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Cost of Auto Manuf in Mexico vs US?

Discussion in 'Topical Discussions (In Depth)' started by Scorpio, Jan 27, 2017.



  1. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    What is the actual manufacturing cost of a car made in Mexico compared to one made in the USA?

    Wouldn’t manufacturing a car 100% drive the costs up to being affordable? Quick salary comparison & the differences are ridiculous. Americans want so much more Corporations could not adsorb this cost. They would pass it to us. What might a Dodge Journey cost (Made in Mexico vs Made in USA)



    Denis O'Sullivan, worked at General Motors
    Written Jan 4


    Though a lot of people think the automakers know the cost of producing a car or truck down to the penny, they do not. First off, no automaker produces an auto from scratch. Lots of the components, likely the majority in terms of cost, on that Dodge Journey were not made by Fiat-Chrysler, they were purchased. So, while FC knows what they pay for each part, they only have an educated estimate of what they cost to make.

    I believe your question is brought on by the recent decision by Ford to cancel its planned $1.6 billion investment in a new Mexican assembly plant.

    With world wide sourcing, a large part of the Dodge Journey is still made outside Mexico. And, automation for component manufacture is far more advanced than for vehicle assembly, so the apparent wage differences do not make that much difference in cost.

    The assembly operation is the visible tip of the iceberg of costs that go into a vehicle, and like an iceberg, it only represents about 10% of the cost. For instance, many years ago, I was involved in efficiency measurement at a light duty truck plant. Our average direct labor content in a pickup truck was about 20 hours, and on top of that, with various overhead elements, like supervision, material handling, maintenance and the like, there was another 8 hours, so just 28 hours of labor in total. Projecting that to today, my guess is the total labor would be less due to greater automation, but all the same, lets use the 28 hour figure. If American labor cost $60 with benefits added in and Mexican labor cost just $13, the cost difference is only $1,300, on a likely $25,000 or more vehicle. But, remember, that if the intent is to serve the U.S. and Canadian market from there, there are much larger shipping costs that eat into that apparent $1,300 difference. So, the advantage still lies with Mexico, but nothing like you may expect.



    Ted Hutch, U.S. ASE mechanic
    Written Jan 5


    Companies make more profit when labor costs are lower, you are exactly correct about this. This issue with Trade law is about keeping manufacturing jobs within the U.S. and not a degradation of the people of Mexico. If the U.S. were to put tariffs on vehicles imported into the the U.S., then the companies that manufacture them will be forced to manufacture them in country or pay a tariff. That not only means cars built in Mexico but other countries also. Yes, the cost would be passed along to the consumer by the manufacturers, but other models would have higher sales because of lessened costs from being built in the U.S. This only puts pressure on manufacturers to assemble cars within the U.S. As for cost of a specific model, I wouldn’t venture a guess.

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  2. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    Automotive Manufacturing in Mexico
    In 1910, Daimler and Renault were the first companies to establish assembly operations in Mexico, but that was short lived due to the Mexican Revolution which took place the same year. In 1921, Buick began assembling its automobiles in Mexico, followed by Ford Motor Company in 1925.

    Well over 3.2 million automobiles are projected to be produced in Mexico by the end of 2014, ranking Mexico the eight-largest automobile producer in the world.

    Currently, eight automotive OEM’s have a manufacturing presence in Mexico, with a combined 19 plants located in various parts of the country. Here is a snapshot of the Mexican Automotive Industry:

    Company Plants Products
    Chrysler 3 Engines, RAM, Promaster, Journey, Fiat 500
    Ford 3 Fiesta, Fusion, MKZ, Hybrids, Engines, Foundry
    GM 4 Cheyenne, Silverado, Sierra, Aveo, Trax, and others. Engines and transmissions
    Mazda 1 Mazda 3
    Honda 2 CR-V, Fit
    Nissan 3 Pickups, Frontier, Tsuru, Tiida, NV200, YorkTaxi, Versa, others
    Toyota 1 Tacoma
    Volkswagen 2 Beetle, Classic, TDI, Jetta, Golf, High tech engines
    KIA and BMW have recently announced manufacturing facilities in the State of Nuevo Leon and San Luis Potosi respectively.

