Japan auto companies triple Mexican pay rather than move to US • Hacker News Board

Re: Japan auto companies triple Mexican pay rather than move to US

#81

Post by thisisnico » Thu, Jul 02, 2020, 12:27 AM UTC

hourislate wrote: post #60

thisisnico wrote: post #45

Earlier quoted context omitted.

Nothing is moving to Canada, there had been a pretty big exodus from Michigan and Ontario to Texas and Mexico after Nafta. They’re still closing plants in Ontario and moving them to Mexico. 16$ an hour is less than what they pay in Canada. Source: I work for a supplier in the Automotive Capital of Canada. These comments are so egregiously false.

>16$ an hour is less than what they pay in Canada. It's the equivalent of 16. USD. So around 22. CAD? I agree, nothing is moving to Canada (comment was more aimed at Mexico)I guess since you work for a supplier you heard of FORD probably closing down their Oakville Assembly plant since they are not assigning any vehicle production to that plant after they stop making the Edge and the Lincoln equivalent.

They've also closed the Oshawa GM Plant, and they've reduced a shift at the FCA minivan plant. GM exited Windsor about 20 years ago. If anything the new agreement is aimed at re-balancing auto back to the US and Canada. We had a great automotive relationship in the past, it's mutually beneficial to both economies as there are strengths and weaknesses in the US industry and Canadian Industry. I'm interested to see what happens. I want to see Detroit as great as it was before NAFTA destroyed it.

Re: Japan auto companies triple Mexican pay rather than move to US

#82

Post by tzs » Thu, Jul 02, 2020, 12:31 AM UTC

gaukes wrote: post #47

The big issue seems to be that companies don’t know how long this version of NAFTA will last. If Biden becomes the next president and signals support for keeping the agreement the way it is, there’s a good shot they’ll move to the USA.

Even if they were sure it was going to last, why would they move to the US?

If they stay in Mexico, they can build cars for the US and Canadian markets and make sure that 40% of the parts are made by workers making $16 an hour to avoid tariffs, and in the same plant they can build cars for the rest of the countries in the Americas but use parts made by workers making more normal Mexican wages.

If they move to the US, they will be paying US levels of pay for both the cars they build for the US and Canada and the ones they build for the rest of the American continents.

Another disadvantage of building in the US cars for export to other countries that are not Canada or Mexico is they would have to worry about a trade war between the US and those other countries. If the current US administration slaps tariffs on country X, and X retaliates with tariffs on some US export and happens to pick cars as one of those exports, that is going to hurt the car company's sales. If they had remained in Mexico, they would not have to worry about US trade wars messing up their sales outside the US.

Re: Japan auto companies triple Mexican pay rather than move to US

#83

Post by AnthonyMouse » Thu, Jul 02, 2020, 12:38 AM UTC

austincheney wrote: post #80

AnthonyMouse wrote: post #54

Earlier quoted context omitted.

That's assuming it lasts. When you already have a factory in Mexico and now you have to pay them $16/hour, it makes little sense to immediately move it back to the US just in order to save $0 by paying US workers $16/hour instead. But the next thing that happens is that it becomes more cost effective to automate, so you start considering that. Then you don't employ as many people, and they become skilled workers who…

> But the next thing that happens is that it becomes more cost effective to automate, so you start considering that. Economically that is always the desired direction, but not because people cost too much. Changes to automation are incredibly expensive to build. The benefits to increased automation are increased output volume and improved quality control. Any cost reductions that arise are almost always completely un…

> Any cost reductions that arise are almost always completely unintended.

Nonsense. Are you trying to argue that computers are not an intentional cost savings over floors full of accountants using pen and paper? That a loom costs more than the labor required for hand weaving? Or that businesses don't realize that they are?

> To the contrary increased automation actually raises costs directly proportional to changes in market pressure from the increased output volume and any supply chain changes that increase access to the product.

Hardly any manufactured product is genuinely long-term supply constrained. Output volume increases as a result of higher demand. Higher demand comes from lower prices. If automation isn't lowering prices then it isn't increasing output volume.

Re: Japan auto companies triple Mexican pay rather than move to US

#84

Post by Krasnol » Thu, Jul 02, 2020, 12:54 AM UTC

AnimalMuppet wrote: post #31

rasz wrote: post #17

Earlier quoted context omitted.

Yes, US workers get to enjoy unemployment instead. Brilliant solution.

Maybe not. If you raise wages in Mexico, the number who come to the US looking for jobs goes down. That may move the supply-vs-demand more in favor of labor in the US.

I'd love to see those Trump voters who have to start working for a Mexican owned pool cleaning company because of that. That would maybe lead to proper inclusion of those people into a 21st century society.

Re: Japan auto companies triple Mexican pay rather than move to US

#85

Post by austincheney » Thu, Jul 02, 2020, 1:00 AM UTC

AnthonyMouse wrote: post #83

austincheney wrote: post #80

Earlier quoted context omitted.

> But the next thing that happens is that it becomes more cost effective to automate, so you start considering that. Economically that is always the desired direction, but not because people cost too much. Changes to automation are incredibly expensive to build. The benefits to increased automation are increased output volume and improved quality control. Any cost reductions that arise are almost always completely un…

> Any cost reductions that arise are almost always completely unintended. Nonsense. Are you trying to argue that computers are not an intentional cost savings over floors full of accountants using pen and paper? That a loom costs more than the labor required for hand weaving? Or that businesses don't realize that they are? > To the contrary increased automation actually raises costs directly proportional to changes i…

> Are you trying to argue that computers are not an intentional cost savings over floors full of accountants using pen and paper?

