Monday, July 05, 2010

U.S. Motor Vehicle Export Milestones

1. General Motors' first-half of the year sales in China, the world's biggest auto market, exceeded sales in its home U.S. market for the first time.

2. After 15 years of building cars and SUVs in Spartanburg, South Carolina, BMW has now shipped over one million cars to overseas markets. That's nearly two-thirds of all of the production from the plant.

Update: Unfortunately, President Obama doesn't seem to fully understand yet the benefits of free trade (or appreciate the fact that 95% of the world's consumers are in export markets outside the U.S.?), and has failed to put the Colombia Free Trade Agreement (signed in 2006 by President Bush) up for a vote in Congress, despite claiming that he supports its "rapid ratification," despite this recent June 2 letter from 39 members of Congress (including 20 Democrats) urging Obama to sign the Colombia FTA, and despite this joint letter in 2008 from GM, Ford and Chrysler supporting Congressional approval of the Colombia FTA (along with more than 1,200 other U.S. companies, business organizations, farm and ranch groups, and chambers of commerce that also support the Colombia FTA).   

49 Comments:

At 7/05/2010 10:18 AM, Anonymous Anonymous said...

How many Americans jobs does the sale of one GM car in China represent?

 
At 7/05/2010 10:18 AM, Blogger bob wright said...

Nearly two thirds of the SC plant's production has been exported.

This is clearly an intolerable trade imbalance.

This plant should be forced to lower its production and stop exporting cars in order to bring its imports/exports into balance.

Let me be clear, this type of unfair trade practice simply cannot persist.

 
At 7/05/2010 10:23 AM, Anonymous Anonymous said...

Where's "sethstorm"?

 
At 7/05/2010 10:46 AM, Blogger PeakTrader said...

It seems, many people believe China's economy will overtake the U.S. economy.

However, in 2007, U.S. per capita GDP was $45,000 and China's per capita GDP was $2,200 (measured by a hard currency).

If China's real per capita GDP increases 15% a year, then in 20 years, its per capita GDP (compounded annually) will be $14,800.

If U.S. real per capita GDP increases 2% a year, in 20 years, its per capital GDP will be $66,900. At a 3% real rate, it will be $81,300.

I stated before, if the U.S. gains $700 and China gains $300 for each $1,000 in trade, then U.S. income rises less than 2% and China's income rises 15% (however, unfortunately for China, when social costs are included, the U.S. may capture all the gains in trade).

China's aggregate annual GDP may eventually overtake U.S. annual GDP only because its population is four times larger.

 
At 7/05/2010 11:14 AM, Blogger juandos said...

"It seems, many people believe China's economy will overtake the U.S. economy"...

Well PT if the contents of the following couple of links are factual these 'people' you allude to might possibly be right...

From the UK Telegraph: With the US trapped in depression, this really is starting to feel like 1932

From CNBC: Dow Repeats Great Depression Pattern: Charts

Libertarian Wayne Allen Root calls Obama: The great jobs killer

 
At 7/05/2010 11:17 AM, Blogger PeakTrader said...

India's economy may outperform China's economy over the next 20 years:

Projected Economic Growth in China and India: The Role of Demographic Change
Nov 2007

Within the next decade, China’s labour force will begin to contract, while that of India will expand faster than its population...China’s growth is projected to slow in the future with India becoming the fastest growing economy in the world on the strength of its continued population expansion.

 
At 7/05/2010 11:27 AM, Blogger PeakTrader said...

Juandos, it looks like Robert Reich and Paul Krugman have become negative on the economy.

Obama seems to be the worst possible response to this recession.

Thanks for your informative articles (including the prior ones).

 
At 7/05/2010 11:42 AM, Blogger juandos said...

"Obama seems to be the worst possible response to this recession"...

Amen!

PT Kevin Hassett of AEI warned us about Obama in a Bloomberg commentary back in March of '09...

 
At 7/05/2010 11:50 AM, Anonymous Titus Pullo said...

Anybody comparing our economic troubles of today with 1932 is just plain daft. I don't swallow of this "prosperity is just around the corner" that Dr Perry peddles but it isn't 25% unemployment with Hoovervilles in Central Park either.

 
At 7/05/2010 12:05 PM, Anonymous Benny The Man said...

