When American automakers want to cut costs on parts, they turn to China. When German automakers want cheaper parts, they turn to North America. Automotive News [sub] reports that German automakers are looking to buy more parts made in North America to "cope with the dollar-euro exchange rate." AN says the Germans are asking their suppliers if they can build sub-assemblies (e.g. seats) with parts bought in the "dollar-zone." That's a no-brainer for Mercedes and BMW, who assemble vehicles in North America. But the dollar – euro disparity is now so great that even Audi, who builds NA-spec models in Europe, are switching to American parts to cut costs. Does this mean we should start looking for the UAW label in German vehicles? Nope.
9 Comments on “Is North America the New China?...”
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Every cloud has its silver lining, I guess.
What cloud? This is precisely why a cheap currency is more of a good thing rather than the bad thing the media likes to obsess about. Or more to the point, it’s simply the feedback loops of the international economy automatically kicking in to moderate the “imbalances” that pundits like to yak about.
By the way, since when is “North America” the dollar zone? Don’t they really mean, like, the United States of America? I don’t think the Europeans gain much by moving manufacturing to the loonie zone.
Surprising that they didn’t skip the USA for China or the formet Soviet-bloc countries.
Hey, I got an idea! Maybe Cerberus can sell all those idle Chrysler factories to Daimler.
A cheap currency just means there is less demand for U.S. dollars. Greenspan and the current Fed have really screwed the pooch over the last decade destroying the U.S. dollar. If being cheap was all that mattered, then Zimbabwe would be an economic powerhouse.
If you read between the lines, that tells you investors find other currencies to have less risk vs. return.
Not a good thing long term.
A cheap currency just means there is less demand for U.S. dollars. Greenspan and the current Fed have really screwed the pooch over the last decade destroying the U.S. dollar. If being cheap was all that mattered, then Zimbabwe would be an economic powerhouse.
Do you think this was partly deliberate to address the crippling trade deficit?
This is precisely why a cheap currency is more of a good thing rather than the bad thing the media likes to obsess about.
Until you have to import something, say like a barrel of oil.
Quote “Every cloud has its silver lining, I guess.”
In this case that’s debatable. A devalued dollar means more expensive imported goods and inflationary pressures (usually leading to higher interest rates).
Net result – everyone’s working like dogs to make ends meet, foreign products are beyond many people’s reach, we can’t afford to travel abroad and we’ll be riding around on bikes because we can’t afford the gas. Mmm does sound like China.
Mike S:
Don’t get too optimistic now…