PM)Lucky2Last Wrote: [ -> ]It's cute you all think those savings will be passed onto the consumer. We'll get a fraction of that benefit. The union is only half the problem.
But here is my question. If you have two identical cars and you can buy either one but one costs $10,000 more than the other because it is made in the US and the other is made in Mexico, which one would you buy?
This may be addressed in the subsequent communication but our US companies are not looking to pass savings on to us when they move jobs to Mexico or China, they are simply seeking to improve their profitability. As such, if we are paying $40k for a car made in the US, there's a good chance we will be paying that same $40k after they move the jobs to Mexico (or perhaps they will offer some reductions based on competitiveness).
Personally, if we did recognize a $10k savings passed on to the buyer, I'd definitely buy the $30k vehicle if I don't believe in the UAW position AND I'm not going to simply take the UAWs side just because they are US based. They need to be relatively reasonable, knowing manufactures have much cheaper options.
I have to wonder what the quality level of the work is for a person who is asking for premium pay and wants to work minimal hours. Is that person installing your made in Taiwan/China/India components while checking Facebook or chatting with their peers really better than any other factory? I'm not trying to be down on buying American, but pride in the workplace doesn't mean what it used to literally and figuratively. The end user probable has no idea where which parts were made or assembled anyway.
I think another way to look at the proposed question is not weather the choice would be 30,000 for made in Mexico or 40,000 for made in USA. I think ultimately the corporations would not discount the car from Mexico but would drastically increase the USA car due to increased labor cost.
(09-18-2023, 12:12 PM)HURRICANE!!! Wrote: [ -> ] (09-16-2023, 03:55 PM)The Real Marty Wrote: [ -> ]But here is my question. If you have two identical cars and you can buy either one but one costs $10,000 more than the other because it is made in the US and the other is made in Mexico, which one would you buy?
This may be addressed in the subsequent communication but our US companies are not looking to pass savings on to us when they move jobs to Mexico or China, they are simply seeking to improve their profitability. As such, if we are paying $40k for a car made in the US, there's a good chance we will be paying that same $40k after they move the jobs to Mexico (or perhaps they will offer some reductions based on competitiveness).
Personally, if we did recognize a $10k savings passed on to the buyer, I'd definitely buy the $30k vehicle if I don't believe in the UAW position AND I'm not going to simply take the UAWs side just because they are US based. They need to be relatively reasonable, knowing manufactures have much cheaper options.
I thought that would have been obvious to him after my post. Maybe you explained it better.
2 more things of note: 1. People often start high in negotiations to take things off the table, so I'm sure at least some of the UAW's requests are intentionally meant to be thrown out. 2. Remember who has power over the narrative... it ain't the workers.
That is not a wholesale defense of this situation. Truth is that I know very little about it. I'm just postulating some alternative ideas about why these demands seem so extreme.
(09-19-2023, 06:42 AM)Lucky2Last Wrote: [ -> ] (09-18-2023, 12:12 PM)HURRICANE!!! Wrote: [ -> ]This may be addressed in the subsequent communication but our US companies are not looking to pass savings on to us when they move jobs to Mexico or China, they are simply seeking to improve their profitability. As such, if we are paying $40k for a car made in the US, there's a good chance we will be paying that same $40k after they move the jobs to Mexico (or perhaps they will offer some reductions based on competitiveness).
Personally, if we did recognize a $10k savings passed on to the buyer, I'd definitely buy the $30k vehicle if I don't believe in the UAW position AND I'm not going to simply take the UAWs side just because they are US based. They need to be relatively reasonable, knowing manufactures have much cheaper options.
I thought that would have been obvious to him after my post. Maybe you explained it better.
2 more things of note: 1. People often start high in negotiations to take things off the table, so I'm sure at least some of the UAW's requests are intentionally meant to be thrown out. 2. Remember who has power over the narrative... it ain't the workers.
That is not a wholesale defense of this situation. Truth is that I know very little about it. I'm just postulating some alternative ideas about why these demands seem so extreme.
It wasn't obvious because you didn't give me a direct answer. But I assume from the above that you would buy the car made in Mexico. I would, too. And I don't think doing so would harm US jobs, because I would have an extra $10,000 to spend, and a large portion of that would probably go towards US-made products and services.
It's interesting what's happening in the auto industry. Tesla now sells more cars than anyone else in the world.
(09-19-2023, 07:22 AM)The Real Marty Wrote: [ -> ] (09-19-2023, 06:42 AM)Lucky2Last Wrote: [ -> ]I thought that would have been obvious to him after my post. Maybe you explained it better.
2 more things of note: 1. People often start high in negotiations to take things off the table, so I'm sure at least some of the UAW's requests are intentionally meant to be thrown out. 2. Remember who has power over the narrative... it ain't the workers.
That is not a wholesale defense of this situation. Truth is that I know very little about it. I'm just postulating some alternative ideas about why these demands seem so extreme.
It wasn't obvious because you didn't give me a direct answer. But I assume from the above that you would buy the car made in Mexico. I would, too. And I don't think doing so would harm US jobs, because I would have an extra $10,000 to spend, and a large portion of that would probably go towards US-made products and services.
It's interesting what's happening in the auto industry. Tesla now sells more cars than anyone else in the world.
I think you’re getting value and volume mixed up. Toyota, by a large margin, sells more cars worldwide than anyone.