    The areas of Mexico with the highest concentration of automobile manufacturing in Mexico include:

    • The area around the city of Saltillo (Saltillo, Ramos Arizpe, and Derramadero) with the presence of several plants owned by GM and Chrysler/Daimler/Fiat.
    • A corridor in the State of Guanajuato consisting of the cities of Leon, Silao, Irapuato, Celaya, and Salamanca.
    The long time presence and most recent growth of automotive manufacturing in Mexico is the result of the lowest labor cost structure in North America, OEM venue diversification strategies, and a rapidly growing skilled workforce.

    Our Manufacturing Communities serve as an ideal venue for small and medium sized tier 2 and 3 suppliers because of the scalability of facilities and a shared-services business model that allows clients to take advantage of economies of scale from day one. Other advantages include a legal framework that allows foreign companies to operate for four years without needing to establish permanent operational status and being assessed income taxes based on their manufacturing activity in Mexico.



    1.png

    https://offshoregroup.com/industries/automotive-manufacturing-in-mexico/
     
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  3. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    Why Trump Tariffs on Mexican Cars Probably Won’t Stop Job Flight
    By David Welch and Dave Merrill
    January 4, 2017

    President-elect Donald Trump says he wants automakers to build cars they sell in the U.S at home or pay a hefty tax. On Tuesday he criticized General Motors for building the Chevrolet Cruze hatchback in Mexico. And during the campaign, he called for a 35 percent tariff on autos produced south of the Rio Grande. But it may be more free trade, not tariffs, that would help the U.S. keep some factory jobs from moving south.

    After Trump criticized GM, Ford said it would scrap plans to build a $1.6 billion plant in Mexico and build its Focus compact car at an existing facility there. Despite that, U.S. automakers Ford, GM and Fiat Chrysler are planning to manufacture almost 1 million more cars in Mexico by 2022, according to LMC Automotive, while building half a million fewer cars in the U.S. They're not alone. Over the past five years, automakers have rushed to build factories in Mexico. The largest car companies have announced at least $22 billion in investments and about 25,000 jobs at new or expanded plants in Mexico by 2019. And that’s just the jobs that have been made public.

    [​IMG]
    Cheaper labor is only one reason Mexico has seen a surge in new-car production. While the country’s low wages have been the big attraction, one of its key advantages is that it has trade agreements with 44 countries, giving automakers access to half the global car market tariff-free. The U.S. has similar trade deals with just 20 countries, which make up 9 percent of global car sales, according to the Center for Automotive Research in Ann Arbor, Michigan.

    A GM spokesman said most of the Mexican-built Chevy Cruze hatchbacks Trump targeted on Tuesday are exported overseas. Many of the new plants opening in Mexico are producing small SUVs and compact cars such as the Cruze that are more popular with buyers in South America and Europe. That means, that for Trump to get jobs flowing back into the U.S., he might be better served seeking the kind of open market that Mexico has created.

    "It’s pretty ironic that what makes Mexico successful is free trade," said Kristen Dziczek, an analyst at CAR. "You can look at the new investment that has gone into Mexico and while a huge portion is for the U.S., they are selling a lot elsewhere, too."

    Ford spokesman Karl Henkel said that Ford's decision to build its Focus compact and Fusion sedan in Mexico "is not solely tied to whichever agreement has the lowest tariffs." He did say that low cost is important, especially in Mexico, but location of the plants relies on multiple factors.

    To get a better sense of Mexico’s advantage, consider a $25,000 midsize sedan built and shipped in Mexico with one in the U.S.

    Automakers can pay Mexican workers a lot less. Total hourly compensation in the motor vehicle manufacturing sector is about 80 percent less for Mexican workers compared with that for U.S. workers. Considering assembly time for a typical midsize car, an automaker can save $600 per vehicle on labor costs.

    [​IMG]
    Infrastructure in Mexico lags behind the highway and rail network in the U.S., so it actually costs automakers $300 more per car in additional shipping expenses to produce the vehicle in Mexico and ship it to Europe, and an extra $900 to ship it to the U.S.

