Originally Posted by
Blackstone
For some reason you seem to think U.S. workers need to accept lower wages to match what is going on in the rest of the world. You need to remember, manufacturing, for the most part, has gone to less developed countries with very low standards of living. These jobs help elevates the standard of living in those countries, which is good. However, for decades, the U.S. has enjoyed one of the highest standards of living in the world. One reason for that is U.S. workers were offered good wages and benefits. They provided economic stability and opportunities to improve ones standard of living. Now, you think Americans should lower their standard of living to meet those of less developed nations. I don’t agree with that.
Somehow, we have been fooled into believing we must participate in the “global” economy, even if it works to our detriment. We don’t have to. Just look at the Japanese. They are masters of participating in the global economy while protecting their own markets. Before the current world wide economic slow down, the Japanese sold approximately 15 million cars world wide. At the same time, they have kept sales of non-Japanese cars to around 10k units (that includes all U.S., European, and Korean models) in Japan. Ninety five percent of all cars sold in Japan are Japanese cars. Through taxes and tariffs, they have made it almost impossible for the average Japanese citizen to buy a non-Japanese car. The car market in Japan is closed to imports. My point is, it’s okay to participate in the global economy, but take care of home first!
You need to do a little more reading. Capitalism is what made this country wealthy. But, what made this country great was that everyone had a chance to get a piece of the pie. Of course, some people got a bigger piece than others, but everyone had a chance to get a piece. Unfair competition is not the type of capitalism that made this country great. Unfair competition hurts the economy in the long run. That is why there are laws that make sure the competition remains as fair as possible (i.e. anti-trust laws, fair trade laws, copyright, and trademark laws).
The UAW was being paid these types of wages and benefits long before there was a “global” market. Now that manufacturing is leaving the U.S., or going to lower income states in the U.S. where wages are lower, you think the UAW’s wages are excessive. Did it ever occur to you that these other workers might be underpaid?
In the 1960s, the auto companies and the UAW were hailed as good corporate citizens for providing such a good standard of living for their people. What they were being paid benefitted the entire economy. Now, they are being ridiculed for it. You may see auto workers’ pay and benefits as excessive, but some guy in China making $1/hour would probably see the money you make as excessive. So, why don’t you volunteer to give up a portion of your income to get closer to what they’re making in China? It would certainly make your company more competitive and profitable. It’s always easier to tell someone else what they should be willing to give up when you are not being forced to give up anything.
It makes perfect sense when you understand the automotive business. In your scenario, Ford would probably not lower its prices. I have been around the automobile business a long time, and that is not how it works. If Ford’s pricing on that model was already competitive in that segment, they would not lower the price to gain a competitive advantage, they would take profit. Lowering the price significantly will not necessarily translate into a significant increase in sales. In addition, significantly lowering the price, devalues all cars in that segment. This will not be the last model Ford will want to sell in this market segment. The next car they introduce may not have that cost advantage over the competition, so they could end up pricing themselves out of the market as well. They would probably use the reduced cost to help offset costs on other less profitable models, and support R & D. In addition, each successive year in the life cycle of a car, the cost to produce it generally goes down as tooling is depreciated and paid for. How many cars have you seen get cheaper each year?
There are plenty of other examples where manufacturing cost have been significantly reduced by cheap labor, but the savings hasn’t been passed on to American consumers.
The U.S. textile and clothing industries is all but gone from the U.S. Since the implementation of NAFTA in 1994, about 1 million U.S. textile jobs have been lost. Clothes are now made in China, Mexico, and other cheap labor markets. As a result, the cost of producing clothes has gone down significantly for manufacturers. Has the price you pay for clothing gone down accordingly?
Furniture that used to be produced in NC is now made in China because it’s cheaper. Hourly wages for furniture workers in China are between $0.50 and $0.75, which is much as ten times lower than what is legal in the U.S. How much has the price you pay for furniture gone down?
The reason companies take their manufacturing overseas is to lower their costs, thereby maximizing their profit. They don’t do it to save you money.
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