Posted on 11/12/2008 11:41:02 AM PST by foutsc
So the Big Three are asking for a government handout... You should write your representatives and ask them this question: If you want to get mad, go read this WSJ article about how GM pays people to not work. Speaker Pelosi is worried about excessive executive pay when she should be focusing on excessive executive stupidity. Professor Phil Gramm points the finger at dysfunctional state governments: Why are the Big Three going broke and asking for taxpayer money while Toyota USA is expanding?
Ford, GM and Chrysler have become as sclerotic as the liberal states that host them. Like the failed state of Michigan, the Big Three promised goodies to the masses and now they have the gall to ask the American taxpayer to fund their generosity. Note to nanny-state liberals (in government and on corporate boards): It's not generosity when you do it with other people's money!
Business conditions were better in the successful states than in the lagging ones. Capital and labor gravitated to where the burdens were smaller and the opportunities greater.The facts show that soak the rich policies, over-regulation, and yes, overreaching unions, destroy jobs. States like Ohio and Michigan have only their failed liberal policies to blame. And the same can be said for the welfare queens who run the Big Three: They overpromised and undersold on pensions and benefits. You can pile the goodies sky high, but somebody has to pay the bill. Toyota knows this, as does Texas, Tennessee, and Florida.No one should let Michigan politicians blame their problems solely on the decline of the U.S. auto industry.
Yes, Michigan lost 83,000 auto manufacturing jobs during the past decade and a half, but more than 91,000 new auto manufacturing jobs sprung up in Alabama, Tennessee, Kentucky, Georgia, North Carolina, South Carolina, Virginia and Texas.
Liberal Democrats and the press (but I repeat myself) will be trying to convince you otherwise.
Arm yourself against their economic nonsense by going here and reading the entire article on state economies. I also recommend you read everything written by the erudite and highly entertaining economics professor Walter E. Williams. Here is a quote from his web site:"We hang the petty thieves and appoint the great ones to public office." -- AesopWalter E. Williams home page: http://www.gmu.edu/departments/economics/wew/
Gramm Article on State Economies
http://online.wsj.com/article/SB122126282034130461.html?mod=opinion_main_commentariesI presume you meant to say why does a US Affiliate of a Japanese company not need a US bailout?
Why are the Big Three going broke and asking for taxpayer money while Toyota USA is expanding?Lots of "Japanese" cars are made in America while "American" cars are made in Mexico.
Not exactly.
Firms that locate manufacturing facilities overseas do not avoid "dealing" with foreign exchange rates at all, so that is NOT a primary or even secondary reason for locating operations overseas. From the transaction exposure of converting contracts for parts, sales, and expenses from the host country currency back to the local currency, to the translation exposure of converting financical statements from the local currency of the subsidiary to the home currency of the parent company, to the strategic exposure of fluctuation in parent home currency terms of the long term cash flows of a foreign operation, the foreign currency risk is several orders of magnitude higher for companies with overseas operations.Why Multinational Firms Arise – Firms decide to invest and operate abroad primarily for one of the following reasons:
Seeking markets – firms produce in foreign markets to satisfy local demand or to export to other markets. (Examples: US automakers manufacturing in Europe or Japanese automakers manufacturing in the US.)
Seeking raw materials – firms acquire raw materials wherever they can be found. Firms operating in mining, forestry, oil production, etc. operate in whatever countries have these resources available.
Seeking production efficiency – firms often produce in countries where the costs of economic resources (factors of production) are priced lower (in terms of resource productivity) than in other countries. Labor-intensive products are often manufactured in countries with low wages.
Seeking knowledge – firms operate in markets to acquire technology or other technical expertise. For example, foreign firms buy U.S. electronics and defense industry firms in order to acquire their technology and intellectual property.
Seeking political safety – firms sometimes relocate or open operations in countries that are unlikely to expropriate or otherwise interfere with the firm’s business operation.
Foreign investments by firms may be Proactive investments, designed to increase growth of profitability of the firm.
Foreign investments by firms may be Defensive investments, with the purpose of denying growth opportunity or profitability to the firm’s competition.
Honestly, I don’t think you understand what you just posted.
What I posted was (in part) a paraphrase from my notes of the discussion of why multinational firms arise from the textbook I use for the International Finance class that I teach: Multinational Business Finance, 11th Edition, by David K. Eiteman, Arthur I. Stonehill, and Michael H. Moffett, Addison-Wesley Longman, 2006
Then maybe you misunderstood me: I am arguing that one of the reasons companies locate their operations overseas is to minimize their risk with regard to exchange rates.
Tax breaks are the same. The unions are the #1 cause, taxes are #2.
I might be wrong so don't flame me but didn't Honda recently open a new plant in Indiana????????
My 1995 Honda Del Sol gets 32 MPG city and around 40 MPG on long trips.....P>
Cost at purchase: $16,000.00
I got that, and my point in responses was that (1) minimizing exchange rate risk is not one of the considerations in locating plants overseas, and (2) locating plants overseas actually creates new exchange rate risks (while in some cases also creating hedging potential for other exchange rate risks) rather than reducing exchange rate risk.
Are you assuming that the foreign plant assembles with imported parts, or sources its parts domestically?
I’m not assuming either, and it isn’t germane to the reasons for operating abroad. The reality is usually a combination of both. A “japanese” vehicle assembled in a US factory probably has anywhere from 20% to 40% domestic US content and the remainder is “imported” content. So for the Japanese parent company there is currency exchange activity related to the timing of the transfer of the imported content, and there is currency exchange activity related to the flow of funds from the American affiliate back to the parent company and there is currency exchange activity related to the translation of the financial statements (income statement, balance sheet, etc) from dollars back to yen for the consolidated financial statements of the parent company.
If memory serves...H-D was hit hard by the big four rice grinder mfrs., who “dumped” beaucoup big displacement motorcycles into the USA in the late Seventies/early eighties. They (H-D)asked for a temporary tariff to give them a chance to regroup and, when they had recovered, asked Congress to lift the tariffs BEFORE they were scheduled to expire. H-D went on to do well. The last year or so have been troubling, but for entirely different causes...SSZ
Our friends were looking to trade in their 2004 GMC SUV and buy a new one; what they found is none of the dealers are “dealing”... at least not in SoCal.. they are thinking they will keep the one they have, even though he puts on a lot of miles each year.
If card check passes what will these foreign companies do when the UAW goes in and tries to organize?
I can’t find this at the link.
Can you help?
I got my wife a 2009 Toyota Corolla sport model with all sorts of suspension and traction options. Its a physically larger car then its predecessor corolla’s but its gas mileage is a solid 32 miles around town and 40 on the highway...on 10 per cent Ethanol brands! Good power, good acceleration and handling at less than 18k. And what sharp cool lines in an electric royal mettalic blue!
Why can’t Detroit put together models like that for that price!!!?
Sure, since we bailed out the world’s banks, we might as well bail out the world’s car manufacturers too, even if they don’t need it.
The point is to bankrupt America and destroy our domestic economy by nationalizing parts of it, and putting the rest out of business. Corruption abounds in the Treasury and Congress these days.
Because they don’t think we want that ... they make what they “think” we’d like ...
I remember grandad telling me stories about the muscle cars he and his friends built in H/S in the ‘50... so along comes Detroit finally with their version ... they they totally screwed it up .... the T’bird first, then the Mustang ....turned them into large family cars when all the people wanted was an European type sports car ....
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