    That means, even after paying significantly less on labor, a car company is walking away with wage savings of only $300 per car—a fraction of what it costs to build and ship in the U.S. The bulk of the savings are tied to Mexico’s trade agreements and cheaper parts.

    Automakers can save $1,500 per car on cheaper Mexican auto parts. Certainly, a lot of those savings are tied to the lower wages workers in Mexico are paid. But some of these parts are imported to Mexico tariff-free from countries in Europe and Asia, particularly for the foreign automakers who are increasingly investing in Mexico instead of the U.S. Since the U.S. doesn’t have as many free trade agreements, some of the automakers would pay extra for some of those parts if they made those models in the U.S., said Bernard Swiecki, senior analyst at CAR.

    The same company selling that mid-sized car saves $2,500 per vehicle that it builds in Mexico and ships to Europe because the U.S. doesn't have a trade agreement with the EU. That's more than it saves in parts and wages once shipping costs are figured in.

    So, in total, an automaker saves more than $4,000 by building and shipping a car from Mexico to Europe instead of from the U.S. If Trump could match those trade deals, he would erase an average $2,500-per-vehicle cost advantage over American-made midsize cars.

    [​IMG]
    The cost advantages from Mexico’s trade agreements are adding up. Automakers avoided about $770 million in tariffs in 2014, the most recent year for which data are available, that they would have paid had their exports come from the U.S. rather than Mexico.

    [​IMG]
    Make no mistake, the majority of Mexico’s auto exports are still sent tariff-free to the U.S. and Canada under Nafta. Mexico sends 2 million cars a year to the U.S., more than half its total production. But those shipments are making up less of Mexico’s total exports. By 2018, 28 percent of Mexico’s production will be exported to countries besides the U.S. and Canada, up from about 18 percent in 2015.

    Less than 10 percent of U.S. production is sent offshore because American plants tend to make more expensive vehicles that car buyers in emerging markets can’t afford, and because Mexico’s trade deals have increasingly made the country a center for export.

    GM will send more than half of the new Chevrolet Equinox SUVs built at a plant in Ramos Arizpe, Mexico to markets in South America, the Middle East and Asia, according to a person familiar with the matter. Similarly, Audi opened a brand new plant in Mexico to build its Q5 luxury SUV in September, with executives talking up the country’s free trade deals when it announced the start of production.

    “In some ways it makes no sense to bash Nafta,” said Swiecki. “You could abolish the agreement but that won’t abolish the other agreements that Mexico has with other countries.”

    https://www.bloomberg.com/graphics/2017-trump-mexico-auto-jobs/
     
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  4. luckabuck

    luckabuck Gold Member Gold Chaser

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    Complicated economic situation.
     
  5. Treasure Searcher

    Treasure Searcher Platinum Bling Platinum Bling

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    The average worker is working to put food on the table for their family. Before we go into labor costs, why not show what compensation (bonuses, etc.), the CEO's of the automakers are getting?
     
  6. D-FENZ

    D-FENZ Gold Member Gold Chaser Site Supporter ++

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    The actual employee pay as a percentage of the total cost of a vehicle assembly is quite low in the US. But there is more to it than just that.

    While I have no proof, I suspect that American assembly workers could be payed exactly zero for their efforts and it would still be cheaper to assemble cars in any number of foreign countries, including Mexico due to their lack of onerous regulations. The US workforce has been literally strangled by huge compliance cost burdens from dozens of alphabet soup agencies from the EPA on down. Obamacare being jsut one of the latest. And these costs run through the entire US sourced supply chain. Mexico, China, Thailand, India and all the rest have very few or even no such impediments. For the thousands of pages in 'free' trade agreements, few are devoted to this 800 pound gorilla in the room. It's little wonder that we have such huge trade deficits.

    Reductions in our regulations as well as a leveling of the playing field for trade with countries with little to no oversight would be a good place to start. I am somewhat optimistic that a Trump administration will take a much needed look at this issue.
     
