By on January 11, 2018

Ford China

When Henry Ford began selling his popular Model T around the world, the company bearing his name didn’t assemble all of them in America. Instead, the Model T was the first truly global car, assembled in Commonwealth nations such as England, Canada, Australia, and others like Argentina, Belgium, Brazil, Denmark, France, Germany, Mexico, Norway, Spain — hell, even Japan.

But that was a different time. Regardless of which country someone lived in, Ford factory workers made roughly the same amount of money working on the assembly line.

Now things are different.

There’s a recent-ish episode of the Freakonomics podcast — titled “Did China Eat America’s Jobs?” — that does a great job of explaining how we got in our current lopsided trade pickle with China. (Listen to it.)

In it, host Stephen J. Dubner interviews fellow economist David Autor, who gives us a bit of a history lesson:

There are two big differences of the last two decades relative to earlier periods. One is that a lot of our trade prior to China’s rise, a lot of it was North-North trade. You know, trading between wealthy nations. So you know, we sell aircraft engines to France and we buy cheese and wine and Renaults or maybe we buy Mercedes from Germany. And so it’s a lot of high-skill people trading high-skill goods and we’re trading on the basis of taste. Like, “I like your vehicles. You like my aircraft.” 

But, with China…

A lot of what we’re trading there is labor-intensive goods. Nothing that China was selling the United States, especially up until recently, couldn’t be made in the U.S. It just couldn’t be made as cheaply. So this was actually about price competition rather than simply having a better or different variety.

I want you to let that sink in for a moment: nothing in China, at least 10 years ago, couldn’t be made in America; it just couldn’t be made here as cheaply as it was made there.

Up until recently, this has been okay — for the most part. China has focused on making low-value goods: light bulbs, small appliances, cheap home accoutrements, and other baubles and tchotchkes.

But now — now China is building cars, and it’s building them for us.

An automobile isn’t a small, cheap consumer good. Instead, for virtually every single one of us, a car will be either the first or second most expensive thing we ever buy after a house. The automotive industry provides thousands of jobs at each plant and further thousands of spin-off jobs in regions around those plants. Those jobs are filled by people who spend money on things you make, create, grow, and sell.

Unfortunately, there doesn’t seem to be an end to this outsourcing of America (and Canada, for that matter). Ford says it’s sending Focus production to China because we don’t buy small cars anymore. Besides, margins on that car are way too thin; our labor costs are way too high.

But what about Buick and the Envision, a near-luxury crossover that sells for $35,000? Or the Volvo S90 large luxury sedan, which sells for near-as-makes-no-difference $50,000?

When will all of our cars — all of them — come from China?

And considering we can make all these cars here, in North America, I wonder — what would Henry Ford think of that?

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113 Comments on “QOTD: When Will All of Our Cars Be Chinese?...”


  • avatar
    Adam Tonge

    We’ll have Indian cars too. Go check out your local Ford store for a great deal on the EcoSport.

  • avatar
    danio3834

    They won’t all be Chinese, ever. Not as long as Mexico exists. As China continues to grow as a market, models developed for that market may get exported here more and more, but the vast majority of vehicles for North America will still be built in NAFTA, whatever that may mean.

    • 0 avatar
      mmreeses

      Versus the US dollar, the Peso is literally 1/2 of its value from a few years ago for a variety of reasons. So ya, hard to ignore Northern Mexico if you want to juice earnings per share even with the uncertainty over Nafta.

  • avatar
    mmreeses

    A bunch of voters see this issue, have a problem with it, but are left-wing. A pretty much equal bunch of voters see this issue, have a problem with it, but are right-wing.

    They don’t join forces because of they are divided by the __________ issue.

    So the status quo continues—most of the low-margin cars (or their engines/parts) will be from Mexico and more of the low-volume cars will be from China.

    Just saying.

  • avatar
    Carrera

    Well Mark, Volvo should not be clumped in with the others. It is a Chinese company and I don’t see any issues with it being built in China. It is their right to have it built there. Don’t be surprised if all Volvos are built in China within the next 5 years. Of course, I would never buy a Volvo Made in China, but that’s a different story. If Volvo wants to build all their cars in China, it is a bit late for the Europeans to worry about it now. That ship has sailed when Ford sold Volvo to Geely, or whatever other Chinese automotive conglomerate.

    • 0 avatar
      tremorcontrol

      Well Carrera, Volvo is pumping a crap ton of money into building a South Carolina plant so I don’t think your prediction is based on any research.

      Also, make sure to avoid AMC theaters and some other companies and brands:
      http://fortune.com/2016/03/18/the-biggest-american-companies-now-owned-by-the-chinese/

      • 0 avatar
        Carrera

        Tremorcontrol…I don’t care if my pencils are made in China…among other things, but there are items where I draw the line. I am not going to bore you with my personal list, but thank you for the list. Also, I did not say in my previous comment that ALL Volvos will be built in China…I said, “don’t be surprised”. And I also said it is their right to do it since it is a Chinese company. I am not blasting Volvo for building cars there. As for the movies…I don’t really care who owns AMC. I don’t boycott stuff just because it is made or owned by China. You misunderstood me.

  • avatar
    sportyaccordy

    As economies develop, their workers need to find other things to do. Soon the day will come, if it hasn’t already, where it will be too expensive to make cars in China, even with its established infrastructure. If you want to reap the benefits of a developed economy you have to stay with or ahead of it.

    And in any case, given the grim reality of manufacturing in the US (i.e. making workers “contractors” to drive down costs and absolve corporations of responsibility, or the increased use of automation to make the costs work), the romantic notions of “bringing jobs back” is pretty much fantasy.

    • 0 avatar
      Jeremiah Mckenna

      If China wasn’t manipulating the price of their currency as well as subsidizing the workers, then it would be a completely different story right now. Japan also subsidizes their industries, but not as much nor do they manipulate their currency prices. All the companies do is move their operations to other un-developed or under developed countries. China sees this happening and lowers the value of their money as well as force people to work for less money per hour. Gotta love communism.

      • 0 avatar
        Big Al from Oz

        And other countries don’t manipulate their currencies?

        What about Quantitative Easing in the US? What did this do to the USD?