Maybe we can make a new alliance with Colombia, Afghanistan and Mexico--the drug-exporting superpowers. "Am-CAM" for America, Colombia, Afghanie, Mexico.
Lots of money to be made in such an alliance--billions of greenbacks, I hear, on pallets in airports in Kabul.
As global urbanization and incomes rise, so will recreational and hard-core drug use. Milton Friedman would call this a huge global market opportunity.
But, I guess the people who run our foreign policy have already figured that out.

 
At 7/05/2010 12:20 PM, Blogger Jason said...

So, when will GM move its headquarters from Detroit to Shanghai? It only makes sense as the California contingent thinks GM is an awful automaker, the new south is betting its prosperity on Toyota auto plants and the UAW is just waiting to suck the remaining life from the recovering auto giant.

 
At 7/05/2010 12:24 PM, Blogger sethstorm said...

You want to test your hypothesis, fine.

If they pass it, show us the immediate jobs that will come by the millions. Then follow through on a direct-employment basis, and not weasel out providing that work over the long term. Not part-time, not through some staffing/temp agency, not temp-to-nowhere, not at Third World conditions, but work that is offered in good faith.

You want to have people for something, how about they put their money where their mouth is? Not having them try to weasel out of hiring. Treaty gets passed, people get hired for the long term. No exceptions, or attempts to spoil the deal.


Anybody comparing our economic troubles of today with 1932 is just plain daft.

There are no Hoovervilles, but there is plenty of pain to go around.

 
At 7/05/2010 12:27 PM, Anonymous gettingrational said...

The headline is GM sales in China but this is really a joint venture situation. One million of the car sales was in the SAIC (Shanghai Industrial Authority), Wuling Motors and GM. GM owns 34% of this venture. How much of this created jobs in the U.S. for Exports to China? Are any cars from the U.S. exported to China by GM? The name has been exported for headline purposes!

 
At 7/05/2010 12:37 PM, Blogger Ron H. said...

PeakTrader said: - "[juandos] Thanks for your informative articles (including the prior ones).

Ya, thanks a lot. I was having a pretty good morning until I read your links, now I'm depressed. :-(

"If China's real per capita GDP increases 15% a year, then in 20 years, its per capita GDP (compounded annually) will be $14,800."

Peak, my old coal powered calculator says $36k, but the point is the same.

 
At 7/05/2010 12:40 PM, Anonymous Benji's Faithful Dog said...

Did someone say EXPORTS? I'll run in and wake Master to tell him the good news.

 
At 7/05/2010 12:45 PM, Blogger Ron H. said...

Titus Pullo said...

"Anybody comparing our economic troubles of today with 1932 is just plain daft. I don't swallow of this "prosperity is just around the corner" that Dr Perry peddles but it isn't 25% unemployment with Hoovervilles in Central Park either."

...yet.

 
At 7/05/2010 12:47 PM, Blogger Paul said...

"Maybe we can make a new alliance with Colombia, Afghanistan and Mexico--the drug-exporting superpowers."

More idiocy from Benji. The US is the drug IMPORTING super power. Using Benji's logic, what does that say about us?

Colombia is a US friendly democracy headed by Alvaro Uribe, a great man who took the helm at a time when Colombia was on the verge of failed state. His economic reforms, along with his ruthless crackdown on the FARC, have been borderline miraculous. A trade deal would be good for the US, Colombia, and would weaken the "Bolivarian" alliance in Latam.

It's a no-brainer. Even Benji's boyfriend is starting to pretend he'll lift a finger to pass it.

 
At 7/05/2010 1:14 PM, Blogger Ron H. said...

Jason said: - "So, when will GM move its headquarters from Detroit to Shanghai?"

Are you kidding? One of the new owners would never allow that.

 
At 7/05/2010 2:01 PM, Blogger Jason said...

Ron H: Watch, there will be serious discussions regarding a move. Once the GM IPO happens, the UAW and US and Canadian Gov. will be issued stock. The UAW, since they never want to be burdened with trivial matters like whether a COLA or jobs bank actually makes good business sense, will start selling immediately. The Canadian and US governments will be under enormous pressure to sell quickly as well.

Once governements are out of the picture, GM will (and must) assess the practical reality of whether keeping a joint venture in what will be their largest car market makes sense. They cannot take a majority share of the JV until they are a Chinese company.

The discussions WILL happen. Will the move happen - I think it's a coin flip.

 
At 7/05/2010 2:08 PM, Blogger David said...

I wonder what % of the value-added of a Spartanburg BMW is actually added in the U.S. I visited this plant a few years ago, and it was mentioned that the engines for at least some of the models made there come from Austria. Some other parts are imported as well.