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  7. Treasure Searcher

    Treasure Searcher Platinum Bling Platinum Bling

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    In my younger years, I worked 9 years in an automotive assembly plant. While there are Federal laws, regulations, etc., certain states have more laws and regulations, than others. My guess, is that new auto plants, will be built in more business friendly states. To me, that would be the Republican states. IMHO, states run by Democrats have more anti-business laws.
     
  8. Silver

    Silver Gold Member Gold Chaser

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    As part of any renegotiation of NAFTA with Mexico, should be a provision on Fair Wages. The Corporations should not be able to move their plants to Mexico, pay low wages, and have tax free access to US markets. If wages in Mexico were decent, their would be much less pressure to immigrate to the US. If wages in Mexico are not at least half of wages in US, then they pay a high import tax - the higher the wages, the lower the import tax. Germany pays higher wages than the US and they still have to pay an import tax (I think it something like 3%), yet Mexico pays skilled auto workers $1.50 an hour and pay no import tax.

    Mexico needs a middle class and it will not happen without outside pressure. They actually are a failed narco state, and in my opinion, should be toppled and seized ( it would be welcomed by many Mexicans) by the USA. We need more territory and Mexico is ripe for the picking. There would have to a major ass kicking of the criminal class and the oligarchy, but it is doable - think California and Texas.
     
    Last edited: Jan 27, 2017
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  9. Professur

    Professur Midas Member Midas Member Site Supporter ++

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    As anyone into classic cars will tell you, getting anything plated today means paying the EPA tax. Steel and aluminum foundries ... EPA tax. Paint? EPA tax there too. Reign in the EPA and your costs drop significantly. But!!! That's not to say that a certain level of monitoring isn't necessary. Let's not go backwards here. Any time a job is farmed out to another country and the reason is that country's lack of pollution regs .... something's wrong.
     
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  10. TAEZZAR

    TAEZZAR LADY JUSTICE ISNT BLIND, SHES JUST AFRAID TO WATCH Midas Member Site Supporter

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    I think inflation ( dollar devaluation, banksters), unions & corporate greed are the major factors in the high price of cars & other items.
     
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  11. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    Mexico is the 12th largest export economy in the world and the 20th most complex economy according to the Economic Complexity Index (ECI). In 2014, Mexico exported $400B and imported $379B, resulting in a positive trade balance of $21.3B. In 2014 the GDP of Mexico was $1.29T and its GDP per capita was $17.3k.

    The top exports of Mexico are Crude Petroleum ($37B), Cars ($33B), Vehicle Parts ($23B), Delivery Trucks ($22.7B) and Computers ($18.6B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($22.9B), Vehicle Parts ($22.7B), Integrated Circuits ($13.5B), Computers ($10B) and Broadcasting Accessories ($8.98B).

    The top export destinations of Mexico are the United States ($291B), Canada ($24.5B), China ($7.89B), Spain ($6.18B) and Brazil ($5.35B). The top import origins are the United States ($194B), China ($58.7B), Japan ($15.8B), South Korea ($13.4B) and Germany ($12.8B).

    Mexico borders Belize, Guatemala and the United States by land and Cuba and Honduras by sea.


    http://atlas.media.mit.edu/en/profile/country/mex/
     
  12. TAEZZAR

    TAEZZAR LADY JUSTICE ISNT BLIND, SHES JUST AFRAID TO WATCH Midas Member Site Supporter

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    and in my opinion, should be toppled and seized ( it would be welcomed by many Mexicans) by the USA. We need more territory and Mexico is ripe for the picking.

    I like it, then I could go fishing in "Baja", AGAIN !!
     
  13. tom baxter

    tom baxter back from 2004

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    My thoughts exactly, and who knows what government subsidies the author missed?

    Down here in Australia the coal industry is massively subsidized by the federal government, but when you look into the numbers most of the money goes towards revegetation and other environmental work the greens have made mandatory practice for the mines. Were talking billions and billions here.

    I'm not saying it shouldn't be done but as time goes on these equations of economic progress get more and more complicated and there is less and less profit for the corporations. This is why even a comparatively small saving is worth chasing after.

    If I had an income comparable to the annual funds spent on an Australian Flasher frog I could live quite comfortably.