      • 0 avatar
        Lou_BC

        @Jeremiah Mckenna –
        China hasn’t actively manipulated their currency in quite a while. The USA has manipulated multiple socioeconomic and political systems around the world. That ability is going to end much earlier than most think.

        #45 bailed on TPP which was incredibly stupid. The Idiot blathers on about “America First” but by bailing on TPP he basically handed China 40% of future trade. TPP would have funneled that wealth and power to the USA.

        USA sabre rattling and defunding Pakistan pushed them into the open arms of China. They have signed multiple trade deals with them and use Chinese currency now as their default trade currency.
        If one looks at USA’s northern and southern neighbours, the threat of killing NAFTA is already hurting trade and stock markets. It makes zero sense to destabilize trade with its closest neighbours.

        Back to China. China is the largest single purchaser of USA government bonds. Chinese financial experts are pushing for them to sell off all of those bonds. They feel the USA debt no longer makes the USA a safe place to put their money. If you want to talk about trade imbalances, what do you think will happen to the USA when China cashes in?
        Some are predicting the end of the USA Empire by 2030. That is 12 years away.
        Might as well get accustomed to seeing “made in China” and the yuan.

    • 0 avatar
      gmichaelj

      “Soon the day will come, if it hasn’t already, where it will be too expensive to make cars in China, even with its established infrastructure.”

      Soon?

      IF IF just 25% of China’s population was to reach the same level of economic prosperity as the USA, there would still be 3 times as many Chinese living below that level – a strong supply of cheap labor.

      What is your definition of “Soon”?

      • 0 avatar
        sportyaccordy

        This analysis is short on a lot of key detail. For starters, China is in a demographic crisis thanks to its one child policy. There are a lot of people, but they are too old (and often too beat down by the consequences of China’s trajectory over the last 50 years) to be considered in the labor pool.

        There’s also automation which is prompting re-shoring, and all the logistical and IP issues associated with manufacturing in China. Not to mention all their environmental and political issues. For now China is definitely a force to be reckoned with but the notion that they are some kind of sleeping giant is a pipe dream. I think where they are now is representative of their potential.

        • 0 avatar
          gmichaelj

          Here’s a “key detail” for ya:

          https://www.populationpyramid.net/china/2017/

          12% of their population is 19yrs old or younger. 12% of 1.388 Billion is 167 million – Boys only, and about the same amount of girls.

          Right now, the US has about 320 million people of all ages and sexes.

          • 0 avatar
            sportyaccordy

            And what of the other 76 percent? China is fast approaching a where they won’t have enough young people to support their elderly. And there are a lot more young men than women, which is a reliable source of social unrest. There’s also the issue of skyrocketing wake growth which has already caused some businesses to leave China. Let’s not let our analysis of a country with China’s history and size hang on one bullet point free of context

          • 0 avatar
            gmichaelj

            Sporty:

            “And what of the other 76 percent?”

            They can work too at wages below ours as well

            “China is fast approaching a where they won’t have enough young people to support their elderly.”

            Their inability to support their elderly will not slow their drive/desire to work

            “And there are a lot more young men than women, which is a reliable source of social unrest.”

            Sure, that could present a work/production problem for the Authorities, but their command structure looks firmly in control from all that I read.

            “There’s also the issue of skyrocketing wake growth which has already caused some businesses to leave China.”

            Yeah, I’m not familiar with “the issue of skyrocketing wake growth” – do you have some links? But last I remember hearing, China’s overall annual growth rate was still 6% or 7%

            “Let’s not let our analysis of a country with China’s history and size hang on one bullet point free of context”

            Let’s not get lost with a tossed salad of spurious arguments – they have as many 0-19 year olds as we have total population. Plenty of people to work at low wages and reproduce for many generations.

  • avatar
    Jeremiah Mckenna

    The people will vote,… or veto this decision with their purchasing power. Once the public becomes educated about this, there will be less and less of these vehicles bought and hopefully Ford will get the hint.

    • 0 avatar
      TMA1

      I’m sure that some people said the same thing in the late 70s about Japanese cars. Now they’re getting ready to drive their Camry to the retirement home.

      • 0 avatar
        IBx1

        TMA1, buying a Japanese brand car that’s made in Japan is a vastly different situation from buying an American brand car that’s made in China. Besides, late 70’s Japan was eating Detroit’s lunch and 80’s Japan was steamrolling them by actually caring about how they built cars.

        • 0 avatar
          gmichaelj

          But I think his point remains – the Boomers (kids of the Greatest Generation) forgot that members of the GG fought/died/maimed fighting the Germans and Japanese.

          They buy BMWs and Toyotas with unfailing loyalty.

          • 0 avatar
            gomez

            I don’t think the Boomers forgot at all (how could they with the GG constantly bringing it up). They just bought what they perceived to be the best vehicle they could afford, like most people do. It was also the GG that brought over many of the VWs, BMWs, and Toyotas to the US in the first place.

          • 0 avatar
            gmichaelj

            Gomez:

            Ok, perhaps they couldn’t forget since the GG couldn’t stop reminding them. I don’t know my parents were born in ’39 and ’41. I was born in 63. One Grandfather was in the Army the other was a Petroleum engineer

            Anyway, as someone says here perhaps more loyal to their wallets than to their country

        • 0 avatar
          Big Al from Oz

          IBx1,
          The Japanese vehicles we have in Australia mainly come from Thailand. Even Fords and GMs. Hondas as well.

          If you are not aware Thailand is on par with China.

          People confuse their political affiliation with product.

          China and Mexico are the World’s greatest producers of auto parts. Now the world of auto manufacturing is moving more or less to points of assembly. So made in “America or wherever” is becoming more and more assembled in America.

    • 0 avatar

      I think the average auto consumer is A) not educated on the subject of China and its production of goods, and B) doesn’t give a crap if it saves them even $12.50.

      • 0 avatar
        SSJeep

        I disagree Corey. Its hard to define the “average auto consumer”, but most of the folks I know do factor in country of origin along with whatever Consumer Reports or some other source states is the most reliable vehicle. If average consumers really cared about saving money and nothing else, Yugo would still be a brand, and Nissan would be selling a heck of a lot more Versas.

