Jeep, an Obama favorite, looks to shift production to China

the examiner ^ | 10/25/2012 | Paul Bedard

[kimtom]

I do not watch foreign trade much,But was employed in auto industry for about 20 years (German, US, Japanese auto suppliers) until the BIG layoff 2008.
I agree trade barriers do not help. Japan is feeling the pinch of stiffer competition. They feel the pressure to cut cost, maintain quality. (they use Chinese labor as well) I admire Japans Mfg capabilities and eye for detail, but not Germany's. USA has good designs and capability, but usually chooses the cheaper (quality) route. But that's another topic. Thanks for your input

[kimtom]

“...2016 Model Jeep...”
Try 2018-2020 US Mfg can't seem to launch new products as fast as Japan.
But where does Fiat come in? (and how did Fiat get control anyway?)

[Zhang Fei]

USA has good designs and capability, but usually chooses the cheaper (quality) route.

I've always maintained that the UAW wage package and UAW work rules increase its labor costs so much, relative to the competition, that Detroit has had to remain price competitive by reducing parts costs. This means substituting weaker materials or skipping steps in materials processing, thereby causing phenomena like the second set of powertrain components failing after being installed even while Japanese cars with the same mileage are running, smooth as silk, on the original powertrain without problems. As the yen went from 250 to $1 to $80 to $1, Japanese manufacturers have chintzed out on trim components, but generally not skimped on powertrains.

[Zhang Fei]

That’s why we need to tariff incoming manufactured goods. I would say a 10% tariff would be about right. It would raise probably 100 to 200B and eliminate the “slave labor” factor.

Wikipedia has an interesting primer on the history of tariffs here.

[CatOwner]

Chrysler states they are not moving production to China.

http://www.reuters.com/article/2012/10/30/us-chrysler-jeep-idUSBRE89T15X20121030

[Candor7]

Chrysler Corp bought Fiat in 1987.

The interesting thing is that Chrysler Corp makes really great vehicles for Japan and other Asian Countries..... Cars that should be marketed here but they do not pass EPA muster or Vehicle Safety Muster in the USA. I saw many Chysler ME4s in Japan in 2009, not the turbio version, but a mid engined 4 cylinder version that was shockingly beautiful .

Chysler has done a good job entering the Asian market , using Fiat inspired designs I applaud the fact that Jeep is headed for China. Its a winning decision for the division, dictated by economics.If the economy here in the USA were not facing 20 years of deflationary non growth, Jeep would be staying. You can blame the Obama regime and the left for the fact that the Community Reinvestment Act caused a huge international mortgage debacle and the taxpayer funded TARP bailout which brought those economic conditions about. Folks still have a hard time here getting it. I mean in 2007 you could get a $250,000 mortgage from just about any bank without even submitting a tax return.So many high risk mortgages with adjustable rates could not last and the democrat leftist , a house for every person house of cards fell, ruining the West's ecomomies.

I hope Jeep does well in China. We can buy them here as imports, just like we do many other vehicles.

Xe, Xe.

[Randy Larsen]

My finances are finally settling down after retirement and I NEED a vehicle that I can trust in snow.

The Jeep was my first choice but if they move to China...no longer.

[Homer1]

As anybody wh works in IT can attest, adding offshore resoures is how you start a larger move. zonce the production lnes are set up, those workers in Toledo will have dirct competitors inside their own company. That is the larger and more important point. The same issues which put the auto industry in trouble were not resolved, only postponed.

[Homer1]

As anybody wh works in IT can attest, adding offshore resoures is how you start a larger move. zonce the production lnes are set up, those workers in Toledo will have dirct competitors inside their own company. That is the larger and more important point. The same issues which put the auto industry in trouble were not resolved, only postponed.

[dalereed]

Complete distortion!!!

They only intend to shift production of vehicles sold in China to be produced there!

They are going to expand domestic production!!