    [​IMG]
     
  14. 917601

    917601 Mother Lode Found Mother Lode

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    Mexico can " fix" this "Trump problem" simply by kicking out all gringo companies and seizing all manufacturing plants.....they have done that in the past, huge American owned retirement communities in the Baja peninsula were seized in the past......
     
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  15. Area51

    Area51 Silver Miner Seeker

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    That'd be the absolute best possible scenario for Trump and America.

    Let the Mexicans keep the factories - - there's massive unused capacity sitting empty throughout North America now.

    Lots of luck to the Mexicans selling anything they produce. Take a look at their trade partners - - virtually everything is sold to either America or Canada.

    Same deal with China. Keep your plastic trinkets and dollar store rubbish. Once they can't dump their junk on North America, the Chinese economy grinds to a screeching halt.

    Always remember, the tail does not wag the dog.
     
  16. Someone_else

    Someone_else Gold Member Gold Chaser

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    That is an excellent idea. Mexico should make it clear that any and every foreign investment will be stolen, and sooner than later. They should send a clear message that gringo money will be taken swiftly and that "investing" there is a dangerous risk of losing all the money.
     
  17. Howdy

    Howdy Silver Member Silver Miner

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    The globalists and the unions got us into this mess. If all the jobs are overseas, how are Americans going to buy cars?
     
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  18. bb28

    bb28 Silver Member Silver Miner

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    The global supply chain can do many things like high technology, speed and scale of costs and economy, but one of them is not quality. So long as the American buyer is willing to pay extra money they do not have for technology they do not need and will be obsolete in another several years, this situation will not be rectified. There will always be someone willing to work for cheaper wages than we are. The answer is to build higher quality goods, not to turn America into the third world. To complicate this, our regulators and unions have thrown workers under the bus.

    The problem with all of the free trade is that it is anything but laissez-faire. It is a coerced plan to screw over American workers, American families and the American taxpayer, backed by bankers, corrupt officials and lying media. Trump is correct in calling all of this out.

    This has resulted in societal and cultural rot with the end result some or many people seeing the current situation as normal or even desirable while not being aware of how much everything has deteriorated.

    Unlike other countries, we don't need anything from anyone else. We already have infrastructure, an educated/skilled/innovative populace, energy sources, and good national defense. Why do we need anything from any other country, except that we can't control our monetary policy?

    bb
     
  19. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    I appreciate this, but also wonder how much of it has been brought on by the worker themselves, and .gov requirements over time?

    It really did morph into a mess for a company to operate. Between the higher wages, the benefits, the employment regulations, the societal regulations, the EPA, the OSHA, the all of the above alphabet soup agencies, it really is more than just a wage rate. Over the years, a cost to 'exist' in the US has risen dramatically.

    Then we have to wonder about obsolescence. As someone had stated in one of these threads, that the plants could only do limited retro fits to upgrade and modernize as the unions did their thing trying to keep max jobs, rather than allow max efficiency.

    It is a problem we all have to entertain, as we continue to move toward more and more automation.
     
  20. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    Raw materials – the biggest cost driver in the auto industry
    By Henry Kallstrom | Feb 5, 2015 2:39 pm EST
    Cost components
    There are four major cost drivers in the production and sale of an automobile:

    • raw materials
    • labor
    • advertising
    • R&D (research and development)
    [​IMG]




    Raw materials contribute about 47% to the cost of a vehicle. On average, an automobile is 47% steel, 8% iron, 8% plastic, 7% aluminum, and 3% glass. Other materials account for the remaining 27%.


    Approximately 22% of an automaker’s operational costs depend on steel. So, any fluctuation in global steel prices has a direct impact on profitability. Steel billet prices came down drastically from 15.2 euros per metric ton in 2008 to 4.8 euros per metric ton in 2013. This significantly improved manufacturers’ gross margins. During this period, the gross margins increased by 200 basis points, or bps, from 15.2% to 17.2%.

    Traditionally, automakers only used aluminum for wheels, cylinder blocks, and other engine parts. Aluminum is twice as expensive as steel. However, this trend is changing in response to stringent fuel economy standards. The US government’s Corporate Average Fuel Economy, or CAFE, regulations require vehicles to have an average fuel consumption of 34.1 miles per gallon, or mpg, by 2016. Vehicles are required to have an average fuel consumption of 54.5 mpg by 2025.