        • 0 avatar
          gomez

          Maybe the folks you know care about country of origin, but most of the ones I know don’t. Nor could they care less what Consumer Reports had to say. They are going to buy a Ford or Chevy because they have always bought a Ford or Chevy. They are going to buy a Ford or Chevy because their nephew works at a dealership and can get them a good deal. They are going to buy a Ford or Chevy because those are the only dealerships that are in town. If they wanted to stand out, they bought a Pontiac or a Mercury since they were also sold at the Ford or Chevy dealership. If they want to show off how good last year’s crops were, they’ll buy a new F-250 or hit the local Buick dealership (which is also the Chevy dealership). If they did really well, they might splurge on a Cadillac or Lincoln for the Mrs. In their minds, all of these vehicles are “American”, even if they’re not.

      • 0 avatar
        Big Al from Oz

        Corey,
        To many people if the product does the job, then its good enough and many people might not have that $12.50 you have because their kid might need new shoes that cost $12.50.

        Remembrr the way you live with your income is not how the other 50% live.

        Open your mind. The World is not like our countries. We are very lucky in ours.

        • 0 avatar

          That’s essentially what I was saying. If the product does the job and can save them even a little, it’s worth buying it from China. They don’t think beyond that.

          • 0 avatar
            Big Al from Oz

            Sorry Corey, reading many comments I think many don’t realise just the infrastructure we have, whether its porable water to our homes!, electricity, communication, availability to transport, health, education, sanitation etc costs sh!tloads. But most just expect it to be there, with little idea of the costs.

            Many don’t have some or even all of this in the world and even within our own countries.

            As I said most who comment on TTAC forget, are clueless or as some comments illustrate just plain self centred and selfish.

    • 0 avatar
      Lou_BC

      “Once the public becomes educated about this”

      Too funny………….

      The wealthy running the USA through mass media have done a masterful job of convincing the public that rugged individualism trumps any form of social and or communal existence. Capitalism thrives best in an “everyone for themselves” system.
      It makes it easy for people to believe that the poor are just lazy or those workers are unemployed because they didn’t work hard enough or some other excuse.
      As long as *I got mine, Fvck the rest* attitude exists, you aren’t going to stop many people from boycotting Chinese products. I’m betting you shop at Walmart. Care to check assembly points on their products or look up the parts content in the vehicle you used to drive their?

  • avatar
    Sceptic

    Cars will follow the way of clothes and electronics.
    Technology transfer, outsourcing, then rebranding and reselling contract made goods.

    Just try to buy a “Made in USA” TV set or a T-shirt. Almost impossible without searching high and low.

  • avatar

    Unskilled labor in China is about $4/hr, and skilled labor is $8. While cheaper than in the U.S. and other developed countries, that isn’t free and labor costs in China will increase along with the expectancies of that country’s growing middle class. Also, nowadays a lot of manufacturing is automated. The printed circuit boards with surface mount components in the consumer electronics made in China are made by robots, not by people. The people mount and connect modules and do the labor that can’t yet be done by robots, like wrapping a guitar amp with vinyl.

    Human labor is a smaller and smaller part of the manufacturing process and capital costs for automated equipment are the same whether the factory is in Guangzhou or Milwaukee.

    I’m far more concerned about the fact that Chinese manufacturers are getting a clue about quality control, product improvement, and customer service than I am in how cheaply they can make stuff.

    • 0 avatar
      Arthur Dailey

      Geez, I agree with Ronnie! But in manufacturing, industry and consumer preferences change is constant. During the 1950’s Britain was the largest global exporter of cars.

      Wages in China are escalating. Due to their previous ‘1 child’ policy they are facing a potential labour shortage in the near future and an aging population, much like confronted Japan in the 1990’s.

      Many companies are already shifting low skill production to other nations such as Vietnam, and Bangla Desh.

      Labour is not the only component. Environmental regulations, occupational health and safety, zoning, infrastructure, exchange rates and government subsidies all have enormous influence.

      Jeff Rubin who was the chief economist for a Big 5 Canadian bank staked his reputation on the belief that eventually the cost of transportation will be so high that most large goods will have to again be manufactured close to their markets. Currently he must be a little embarrassed but again ‘things change’.

      My employer competes successfully against Asian competition by focusing on custom orders, fast turnaround and high quality.

      • 0 avatar
        gmichaelj

        “Wages in China are escalating. Due to their previous ‘1 child’ policy they are facing a potential labour shortage in the near future and an aging population, much like confronted Japan in the 1990’s.”

        Chinese demographics are nothing like Japan’s. They have hordes more to do cheap labor for many decades.

        “Labour is not the only component. Environmental regulations, occupational health and safety, zoning, infrastructure, exchange rates and government subsidies all have enormous influence. ”

        This is certainly true – if they can pollute at low cost, then this is also an incentive to build overseas.

        • 0 avatar
          Arthur Dailey

          Actually the impact is quite similar.
          1) The number of working age people is now starting to drop.
          2) The number of older/retired people dependent on working age people is increasing and will continue to increase.

          Hopefully the link that I posted from The Guardian will remain available.

          https://www.theguardian.com/world/datablog/2015/oct/29/impact-china-one-child-policy-four-graphs

          • 0 avatar
            gmichaelj

            The link was good, and I appreciate it.

            However, the Guardian is showing us ratios/percentage changes over time: growth rates and dependency rates. To me, these appear most relevant to a discussion of China’s future growth vs. its past growth.

            I cited another population pyramid elsewhere, but found some problems on that site, so I went to Wikipedia for this one:
            https://en.wikipedia.org/wiki/Demographics_of_China#/media/File:Population_pyramid_of_China_2015.png

            So just eyeballing that chart, it looks like there are about 40 million in each of the 4 stratum of boys aged 19 and below, so approx. 160 million boys in China, plus the same number of girls. That means there are roughly as many potential workers available for the next several decades as there are total US population ~320 million. What I think is important to the analysis are the absolute numbers. So the Levels are more important than the Trends.

            Granted, many are already working, but that’s still a huge labor pool that the US can’t compete with.