[tanknetter]

Except that Jeep has built vehicles in China before, with spotty results. They transferred production of the old Cherokee line there following the introduction of the Liberty, but apparently it didn’t succeed and they haven’t built a vehicle there since 2009 (per the article)

I’m in IT, btw, so know that offshoring work has had mixed results (due to quality contol issues with building products on the other side of the world) and many companies have been pulling work back here to the US because when the additional costs associated with increased defects is factored in offshoring isn’t all that cost effective. So it’s not a good example to use. You’d be better of drawing comparisons with more traditional manufacturing industries, such as textiles.

[Homer1]

yet, in spite of any previous issues, GM is creating jobs in China and not the US. Once they iron out any issues this becomes a direct threat to US production due to the cost differences. Maybe this is what is needed to address the larger issues, but, the point being, those larger issues have not been addressed.

[kimtom]

...Complete distortion!!!

They only intend to shift production of vehicles sold in China to be produced there!

They are going to expand domestic production!!.....”
..

Distortion??

How do you “shift” production and expand it?

who is doing the distorting? .....Think!

[kimtom]

Good points. At [redacted] they “had” to squeeze the UAW for concessions. There were more retired UAW members drawing pay and free medical benefits than were active (working). Those are legacy (overhead) costs. That Adds (additionally) to price of any goods union shops make. During contract negotiations the current UAW members “sold out” all future new hires, by agreeing to less pay and bennies for new comers, while maintaining “most” of their current benefits. The big 3 could have come out of restructuring stronger, rather than weaker. everyone would have kept their jobs, maybe a few less bennies.

The days of 30+ long year retirements for UAW are over!!!

PS I am not against organized labour, only socialized unions

[dalereed]

They are building a new facility in China for vehicles sold in China and increasing facilities and production in the United States of vehicles for the domestic market.

[kimtom]

I agree 98% with you, except about part of hoping they do well in China. I want them (all) to do well here in US EXPORT, EXPORT, EXPORT.

As far as Chrysler design goes, they (in my OPINION) beat or lead everyone else. (take risk, others copy). Exam: mini van concept, then the design of caravan-voyager, Copied by others, PT cruiser, Prowler...idea Copied (poorly). Pickup front fender design, Copied. with the exception of the Challenger, I don't see anything noticeable lately.

The German influence design?...Yuuuk!!! Now (electrical)quality another issue. I don't mind other countries designing and importing to US. I just wish the US would (could) lead.

[Candor7]

. I just wish the US would (could) lead>>>>>>>>>>>>>>

So do I brother, but the fact is we need politicians with vision and courage in Congress, and that we do not have. We have a lot of work to do to free up the US economy to empower the United States once again to do as you would wish. Let it be so.

[kimtom]

I agree with “ they are building facility in china for vehicles there..”
BUT!, They are currently built here. moving it to China lowers production here....period.(FACT!!) someone can “claim” they “intend” to increase production, but that’s the falacy of the claim, see, if no demand, no increase, where is the demand??? If you produce too much you’ll flood the market and then loose money.

Chrysler officials know this is a “hot” topic, so to appease union members, they say their intention, but my 20 years say, NO. My experience says, (agreement with others on this blog) from a business perspective, once you begin production of virtually the same vehicle overseas, for less, it will be too tempting to produce them and import. It’s business and US MFG has no pride in their country. They’ll take the money every time.

I do understand your point, but you can’t predict an increase in demand. Based on other peoples responses, they will even NOT buy Jeep (if that happens). Look for youself!

Thanks for your reply

[kimtom]

Yes , in my lifetime, I have see politicians help US MFGRS move offshore. For whatever reason (labour, management, money,profit, etc). We do not have leaders (in gov. MFGRG) with guts (loyalty)to help the US worker better themselves and work!. As you pointed out, one day the US worker won't afford the junk being imported, then trade barriers/ tariffs will be too late!!!!

Thanks!!! May we throw the libs and rinos out!

[kimtom]

You make good points to homerl. BUT also remember Japan's quality was junk. Then Korea came on the scene. China is learning and one day WE (USA) will see quality products from China.
Unlike Russia, China has adopted a little capitalism. They know to compete in US, their quality will have to improve. And, coming from that industry myself, we'll help them do it.Improvements are driven by demand. (don't you agree?)
I hope we will be able to afford the imported products!!
Thanks for your thoughts.