    The shift towards aluminum
    Although it’s more expensive than steel, aluminum is much lighter. It has a similar strength. Every 10% reduction in weight improves the fuel economy by 5–7%. Currently, due to cost constraints, only Premium segment cars—like Tata Motors’ (TTM) Jaguar XF and the Audi (AUDVF) A8—have aluminum bodies.

    The new Ford (F) F-150 will launch in January 2015. It will have a high proportion of aluminum in its makeup. Toyota (TM) also said it will be using aluminum in the future for hoods, closures, and parts to make cars lightweight.

    Investors can gain exposure to the auto industry through the Consumer Discretionary Select Sector SPDR ETF (XLY). Ford and General Motors account for 2.6% and 2.1% of the fund, respectively.

    After raw materials, labor is the biggest cost source for automakers. It’s also the most contentious. In the next part of this series, we’ll focus on labor costs.





    Part 9
    Investing in the automotive industry – what you need to know PART 9 OF 20
    Why the automotive industry generates employment

    By Henry Kallstrom | Feb 5, 2015 2:39 pm EST

    Employment

    The automotive sector plays a crucial role in job creation. Car manufacturing activity has an employment multiplier value of five. Other industry activity has a value of three.

    [​IMG]

    In the US, OEMs (original equipment manufacturers) employ 1.7 million people directly. They create 1.5 million jobs indirectly. OEMs make the original parts that are used by automakers. Suppliers and dealers support an additional 4.8 million jobs.


    In the automotive industry, every $1 million increase in revenue leads to the creation of approximately ten jobs. This ratio is larger for sectors like energy and utilities.

    Globally, Volkswagen (VLKAY) employs the most people in the auto industry. It has 570,000 employees. Toyota Motors (TM) has 340,000 employees. Daimler (DDAIF) has 270,000 employees. Among the “Big Three” manufacturers in Detroit, Fiat (FCAU) has the highest number of employees at 230,000. It’s followed by General Motors (GM). General Motors directly employs 220,000 people.

    Investors can gain exposure to these companies through the First Trust NASDAQ Global Auto ETF (CARZ).

    Labor costs
    Labor costs vary significantly by country. A large portion of research and development, or R&D, expense is also in the form of labor cost in the automotive industry. As a result, it’s very important for companies to be able to control wages.

    [​IMG]




    Traditionally, the auto industry has been in the grip of labor unions. In 1997, UAW (United Auto Workers) members produced 86% of the vehicles manufactured in the US. The share decreased to 54% in 2014.

    Production outsourcing and the creation of union-free units by foreign manufacturers diminished labor unions’ bargaining power. Daimler is one automaker that adopted these strategies. The company made its plant in Chennai, India, an export hub for its commercial vehicles.

    So, how do automakers cover their huge costs? They spend more. We’ll discuss this in the next part of this series.

    http://marketrealist.com/2015/02/automotive-industry-generates-employment/
     
  21. Rusty Shackelford

    Rusty Shackelford Midas Member Midas Member

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    If a Mexican made car is $4000 cheaper to make then the same American made model, then why do both cars cost the same for the end consumer??

    I though these free trade agreements would drive down consumer costs to even things out...
     
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  22. D-FENZ

    D-FENZ Gold Member Gold Chaser Site Supporter ++

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    Impressive charts from an impressive sounding sources. It's just too bad that they don't even closely resemble reality. The article states that billet steel costs 4.8 euros per metric ton (2013 price), yet accounts for 22% of the manufacturers operational cost. The problem is that there are very few cars on the road today containing even 1 metric ton of steel. Yet the average light vehicle price sold today is over $34,000 (31,780 euros). Clearly the numbers don't add up, even figuring a modest price increase for a metric ton of steel today. Sure, there are obviously more materials than steel in a vehicle but in no way do raw materials account for nearly half of the cost of an auto as the chart implies. Not even close.

    And noticeably absent on the pie chart breakdown are some monsters including the cost of energy, government regulations and taxes- all the way through the supply chain.