          • 0 avatar
            gmichaelj

            oops, actually a good bit less girls, which the Guardian charts show, but still…

    • 0 avatar
      Guitar man

      I don’t know where you get your figures from. My brother worked as a manager in a mining compnay in China last year and tradesman made $30 a week, all found. That’s 5 and a half days a week, 5 hot meals a day, share flats for unmarried men and whole flats for married men.

      China is a command economy. Labour and property have no real “price” which is why they can undercut the production costs of the most deperate African country.

  • avatar
    mzr

    China didn’t eat anybody’s job. The US consumer wanted cheap items, and they didn’t care how they got them. If anything automation has reduced human jobs more than anything else.

    • 0 avatar
      Heino

      ^^^ We whine about our factories closing and rush to Malwart for it’s everyday low prices. We deserve what we get.

      • 0 avatar
        Mandalorian

        This. There is a large subset of the population that only cares about the bottom line. You see the same thing with airline tickets, people berate the shrinking seats, poor service, etc, while only willing to pay the absolute bare minimum.

        • 0 avatar
          Mark Stevenson

          Let’s flip this argument on its head for a moment.

          In America, 42% of people make under $15/hour. That’s 137 million people.

          As an exercise, let’s say a single person making this $15/hour @ 40 hours per week has no dependents and lives in or near a major city. It’s generally accepted that you can use 40% of your gross income to living expenses, such as rent, utilities, etc. That’s $1,040 a month for someone making that wage.

          But there’s taxes, student debt, kids, transportation (such as bus passes), and all sorts of other things taking away from what remains of this income.

          At $15/hour or less, you don’t have the luxury of paying more for the same good out of principle based on where it’s made. You’re fighting for mere financial survival.

          • 0 avatar
            Big Al from Oz

            Mark, I agree.

            Many forget about the poor and working poor in our own countries.

            Another thing people do (Ronnie is one) they look at the World in USD per hour. This isn’t so. A worker on $8 USD ph in China is far better off than $8 ph in the US.

            How much do we pay per hour in China?

          • 0 avatar
            Heino

            Why not? As much as I hate McDonald’s
            why do I have to use the new touch screens to order. Do I get a discount? Nope. Why I am I paying the labor costs of McDonald? This is about the same as self checkout at grocery stores. We are expected to work for free. Do we get a discount for doing the work an employee would?

    • 0 avatar
      28-Cars-Later

      en.wikipedia.org/wiki/General_Agreement_on_Tariffs_and_Trade

    • 0 avatar
      Lou_BC

      Roughly 90% of job losses are due to automation.

  • avatar
    deanst

    I guess it was okay when the U.S. sold drugs, movies, planes, whatever to EM markets because of their “competitive advantage”, but when the EM markets use their “competitive advantage” -cheap wages – to sell in the U.S. it is something that should not be tolerated.

    • 0 avatar
      slavuta

      We’re talking here about US companies making crap in China. Not like we’re buying a Chinese product, invented and designed in China

      • 0 avatar
        gomez

        Actually, we increasingly are. In the automotive, tech, and medical sectors, it is becoming more and more common to have teams located in different parts of the globe so that product development occurs 24/7. It is more efficient and reduces time-to-market. As the Chinese workforce becomes more skilled (go to any US graduate school and look at the proportion of Chinese students, most of which return to China and/or are sponsored by Chinese companies) and as more manufacturing companies become Chinese-owned, it is highly likely that a lot more R&D will originate in China.

  • avatar
    SCE to AUX

    Other keys to the viability of importing a product include tariffs and transportation costs.

    In another job, we discovered that a 20,000-lb transformer for our product could be shipped from Ontario to our eastern US plant for $1600. The same part could be shipped from China to our plant for the same cost.

    How is this possible? We suspected the Chinese government was subsidizing the shipping costs, thereby tilting the field in their favor in an attempt to flood the market.

    It’s one thing to fill a shipping container with countless small items. It’s quit another to ship large, heavy items across the ocean. This is one reason why so many mfrs have US car plants – they save on shipping (and possibly on labor, too). But if the Chinese government is going to make it easier to get their products to the US, suddenly it’s a real possibility that we’ll see lots of Chinese-built vehicles.

    • 0 avatar
      NN

      Ocean freight is insanely cheap. I just consigned a 40′ Container from China to the east coast of the US for a little over $2k. That’s 12000+ miles. Just trucking it 10 miles from the port to my warehouse will add nearly 25% to that bill. Subsidizing isn’t necessary, the fact is that floating on large container ships is multitudes cheaper than any type of land-based transport. You can float a container 1/2 way across the world for the same rate more or less of a truck coming from the midwest to the coast.

    • 0 avatar
      Lou_BC

      This is why shipping by boat is cheap:

      “There are about 5,080 container ships in the world and global capacity of 17.8 million TEUs (twenty foot containers), which means the average container ship can hold 3,500 containers. But dry bulk ships can hold far more than that.”

      One ship can carry 3,500 20 foot containers. A standard freight truck can carry two.

  • avatar
    tomLU86

    Dear Jeremiah, I disagree.

    People today in general are less attached to their country than to their money.

    As I kid in the 1970s, I had the chance to visit Italy. It seemed half the cars were Fiats, and half the other others were Lancias, Alfas, and Autobianchis. I suspect the vast majority of French drove “French cars” made by Renault, Peugeot, and Citroen in France.

    In America, the land where cash is king (after all, isn’t that what made this country great? That I could make a dollar and keep it? That’s what allowed all these ‘diverse’ folks to get along. As long as the pie was growing, some got a lot more, some got a lot less, but if we worked, we generally “got”) people think “one widget won’t change the world, but it will save me $$$!

    Even unionized blue-collar workers think and behave like that.

    By the time wages in China rise, in many industries, the US plants will not longer exist, and there won’t be a ‘choice’ between US and imported.

    Perhaps the Chinese will be supplanted by India… But don’t count on it–only the USA is ‘dumb’ enough (not really–the elite profit handsomely) to let other countries eat it’s lunch. China probably won’t.

    OF course, it’s not all bad. Manufacturing is dirty…and China is trashing it’s fragile environment at a horrific rate. India is even more fragile and overpopulated….

