In this article, Ford is talking about the construction of their new plant in Mexico, and how it isn't going to affect U.S. jobs. Trump is referenced in this article multiple times saying that this isn't a good idea, and that the U.S. needs jobs, especially in Detroit, little does Trump know the building of this plant will actually not cut U.S. jobs. Many Auto companies including BMW, GM, Volkswagen, Honda, and Toyota are starting to build their factories in Mexico, because other countries cannot compete with their low wages and high productivity.
After reading this article you wonder how moving multiple plants like this out of the U.S. and into Mexico will affect immigration into the United States. I look at this and think that if immigration into the United States goes down, then more people that live in the U.S. legally will be able to find work, which would hopefully lower our unemployment rate. It will also be interesting to see if other companies in other industries start doing this, because of the low wages and high productivity.
Link: http://www.msn.com/en-us/money/companies/yes-ford-is-building-plants-in-mexico-no-it%e2%80%99s-not-cutting-us-jobs/ar-AAj796r
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ReplyDeleteThis article is extremely interesting since it talks about how Ford building plants in Mexico is not going to affect the United States Job market, pertaining to Trump's claim as to why Ford is creating jobs in Mexico rather than the United States. Mexico is an attractive option for car-makers to add to their North American production capacity because they offer high productivity and low wages, which decreases overall costs. The opportunity of cost of producing their cars in the United States is high, because of expensive labor, thereby compromising their profit margins. Thereby, this article shows why capital flows from a country with high capital to a country with scarce resources, and also shows why it is important and beneficial for one country to keep relations with another country. Thereby, Ford's struggle will decrease if it expands its plants to Mexico, along with being 'customer driven' and providing value to buyers. Also, it will be interesting to see the impact of Ford's construction of their new plant in Mexico on the immigration into the United States.
ReplyDeleteThis article refers to a term a lot of companies want to have in a market, a comparative advantage. Ford's intiative provides both countries a beneficial outcome. Outsourcing in this case doesn't take away jobs but provides jobs who would have thought.
ReplyDeleteAccording to another article I read about this topic, we should expect to see other companies start to move out of the U.S. as well. Also this article I read said that the impact on Ford's U.S. employment will be minimal in the near-term especially since they are already building the Fiesta and the Fusion in Mexico. It said as of right now they still plan to make the Ford Mustang at its plant in Michigan. But I think you bring up some good questions about how this transition to Mexico will affect immigration and the unemployment rate.
ReplyDeleteI am curious as to how this will affect prices of Ford cars produced in Mexico. I'm not sure if Ford cars are typically produced in the U.S., but if they are then the extra shipping costs/tariffs will be reflected in the final price of the cars if they are built in Mexico then shipped into the U.S. Although trade agreements in North America will minimize these costs, there's still going to be some additional fees, but it must be worth it since Ford is producing in Mexico already. The cost of labor must be so much lower than these shipping costs don't affect the overall cost of goods sold.
ReplyDeleteOne thing about foreign investments like plants is a lot of times in new countries the plant's owners try not to abide by sanctions set worth by the U.S. Government to avoid addional costs. There's this theme about addressing social and business ethics.
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