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Japan auto companies triple Mexican pay rather than move to US

asia.nikkei.com

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

#101

Post by yellowapple »

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.

In what universe is replacing floors full of accountants with a room full of computer(s) anything other than intentional?

"Oh, whoops, we bought these computers on a whim, and now all of a sudden all but a fraction of these accountants are completely redundant! Total accident, who would've guessed it?"

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

#102

Post by AnthonyMouse »

tzs wrote: post #82
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,…

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

If it no longer saves them money to be somewhere else, it's good PR. You get to hang a huge "made in USA" flag on your dealerships.

> 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.

People in the rest of the Americas buy different vehicle models. Chevy Beat, Nissan March, Volkswagen Vento. Very popular in Mexico.

The US market also just dominates the market on the entire continent. It has almost as many people as all of South America, but more importantly, they're the people who buy new cars. Many of those other countries not only have lower car ownership rates, a large fraction of their cars are used cars exported from the US market.

So they don't buy nearly as many new cars and most of what they do buy are different vehicle models.

> 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.

This is assuming cars being assembled in Mexico are being exported in large numbers to the countries likely to get into a trade war with the US, which are predominantly on other continents. But the cars sold in those markets are typically also manufactured there. The Yaris is popular in Europe, they make them in France. The Buick Excelle is popular in China, they make them in Shanghai.

The Toyota Corolla is manufactured on six continents.

The cars they make in North America are mostly going to the US. And a trade war between the US and e.g. Costa Rica doesn't seem that likely, or if it somehow happened, that much of a concern for US auto manufacturing.

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

#103

Post by Fire-Dragon-DoL »

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…

There is an entire world of books covering this about Toyota. Automation doesn't translate in lower costs necessarily.

Higher production volume means more material purchased, increased warehouse costs, people hired for warehousing, and everything related.

So it all depends on the organization.

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

#104

Post by austhrow743 »

masukomi wrote: post #7
samfisher83 wrote: post #4

Earlier quoted context omitted.

Even triple the pay they are making $16 dollars/hour which is less than whatever an american auto worker is going to make.

Mexican workers get a dramatic quality of life improvement. US workers don't have to work for less than market value / cost of living prices. Tens of thousands of US people continue to get cheap cars. Sounds like a great deal.

Some Mexican workers get a dramatic quality of life improvement. Others become unemployed as demand drops alongside the increased car price and as the "automate or not" formula gets tipped a little more against them.

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

#105

Post by newyankee »

moltar wrote: post #90
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 th…

Or probably because they know that even in the worst case scenario they will not go hungry or lack healthcare access. This is so contrasting with India or other Asian countries where opportunities and wealth was always limited and welfare net was limited to your family and social circle which helped in dire times, this led to a very strong savings culture for the middle class.

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

#106

Post by HeadsUpHigh »

wtallis wrote: post #64
HeadsUpHigh wrote: post #62

Earlier quoted context omitted.

The notion that car manufacturers from all the industries out there haven't already automated anything that's worth automating is something that I can't understand.

"Worth automating" isn't a simple one-time binary decision. Whether a given process is worth automating depends on the cost of automating it, and the labor costs that it will save, both of which change over time.

Japanese manufacturers at least have had similar if not higher costs on manufacturing in Japan( and Europe). And these factories still employ a large number of skilled and non-skilled workers.

I don't think a bump in salaries that puts a country in the same ballpark as existing manufacturing locations( not counting the extra costs of manufacturing in the States or in Europe) is going to be such a big push for more automation. After a certain point the versatility of human workers is still useful.

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

#108

Post by omega3 »

Negitivefrags wrote: post #92
627467 wrote: post #19

> The US-Mexico-Canada Agreement requires 40% or more of parts for each passenger vehicle be manufactured by workers who are paid at least $16 per hour... On face value this seems to be a very progressive condition.

I wonder how you even calculate that? Is a single screw a part? Is the whole engine a part, or made of lots of parts? How far do you break each thing down until it’s a single part? Is it when it can’t be taken apart without cutting something? Could you get past that rule by just welding the things made by cheap workers together? So they are no longer seperate parts? I have so many questions. You could say 40% vehicle…

It's based on the value, here is more info (chapter 3) https://www.wita.org/wp-content/uploads/2019/04/190403_Schol...

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

#109

Post by gurumeditations »

neilparikh wrote: post #69
gurumeditations wrote: post #8

Earlier quoted context omitted.

Exporting working class jobs from a higher cost of living area to a lower cost of living area is on the whole a loss for the vast majority of people who are not wealthy and a gain for those who are wealthy. It’s a blatant wealth transfer from the masses to the wealthy few. So Americans get cheaper cars but no way to pay for them, and wealthy Americans get record levels of wealth. Globalism is a sham and it’s surprisi…

What about those who live in the lower cost of living area, who now gain access to new jobs? Isn't it a wealth transfer to them as well? And these people usually aren't wealthy (usually less wealthy than those in the US), so calling it a wealth transfer from the masses to the wealth few isn't fully accurate. And a dollar goes much further in Mexico than it does in the US, so even if the net labour spending by compani…

As an American I see it from an American perspective. So a job loss here is a loss of wealth here, no matter what country it gets transferred to. The globalist perspective is one that damages every single person in the West whose society relies on a healthy well-paid middle class, that is now well-gutted, and we’re seeing the horrible chaotic effects of it over the past 5 years. Every father who made $25/hr at a plant years ago now has a son who makes $9/hr at a Dollar General, and both father and son are happy to back the next Hitler or Putin so long as he promises to make their lives great again. The transfer of wealth from Western society to poor societies is demolishing all of us. The US is rapidly becoming like Putin’s Russia and Europe is still in danger of falling apart despite its stronger safety net. Globalism has made freedom and prosperity very precarious these days.

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

#110

Post by gurumeditations »

ksk wrote: post #29
gurumeditations wrote: post #8

Earlier quoted context omitted.

Exporting working class jobs from a higher cost of living area to a lower cost of living area is on the whole a loss for the vast majority of people who are not wealthy and a gain for those who are wealthy. It’s a blatant wealth transfer from the masses to the wealthy few. So Americans get cheaper cars but no way to pay for them, and wealthy Americans get record levels of wealth. Globalism is a sham and it’s surprisi…

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…

Everyone in western society is owed a good well-paying job so long as they’re also willing to work for it. It’s our birthright and expectation. You can believe that no one is owed that and that everyone can just work for pennies from Walmart as America and the Western world continues to go down in flames.
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