    No free lunch

  • avatar
    redapple

    How can you have fair trade with a country that doesn’t have Human Rights?
    -Or pollution rules?
    -Or a free floating currency?
    -Or doesn’t honor copyrights and patents.

    The deck is stacked against the USA and we are idiots.

    10 Years ago the AFS brought a suit against a Chinese foundry. They were selling a 10 pound aluminum casting in Detroit for $10. Aluminum was $1/pound. OBVIOUS DUMPING. Case dismissed. No cause for standing.

    The only things that generate wealth is mining, manufacturing and agriculture. Everybody else is just moving money around.

    We are doomed.

    • 0 avatar
      stuntmonkey

      How can you have fair trade with a country that doesn’t have Human Rights?
      -Or pollution rules?
      -Or a free floating currency?
      -Or doesn’t honor copyrights and patents.

      You see, these are the things that the rest of the world complains about the US.

      – Pollution rules… umm, Flint Water Crisis?
      – Free floating currency… quantitative easing?
      – Copyrights/patents … “Patent troll” is term originating from the US

      As I write, there is a news article today about Canada launching a WTO complaint against the US for unfair use of anti-dumping and anti-subsidy duties, both against Canada and other countries.

      I totally believe in fair trade and human rights, but what I don’t believe is the narrative that gets pushed on us. If you want better trade with a nation, going the adversarial route benefits neither side in the end.

    • 0 avatar
      Lou_BC

      @Redapple – Western companies went to China to exploit the fact that “they” do not care about pollution, worker safety, and public health.

      “In 1979, there were 100 foreign-owned enterprises in China. In 1998, there were 280,000.”

      • 0 avatar
        Big Al from Oz

        Lou,
        Actually the Chinese relaxed their isolationist posture, allowing external influences in to modernise the country.

        They are now tackling the mess caused by the transition.

        Not just China here, but how long did it take for us in the West to create the infrastructure, systems and processes we have now? 150 years. In order for a developing nation to reach our standard they require require similar income. This will never occur with your stance of not dealing with them if they are not like us.

        I’m totally against the Chinese government. I’m also hoping as affluence increases in China a change for the good will occur.

        Chinese influence is now large and with the current beanhead as President he is literally giving the Chinese a free ride.

        As the Chinese are given “free” access to this influence can only harm US trade.

        So, in effect Trump is fncking America over, along with the stability of all free nations.

        Trump must realise, having the biggest button is not what its about. Trade is the answer, consumption. Whoever controls trade controls the world. Trump’s dismissal of the TTP is a classic example of a short sighted fool who threw away the and easiest opportunity the US has had since WWII of increasing global influence, what a jerkoff this guy is …. and at the expense of the Greatest Nation that ever existed.

        • 0 avatar
          Lou_BC

          @Big Al from Oz – I watched an interview with an expert on “empires” and basically that is what he said. Trade is the key to global power. He pointed out that a massive military makes the risk of empire collapse more likely because a disproportionate amount of funds gets funneled into keeping the military running. Any significant disruption in trade shows up immediately since there aren’t enough funds in the system to weather the problem.

  • avatar
    Sub-600

    By the time all cars are made in China, Mexico, etc., Americans will be financing 150,000 mile used pickups for 12 years anyway.

  • avatar
    28-Cars-Later

    This will backfire in the short to medium term. Japan Inc keeps expanding US production, zee Germans and zee Chinese through Volvo also building here. They are playing smart long game. You’ve got a quasi nationalist sentiment and a President without a filter when it comes to US J-O-B-S. Eventually someone will call for a boycott if en masse FoMoCo and Guangzhou Motors get serious with low margin Chinese made US branded product. The Internet makes this more viable than it would have been in 1995. 2008-15 was the time to shaft the nation for this, new ball game now.

    • 0 avatar
      28-Cars-Later

      Protip for the two: I love Zhongguoren but I am fully aware the products exported are junk, along with many products sold in the PRCDM. I will not buy these products at second hand stores let alone for expensive purchases. Ever. I will buy a NEW car that’s not Chinese in order to skirt anything you bring over new or used, and that’s a stretch for me. You will fail at this because truly monied people will vote with their dollars and go elsewhere. If subprime is your game, go for it and see your reputations go down the drain. I already won’t buy anything Chevrolet except Corvette because of thirty years of mostly shitty Chevys…. always bought B-O-C. Daewoo models only sunk you further in my eyes. Ford isn’t doing any better with Focuses that just can’t work well in the real world, tranny issues and all. I guess its F-150 or bust.

    • 0 avatar
      slavuta

      Or people will throw some Molotov cocktail at new China-made cars. Didn’t we already have instances where Japanese cars were damaged?

    • 0 avatar
      Big Al from Oz

      28 Cars,
      Your comments seem to omit snippets of significant information relevant to your argument. Why? Because it doesn’t marry up to your idealistic nationalism.

      Forget the real truth, understate and omit, this is how I want to justify my fear of the big bad world.

      The US is by far the greatest ever holder of external assets. The US is by far the largest globally with finance and its products, high tech, (ie Intel/AMD, Amazon, Apple and I can go on forever), it is the world’s leading agri exporter, the world’s largest aerospace exporter, even eeapons exporter, it will be the largest exporter of natural gas in a few years with all the projects on hand, one of the largest vehicle manufacturers. This list is endless because I have not touched much on sevices/construction.

      Why do you spee so much crap?

      What about looking at what you have in the US and maximise the income, invest more into these areas.

      The US has one of the highest living standards (6th), with a high GDP per capita, low unemployment.

      No one owes the US a zac. As I pointed out the US has all that needed.

      The only thing missing is fairness for workers. A real minimum wage, ie, $12_$15ph. That will fix up many social issues.

      • 0 avatar
        slavuta

        When did minimum wage fixed anything? As long as there are shareholders, minimum wage or other things will not affect anything. compny needs profits. This is the driver. Increase minimum wage today and ina few months time, it is not going to be enough

        • 0 avatar
          Lou_BC

          @slavuta – companies have plenty of profits. The USA has one of the worst standards of living for any country if one just looks at the lower end of the population. Incarceration, infant and adult mortality rates due to health issues and violence are dis-proportionally high.