Yes. The key word there is intentional.

> Output volume increases as a result of higher demand.

Indirectly. Output directly increases from higher production capacity. Wishful thinking and consumer desire do not transform manufacturing without some changes to that manufacturing.

Re: Japan auto companies triple Mexican pay rather than move to US

#86

Post by AnthonyMouse » Thu, Jul 02, 2020, 1:15 AM UTC

austincheney wrote: post #85

AnthonyMouse wrote: post #83

Earlier quoted context omitted.

> Any cost reductions that arise are almost always completely unintended. Nonsense. Are you trying to argue that computers are not an intentional cost savings over floors full of accountants using pen and paper? That a loom costs more than the labor required for hand weaving? Or that businesses don't realize that they are? > To the contrary increased automation actually raises costs directly proportional to changes i…

> Are you trying to argue that computers are not an intentional cost savings over floors full of accountants using pen and paper? Yes. The key word there is intentional . > Output volume increases as a result of higher demand. Indirectly. Output directly increases from higher production capacity. Wishful thinking and consumer desire do not transform manufacturing without some changes to that manufacturing.

> Yes. The key word there is intentional.

You're basically arguing that businesses are run by people who can't compare numbers to each other.

If automation costs less, as it often does, then businesses will adopt it because it costs less, because lowering costs increases margins (or volumes, if the lower costs are passed on).

> Indirectly. Output directly increases from higher production capacity. Wishful thinking and consumer desire do not transform manufacturing without some changes to that manufacturing.

Not indirectly. If there is demand for 5000 cars at a given price and you suddenly gain the capacity to manufacture 10,000 cars at that price, you still aren't going to manufacture 10,000 cars unless you expect somebody to buy them. Having the capacity without the demand is nothing.

And having the demand without the capacity would only cause businesses to expand capacity, whether through automation or otherwise. If it was profitable to make 5000 cars by hand and there is demand for 10,000 cars at that price then they would just hire twice as many people to make them if nothing else.

Re: Japan auto companies triple Mexican pay rather than move to US

#87

Post by nine_zeros » Thu, Jul 02, 2020, 1:16 AM UTC

cmxch wrote: post #58

ksk wrote: post #29

Earlier quoted context omitted.

Well, nobody is "owed" a job. Markets transform and respond to pressures. When you operate in a saturated market like the US the only line item on the balance sheet that is easy to tackle is labor costs, not revenue or profit. Your customers aren't going to buy products from you because you gave a raise to your janitor instead of replacing them with a roomba (relax, its a joke :P). The China/Walmart economy is here t…

So what do you do for those that end up on the wrong side of the equation, especially those who have been there for a long time?

> So what do you do for those that end up on the wrong side of the equation, especially those who have been there for a long time?

Tax the capitalists to reduce inequality and also fully fund better programs like healthcare, education? This funding is wages for workers and as a society we remain developed?

The only problem with all our systems is disproportionate gains at the top.

Re: Japan auto companies triple Mexican pay rather than move to US

#88

Post by valuearb » Thu, Jul 02, 2020, 1:22 AM UTC

colechristensen wrote: post #78

valuearb wrote: post #32

Earlier quoted context omitted.

But it’s not. It’s funding more robots for the Mexican plants, which means fewer jobs for Mexican auto workers. So some workers will do better, others worse. And American consumers pay higher prices, so they are worse off.

Are the robots cheaper or more expensive than human workers? There is some broken thinking that high wages will increase consumer cost but replacing humans with cheaper robots won't, cherry-picking armchair cause-and-effect thinking to fit a "this is bad" narrative. Reducing trade frictions forces economic equality, especially when that reduction is tied towards some equality metric, like wages. Products being cheap…

The more you are forced to pay workers, the more attractive robots become.

The jaw of comparative advantage tells us that unrestrained trade benefits both parties. It means we get to deploy our workforce into higher value and higher paying jobs, while they get to increase their standard of living as well.

Re: Japan auto companies triple Mexican pay rather than move to US

#89

Post by moltar » Thu, Jul 02, 2020, 1:24 AM UTC

Of course, because as soon as they do that, they’ll start planning to phase out humans as much as possible. It’s clear that we are on the cusp of total automation. Moving a factory to US is probably just more costly than to pay employees $16 for a few more years.

And the employees who are left are highly paid engineers anyways.

Re: Japan auto companies triple Mexican pay rather than move to US

#90

Post by moltar » Thu, Jul 02, 2020, 1:28 AM UTC

erikw wrote: post #6

Wow, this should at least provide for some very interesting natural sociological experiments. For context, I make less than this as a software developer in Chile, and still have no problems saving and living a comfortable lifestyle. This is going to significantly impact the lives of folks working in these factories, and it will be interesting to see how it will affect the individuals, their communities, and the quali…

Similar situations happen in many places around the world.

Factory workers are usually not well educated and they don’t handle money well.

A perfect example is Alberta oil sands. Many workers are extremely well paid. Most of them just spend everything and manage to get in debt with lavish lifestyle. Buying expensive cars, toys, large houses. They end up without any significant net worth and now are also hostage of their lifestyle.

There’s a term for that: lifestyle inflation.