    Must everything be bullshit? Yes, I'm cynical. But statistics and facts like these, trotted out on a daily basis- on every subject matter- do little to alleviate my condition.

    ~rant off~
     
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  23. TAEZZAR

    TAEZZAR LADY JUSTICE ISNT BLIND, SHES JUST AFRAID TO WATCH Midas Member Site Supporter

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    It was "Tricky Dick" & his Air Farce One, going over to China in 1972.
     
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  24. Howdy

    Howdy Silver Member Silver Miner

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    Tricky Dick must have been a front man for different interests.
     
  25. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    D,

    I would argue the stats are related to how things are done.

    For instance, a radio comes in and gets installed at the plant. Everything associated with that radio is a mat cost, while only the labor to install it is a assembly cost.

    As you state, stats can be manipulated darn near anyway you want to. But there are plenty of ways to arrive at a 45% mat cost.

    Then when you look at it, it is a direct shot to insulate themselves in union negotiations. Whereas parts are parts, but buildings and equip are depreciable, leaving a opening for unions to exploit later, etc.
     
  26. Area51

    Area51 Silver Miner Seeker

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    Good to see I'm not the only one who understands what a laughable joke these numbers are.

    Direct labour at 21% is a total farce. It's widely documented that it takes about 30 man hours to build a vehicle from start to finish. I can tell you from experience that's accurate within an hour or two.

    What most people to t realize it that it takes essentially the same amount of time to build a $15,000 shitbox as it does to build a $70,000 luxury vehicle.

    Where's the indirect labour? The clueless shill who wrote this drivel conveniently forgot to account for the indirect labour cost of managers, directors, VPs and the CEO.

    It's the indirect labour cost that's out of control - - NOT the direct labour.
     
  27. mayhem

    mayhem 497th Recon Tech Silver Miner Site Supporter

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    Indeed. Personally I think EPA regs have a lot of weight in the decision whether to move south or not. No one ever puts in the cost of these regulations on the big 3 or their sub contractors. Ditch 95% of the EPA and things will take off. Even I didn't expand into Mold Remediation 15 years ago because the regulations were so burdensome it drove the cost of certifying a job up 3,000%. So now instead of getting a mold job done correctly for a fair price we get people spraying bleach thinking all is well after. Bleach does not kill mold, it just changes the color.
     
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  28. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    that is overhead and not calculated in the cost to build,

    that is in the cost to run the company,

    as for companies having oodles of middle managers around just for giggles just doesn't wash,
    some of those persons are sourcing parts, complying with all the .gov regs, etc, etc.

    ------------------
    Ford

    Fields, 55, in his first full year as CEO, received $1.75 million in salary, $3.46 million in bonus and $13.36 million in stock and other compensation, for a total of $18.6 million, the company said Friday in a regulatory filing.Mar 18, 2016

    ------------------

    So if the ceo is so overpaid, his pay amounted to $93 bucks a year per employee if you wiped out everything they guy gets, or 4ct per hour worked.

    Whereas if you gave the worker just $1 raise per hour, that equates to about $620,880,000

    Great, so you toss the guy, and you get a raise of 4 ct an hour.

    All these discussions about ceo pay are not complete without the whole picture. That one guy can make the difference of millions in profits and higher wages overall, or he can put everyone out of work.

    basketball players, baseball players, actors, and a whole lot more make in many cases more than that for doing nothing. The guy runs a multi-billion dollar company for criminy sakes. Not doing a movie once in awhile then preying on us to back whatever bullshit cause they have going on.
     
    Last edited: Jan 29, 2017
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  29. nickndfl

    nickndfl Midas Member Midas Member Site Supporter ++

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    I just purchased a new car today. I was looking at Hondas, Toyotas and settled on a new 2016.5 Mazda CX-5.

    I test drove a new Honda HRV first. It had rattles and very vague suspension. I supposed that its 35% Mexican content and Indonesian transmission might have something to do with it. The HRV is a big POS, I would never own one. I traded in a CRV which was very good, but the Mazda seems to be laid out better in the cabin and engine compartment. It also gets excellent mileage.