  • avatar
    Geordie Guenther

    Focus sales are declining because of transmission problems and because it’s now an old design. This just sounds like typical domestic executives refusing to accept blame for their own bad decisions, blaming the market and unions.

  • avatar
    redapple

    Example 2 of China.
    H-13 tooling for Semi Permanent Mold Aluminum. In the USA that’ll cost about $65,000 with coreboxes.
    China sourced, same part number? About $15,000 including free tools after ~ 60,000 shots.

    Cheating and Dumping.

    Hell, the H-13 block alone cost $10,000.

    We are stupid for allowing this RAPE of America.

    • 0 avatar
      Lou_BC

      “We are stupid for allowing this RAPE of America.”

      Agreed but foreigners aren’t doing the raping!

      A few quotes for you:

      “The 3 Richest Americans Hold More Wealth Than Bottom 50%.”

      “Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America.”

  • avatar
    RHD

    “Baubles”, not “bobbles”.

    And if it weren’t for women buying worthless crap from China, we wouldn’t have the trade deficit that we do. It sounds sexist, but it’s not, it’s just the unvarnished truth.

  • avatar
    PrincipalDan

    Too soon. That’s when.

    Although we should be heartened by Toyota and Mazda just announcing a joint investment in a factory.

    It may be likely that one day soon I’ll need to buy a Toyota or Hyundai or MB or BMW to support the job of an American.

    • 0 avatar
      kvndoom

      It’s the argument I had with Vanilla Dude when I got my Accord all those years ago… should I rather support American workers and Japanese executives or foreign workers and American executives?

      • 0 avatar
        28-Cars-Later

        Tough choices.

        • 0 avatar
          PrincipalDan

          Even with union wages the pay gap between an American Worker and his “headquartered in the USA” executive is outrageous. If you want to compare Mary Barra’s compensation against a worker in a Chinese factory assembling the Envision it gets really outrageous.

          • 0 avatar
            gmichaelj

            But Mary and her family will largely spend their money in the USA. And that money will get spent by the owners and employees of those businesses too.

            Other than those trips to the Italian Lake District – or wherever she impress/vacations

          • 0 avatar
            DeadWeight

            PrincipalDan:

            Mary Barra:

            Salary: $1.75 million

            Bonus: $0

            Stock awards: $12 million

            Option awards: $11.2 million

            Non-equity incentives plan: $3.1 million

            Change in pension value: $12,012

            All other compensation: $597,118

            Total: $28.6 million

            Compare:

            Toyota President Akio Toyoda earned $3.1 million in *TOTAL* compensation in 2016 (I don’t have 2017 figures handy).

            Any sensible person will come to the inescapable conclusion that even by *relatively* lot-free market capitalism standards, there’s a bizarre scenario playing forth in this world, in terms of inequality, and this disparity depicted above between the total compensation of Japan’s largest automaker (and the largest in the world) and the U.S.’s largest automaker is small potatoes compared to the financial masters of the hedge fund world and those who “manage” assets for pensions funds, insurance companies and the like, where total compensation can reach into the many hundreds of millions per year (and in some cases, billions per year).

            We’re literally back at or beyond the inequality of the 1920s, which preceded the Great Depression, and the greatest, bloodiest world war ever fought.

            Top 3 at publicly traded corporations:

            1. Marc Lore, Walmart U.S. E-commerce

            Total compensation: $236,896,191

            2. Tim Cook, Apple

            Total compensation: $150,036,907

            3. Sundar Pichai, Google

            Total compensation: $106,502,419

            But here are the really skewed figures:

            Top-earning hedge-fund managers raked in $11 billion last year, despite disappointing returns
            Kathryn Dill | @kathryndill 2:33 PM ET Wed, 17 May 2017

            1. James Simons
            Company: Renaissance Technologies
            2016 Earnings: $1.6 billion

            2. Ray Dalio
            Company: Bridgewater Associates
            2016 Earnings: $1.4 billion

            3. John Overdeck
            Company: Two Sigma
            2016 Earnings: $750 million

            3. David Siegel
            Company: Two Sigma
            2016 Earnings: $750 million

            5. David Tepper
            Company: Appaloosa Management
            2016 Earnings: $700 million

          • 0 avatar
            PrincipalDan

            @DeadWeight, for once I agree whole heartedly.

            The gap between Henry Ford and his factory workers when he instituted $5 per day wasn’t as great as the gaps are now. Old Henry wasn’t exactly known as a paragon of wage equity either.

          • 0 avatar
            28-Cars-Later

            Step 1: Deadweight helps me get David Tepper’s job for a year.

            Step 2: I resign after a year, and with my $700m hire a mercenary force to overthrow the government of Andorra and install myself as Regent (Qaddafi kept the Colonel title but after Miklós Horthy I think I will make myself the second Admiral of a landlocked country).

            Step 3: Rename Andorra: 28landia and become the first country to use a number in a national name.

            Step 4: After establishing a national monastery for Buddhist monks, leave the EU dictatorship and direct my economy to compete in two primary domains: banking and tourism.

            Step 5: ICO the 28coin backed by a floating basket of gold, oil, and FCOJ commodities.

            Step 6: Run the 28coin up to $1.00, sell my nation’s stake.

            Step 7: Establish a national museum of automobiles and invite tourists to my country for automobile conventions where drivers can sample the many tight mountain roads.

            Step 8: Ban all CUVs.

            Step 9: Appoint Deadweight as Grand Moff of national regions and together establish a world class casino and brothel in Ordino.

            Step 10: Taking cues from the great Kim Il-Sung, declare myself Eternal President and spend my days cruising a different member of the Lincoln Continental Mark Series each day while receiving road head.

            Additional: In a track suit, search every golf course in Europe for the real killers of Kim Jong-nam. Pour out a 40 for him.

        • 0 avatar
          kvndoom

          That was my last new car purchase… probably ever. Increasing prices and decreasing choice of well-equipped models with 3 pedals have pretty much removed me from the new car market. Sad but true.

          So now, buying used doesn’t really impact where the money goes one way or the other. The person who traded the car in is the one who had to decide (if they even put any thought into it).

  • avatar

    There will never be a North American market where 100% of cars come from a single country.

