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To: expat_panama
For one, U.S. companies have overseas operations for a reason.

I used to teach Multinational Corporate Management. One of the major reasons for putting factories overseas is to get inside foreign countries' tariff walls and other non-tariff barriers to imports. If you manufacture something locally, you can sell it without paying a tariff, as you'd have to do if you exported it to the target country.

Another reason is access to local raw materials. If you manufactured in the US, you'd have to import those raw materials, possibly paying a US tariff, then pay another tariff when you export the finished product back to the country from which you got the raw materials.

Cheap labor, which is the bete noir of those opposing overseas manufacture, can be important, but often it's much less important than the above two reasons. This is especially true if you intend to sell locally, instead of exporting to the US.

26 posted on 01/26/2016 2:44:56 PM PST by JoeFromSidney (,)
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To: JoeFromSidney
...Cheap labor...   ...much less important than the above two reasons...

The rule of thumb in estimating costs for overseas projects is that while cost per hour may be less, the cost per output is usually the same.  So what we're saying here is that trade wars mean more off shoring, not less.

Tx fer the headsup. I plan to link to it in future threads.

29 posted on 01/26/2016 4:28:29 PM PST by expat_panama
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