    The Toyota RAV-4 was reported to have transmission problems, so I passed.

    I purchased a base model which is what I needed. I cannot use an electric seat. In addition, it was reported that side crash detectors and smart braking can glitch on cruise control in the rain or when changing lanes. I don't like a lot of electronic stuff on a work vehicle, so I was glad to get a base model. It was made in Japan too, so hopefully it will be good to go zoom zoom.

    Now cars made in USA are better than Mexicans, but not Japan. The USA needs to raise its quality standards and the world will buy our products.
     
    Last edited: Jan 29, 2017
  30. Howdy

    Howdy Silver Member Silver Miner

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    It as not the USA that lowered the standards, it was the globalists that run the industry. Before the Japanese automobile invasion, American cars were the best value. Their quality was lowered deliberately to make way for globalization.
     
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  31. Usury

    Usury Platinum Bling Platinum Bling

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    Did you run a Geiger Counter over it before taking delivery?
     
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  32. mtnman

    mtnman Gold Member Gold Chaser Site Supporter ++

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    This article doesn't address the Pension cost, which is passed on to the buyer of the car and is quite high.
     
  33. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    Hey mtn, good to see ya,

    hope the healing is coming along,

    I am assuming the pension cost is included in the labor cost

    The data on actual costs to manufacture are quite hard to find a decent breakdown on.
     
  34. Area51

    Area51 Silver Miner Seeker

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    Conveniently omitting so many of the non value added costs - - overhead/indirect labour/legacy cost - - is why articles su has this one can't be taken seriously.

    I can tell you from experience that there's a ridiculous amount of middle management and "engineers" in the auto industry.

    Back in the 1980s supervisors were required to wear a suit and tie every day. When I started at GM in 1999 I was given five white dress shirts with the logo and plant embroidered on, and told to make sure I wore them everyday along with a pair of dress pants. That's what I've always worn ever since regardless of the company I was at.

    I'd left GM and returned in 2013 and could't believe management was now wearing jeans and golf shirts. I remember seeing groups of four or five people standing around drinking coffee and everything is ask who the fuck are those guys over there, the answer was always the same - - oh they're engineers.

    When I asked WTF was going on, the explanation I got was that when the auto bailout happened everyone below upper management was given the directive to dress down so they would just blend in with the hourly workers. This way when government types were going through all the plants apparently checking out efficiencies they wouldn't see how bloated the salaried staff was.
     
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  35. Area51

    Area51 Silver Miner Seeker

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    Interesting how things like that just get glossed over, isn't it?
     
  36. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    then provide the data if you have the inside info,

    people making a whole lot of claims on nothing here, but not one has put up research showing actual car costs to manufacture, which was the point of this. Rather than a bunch of bs conjecture.

    show how they are wrong, and the numbers are cooked, 'cause I don't doubt your statements at all.
     
  37. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    It isn't glossed over, it is part of the labor costs

    again, prove what you state as I answered his question with my opinion of it

    I went to ford to try to find it from their financials, and it would take me hours to dissect those. Hours that I don't have.
     
  38. Area51

    Area51 Silver Miner Seeker

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    Here's a few nuggets from GM Canada's website

    http://media.gm.ca/media/ca/en/gm/n...ages/news/ca/en/2016/Events/0803_GMFacts.html


    • GM Canada directly employs approximately 8,400 employees in Canada (6,500 hourly + 1,900 salaried)
    • Through our GM Canada pensions, we support approximately 30,300 hourly retirees and 7,000 salary retirees in Canada.
    That's a lot of non value added people on the payroll. Salaried is non value added - - only people who actually put parts onto the vehicle are considered value adds.

    Worst part is how many people the company is paying not to work - - more than QUADRUPLE the number of retirees collecting a pension.

    Anyone who can't recognize the problem with that is either wilfully blind or just doesn't understand what they're looking at.
     
  39. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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  40. Area51

    Area51 Silver Miner Seeker

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    The article in post #20 proclaims "Raw materials - - the biggest cost driver in the auto industry".

    That's not even remotely close to being correct.

    There's more than four times the number of retirees collecting a pension and benefits than actual employees putting the vehicles together.
     

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