    There will be some real money in figuring out in advance where the next nation to build US market cars will be, once China becomes too expensive.

  • avatar
    slavuta

    Never. Production has to be spread around the world. Carbon credits. Carbon credits

  • avatar
    gomez

    Slapping an American brand’s badge on a Chinese-built car isn’t going to make a difference in sales because the average consumer is oblivious to where their vehicle is made. They just see an American brand and assume it was made in the USA, see a Japanese brand and assume it was made in Japan, see a BMW or Mercedes and assume it was made in Germany, etc. Or they just heard that Hondas and Toyotas were good vehicles so that’s what they buy. Other than car enthusiasts, it’s fairly safe to assume that few people that have purchased the Buick Envision knows it was made in China. GM and the dealers certainly don’t broadcast that fact. And of the tiny minority that do know and still bought an Envision, they obviously don’t care.

    As was stated in the story, a vehicle is one of the most expensive purchases most people make and it plays a large role in their daily lives. As long as it is reliable and affordable (and doesn’t look like a rolling turd), most people ultimately don’t care where it was made, let alone take into account (or grasp) how their decision impacts the larger economy.

  • avatar
    Whatnext

    And note that despite the campaign rhetoric, President Dump has done nothing to punish China for trade tactics. He smells where the money is.

    • 0 avatar
      gmichaelj

      He’s a fraud. But many people wanted a change. Too bad I don’t see any solid candidates for 2020 that aren’t very old.

      • 0 avatar
        Lou_BC

        Oprah?

        • 0 avatar
          30-mile fetch

          No more goddamned television personalities in the Oval Office. Ever.

          • 0 avatar
            krhodes1

            If Ronald Reagan can be President, so can Oprah Winfrey.

            I think I would actually prefer a true outsider in the oval office, but I prefer they not be insane and addicted to Twitter. Unlike Trump, Oprah really is a billionaire who came from nothing.

          • 0 avatar
            dal20402

            Ronald Reagan served as governor of California first (and had a very rocky start there as he learned the ropes of being a government executive).

            No more outsiders, ever. The U.S. Government is the most complex organization in the world. It is full of career bureaucrats who (quite properly) have their own agendas and know all the tricks. The idea that someone with zero government experience can come off the street and run this enormous structure smoothly is absurd. It’s like thinking you could be coach of the Patriots tomorrow, only 100,000 times more complicated. I will only support people with previous government experience of some sort.

            Independent of that point, Oprah is prone, although less so than Trump, to kooky pseudoscientific bull$h!t.

          • 0 avatar
            Lou_BC

            “No more goddamned television personalities in the Oval Office. Ever”

            LOL

            I agree.

            At least Oprah is a billionaire who started with nothing.

    • 0 avatar
      Big Al from Oz

      Whatnext,
      I just read today that the Chinese off loaded some Treasury Bonds prior to the trade talks with Trump in a week. The Chinese are by far the largest holders of these bonds and flooding the market with them will decimate the US economy along with themselves.

      The article stated the Chinese off loaded these as a warning to Trump that he must work with them. Scary stuff.

  • avatar
    don1967

    When will all of our cars come from Detroit? Or Japan? Or Mexico? Or Saint-Louis-du-Ha! Ha!

    Ask a silly question, get a silly answer.

  • avatar
    Trend-Shifter

    Here is the problem with Chinese manufactured cars being exported to the USA by the big 3.

    First, auto manufacturers prefer NOT to build a new manufacturing facility any where in the world. It requires a huge capital investment in plants and tooling. So in theory if an auto manufacturer is already building a vehicle model at a factory it makes sense to export it rather than build a redundant manufacturing facility in another market. We have many vehicles in the USA that should be exported to China.

    But in the case of US auto manufacturing, that model is not working. The China government adds various taxes and barriers to make imported vehicles non-competitive. Also the China government puts back-door pressure to the auto manufacturer to build cars in China or deal with the consequences.

    So now US based auto manufacturers change their business model to build cars in China and export them to the USA despite the cost.

    The other problem is that China puts these barriers in place until they have achieved their objective, then they drop them. Now it’s too late for China’s trading partners. (Example, the rule to have Chinese automotive joint ventures)

    The USA needs to use a mirror trade policy that goes back 8 years.
    It seems pretty simple to me, call for free trade but use the exact same trade policy that the other country used 8 years ago. That would level the playing field in a fair way while moving towards free trade.

    • 0 avatar
      Big Al from Oz

      The issue is all countries have different levels of protection, from the overt like the 25% Chicken Tax in the US on imported pickups, subtle and not so subtle technical barriers, ie, different design regulations.

      It seems most regard protecting production as a priority, when consumption is what needs looking at.

      If find it odd when governments want consumption to reduce they increase taxation on items, whether its a cigarette or imported pickup. But when they want something to stay the production side is protected. Assup.

      Production and jobs are totally reliant on consumption.

      • 0 avatar
        TwoBelugas

        “The issue is all countries have different levels of protection, from the overt like the 25% Chicken Tax in the US on imported pickups, subtle and not so subtle technical barriers, ie, different design regulations.”

        How’s the auto industry doing in Ozland?

        • 0 avatar
          Big Al from Oz

          TwoBelugas,
          Its actually improved. The auto sector had its best year ever. Proportionally on par or even better than the US.

          As for the manufacturing side off shoring has saved the taxpayer 100s of millions of dollars. Money to be better invested elsewhere.

          The engineering and design side is moving forward. The US Bronco and Ranger will be coming your way soon, even a Ranger Raptor.

          If you didn’t know the Ranger is more successful than the F150 in some ways. Its sold in over 180 countries and had alot to do with the popularity of the global pickup market.

          We kept the high paying auto jobs, the engineers and designers.

          Our economy is moving forward as well. Remember the money not wasted subsidising production will be spent elsewhere in the economy and more than likely in an area that provides a return, not a black hole like manufacturing subsidies.

          So, now Australia has retained its second highest living standard, with the World’s 4th or 5 th freest economy.

          Things are okay here, but we have the same kind of whinners you have who blame all but themselves.

          There is a saying in Australia (and probably elsewhere) “some people you can shove diamonds up their ass and they still complain”. There seems to be those types on TTAC.

          • 0 avatar
            CV Neuves

            »As for the manufacturing side off shoring has saved the taxpayer 100s of millions of dollars. Money to be better invested elsewhere.«

            100s of millions Auto mfrg. subsidies are saved indeed. The jobs are now created by spending billions on “defence” items (ships, submarines) instead. Wages continue to fall, whilst an ever larger part of incomes is spent on housing and utilities. In between, the once famous Australian lifestyle is giving way to more and more overcrowded cities, which are dominated by toll-roads and collapsing public transport. A ten minute public journey in Sydney from the city to the airport, 4.5 miles, costs about AU-$ 17.00 / US 13.50, one way.

          • 0 avatar
            Big Al from Oz

            CV,
            Yup, move to Brisbane, Perth, Hobart, Adelaide, Canberra. Greater Newcastle with 600k population is my choice in NSW. You described Sydney and at that’s inner Sydney. But, even then Sydney is one of the worse possibble places I want to live.

            If I lived in inmer city Sydney I would sell up and move. But why is inner Sydney like this? Because many want to live there.

            Like the US, if there are issues where you live move and start anew.

          • 0 avatar
            Big Al from Oz

            CV Neuves,
            I forgot to add.

            The region of the world Australia is in has the most rapid escalation of arms/weapons.

            This expansion is caused primarily by China and Russia to an extent. The region has seen rapid economic expansion and all countries are investing in arms.

            Australia is the same size as Continental US with the population of 25 million and this requires some form of defensive capability.

            Remember Defence is the insurance policy for a nation. Buy a crappy insurance policy and when or if the sh!t hits the fan the populace will blame all but themselves. Invest in defence and people like you seem to (allude) whine.

    • 0 avatar
      Big Al from Oz

      Trendshifter,
      In the early 80s the US made the Japanese restrict car imports (not pickups) into the US to protect the Big 3 and force Japanese car manufacturing into the US. In the early 80s the final version of the Chicken tax came about……forcing the Japanese to manufacture pickups in the US.

      What goes around comes around.

  • avatar
    Big Al from Oz

    The US was not the leader in manufacturing 200 years ago. It was a commodities supplier for the Europeans.

    The same will apply to China.

    Economies transition through time. Advanced nations are service economies. As US manufacturing declined the US became the World’s greatest exporter of services.

    Services are pretty much everything other than mining, manufacturing and agriculture.

    Rather whinning and bitching about manufacturing I would be more concerned about competition in services.

    Finance, even restaurant chains are all services.

    People globally do complain about US service industries changing and taking over their cultures.

    So give me a break you shortsighted narrow minded Luddires who still think the world should revert back to spinning wheels and owes you.

    I read here people making statements regarding pollution, hourly wages, standards etc to justify their narrow views. They say this because they know it is near impossible for poor countries “to be like us”. Look within our own countries first, especially the US, a rich modern nation a check out your disparity. But it seems okay to pay peanuts in your own country with people living like sh!t, but not elsewhere.

    And when they become more like you same whinners complain about competition. Life is never fair to you types. Its all about you and not even your country.

    Sort of like the rich saying “I wonder why all don’t have what we have, look at those people”.

    I think if the global community becomes better off, rather than a few select countries there would be less strife in the world, no different than towns. Poorer towns have more issues.

    Elitist many are.

  • avatar
    raph

    Easy enough after the great car financing apocalypse. Once the majority of consumers can no longer afford to purchase cars even at decade long financing production will shift to accommodate the purchasing power of the masses.

    A few wealthy folk with super good credit cannot support the industry.

  • avatar
    mshenzi

    First of all, Hello, Mark! I did a happy double-take when I saw your name as the author the post.

    Second, a question– Germany, hardly a low-labor-cost country, (and hardly one with low government spending on social programs), manages to have a booming industrial economy. What’s so different between there and here?

    https://www.bloomberg.com/news/articles/2018-01-11/german-economic-growth-accelerates-less-than-forecast-in-2017

    • 0 avatar
      CV Neuves

      Germany has Western Europe’s largest low wage sector. On top of that they have state subsidized wages (“1 Euro Jobs”/”450 Euro jobs”). To a good extent, Germany also benefits from an undervalued currency (the Euro also has to meet the requirements of eg., Greece and Portugal).

      • 0 avatar
        Big Al from Oz

        CV Neuves,
        With a collection of 50 States the US and Australia with our collection of 8 States and Territories is not much different when it comes to income differences,debts etc. There is significant income difference across the US between the States.

        As for Germany and its low paying job sector you forgot to include Germany’s population. The largest in the EU.

        Sort of like saying the US has the largest welfare system globally, but Iceland with literally 1/1000 the population has a far more comprehensive welfare system.

        Its horses for courses.

  • avatar
    Sub-600

    The “rising tide raises all boats” trope assumes that comically backward nations will be able to get their collective acts together. This was illlustrated in yesterday’s piece on car safety in India, manufacturing and service industries are not immune to this. Globalism is a pipe dream, just like socialism. Greed and corruption, as much as globalists like to believe, are not uniquely American traits.

  • avatar
    FreedMike

    Good to see you around, Mark! Hope the new gig is working out OK.

    Answer to the question: I’d say China will never be the source of all car production here.

    If it was, though, I’d buy stock in companies that manufacture auto transport ships.

  • avatar

    Boycott the Envasion.

  • avatar
    Big Al from Oz

    The title for this article was designed to pull at the emotions of the readers.

    Mark as knowledgeable as he is in auto industry news knows this.

    The only area I envisage Chinese auto dominance is with EVs in advanced evonomies. Even then there will be steep competition.

    China and in the future with India will dominate developing nations in the auto market.

    The Chinese will target more prosperous developing nations and India will scrape the bottom of the barrel.

  • avatar
    Sub-600

    Judging from the emotional responses, one might assume the article was titled “When Will All of Our Cars Be Australian?”.

    • 0 avatar
      Big Al from Oz

      Sub-600,
      Good retort.

      Judging by the timing of your comment and I’m not familiar with your name and the abstract nature of your comment, you want a bite.

      So what is it you are after? Hmmm?

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