IIRC, the labor involved in actually assembling a car is typically only something on the order of 20-25 hours, so clearly to understand the value-added and employment impact you have to look beyond the assembly plant and follow the supply chain downwards.

 
At 7/05/2010 2:13 PM, Blogger Ron H. said...

Jason said: - "The UAW, since they never want to be burdened with trivial matters like whether a COLA or jobs bank actually makes good business sense, will start selling immediately."

ROFL

That's rich. They could sell themselves out of their jobs. What an interesting idea! Thanks, Jason.

 
At 7/05/2010 3:33 PM, Blogger sethstorm said...

Should GM move things out of Detroit and to hostile territory, I will no longer buy from that company. Any model made by that company is a car made by a hostile Chinese regime, undeserving of the name General Motors.

When I go to General Motors, I don't buy it for being 'global', but by it being uniquely '[North] American'. If I wanted a 'global' car, I'd buy a glorified golfcart from the usual suspects. By selling General Motors(the company) to the Chinese, you would be taking everything American out of it.

I already make a point to avoid anything with the Chinese engine block. That's on top of watching out for narcostate specials from Mexico.

I would hope that if a sale was attempted, that GM be scuttled. I would have no problem if it meant sabotage. They will kill GM in the same way that IBM's PCD was killed, very slowly. That said, I have no problem if it literally blew up in the face of the Chinese.

 
At 7/05/2010 4:06 PM, Blogger Walt G. said...

"Japan's success—and there is no precedent for it in history—very largely rested on organized immobility—the immobility of 'lifetime employment,'" asserted Drucker, who first visited Japan in 1959 and was among the earliest observers to predict the nation's rise as a world economic power.

Deming introduced the lifetime employment concept in Japan after WWII. The transplants still use it in the U.S. today.

Deming and Drucker. Those are huge names in management systems.

The UAW accepted GM's proposal for a Jobs Bank in 1982 to be more like the Japanese (and for some other reasons). It appears the problem was that it was misnamed. It should have been called the Toyota Production System Temporary Assignment Center (TPSTAC). All kidding aside, no company can successfully operate with fixed labor costs, and the Japanese operate with a mix of core (lifetime employment) and contingent workers (non-lifetime employment).

It just does not take as many people to make a car as it used to. We ship as many tons of finished steel with 1,000 workers as we used to with 4,000. We simply can't pay those other 3,000 workers forever. I agree the Jobs Bank had to go.

Sethstorm,

I appreciate your loyalty to North American products, but you can't ignore the fact that all companies will have to be global to survive in the 21st century. As far as automobiles, the U.S. is a mature market. Businesses expand or die, so we (the UAW and GM) don't really have a choice except to go overseas.

 
At 7/05/2010 4:27 PM, Blogger Ron H. said...

"Should GM move things out of Detroit and to hostile territory, I will no longer buy from that company.

Seth, Seth, you are forgetting! You are UNEMPLOYED and can't buy a car in any case, so what is this self-righteous blustering about?

Besides, you don't need a car. You have no where to go.

"When I go to General Motors, I don't buy it for being 'global', but by it being uniquely '[North] American'."

I take it that Canadian is OK with you but Mexican is not. That's good, because unless you are driving something really old, (if you can still afford to drive) I can almost guarantee that all the interior plastic parts are made in Canada. You should probably check some of the electrical components, like switches, though because many are 'hecho en Mexico'.

Some newer electronic parts, including OEM replacement parts, now come from China

"They will kill GM in the same way that IBM's PCD was killed"

Seth, did you work for IBM at one time? You have made several references that suggest that.

 
At 7/05/2010 4:37 PM, Blogger sethstorm said...


I appreciate your loyalty to North American products, but you can't ignore the fact that all companies will have to be global to survive in the 21st century. As far as automobiles, the U.S. is a mature market. Businesses expand or die, so we (the UAW and GM) don't really have a choice except to go overseas.

If they went overseas for a particular strength and not simply to avoid a regulation, I would have absolutely no problem. However, the reason most things go overseas is not to improve the product, but to dodge some cost.

I already know they do so for parts. Window motors from Mexico and China, engine parts from Brazil, as well as numerous others. Entire engine blocks - that's where I draw the line. Taking an less-powerful Opel and re-badging it as a Buick - even worse. It is harder to forgive entire designs than it is to do so for individual parts.

Now if they started making solidly performing RWD platform cars, I'd at least do a test drive. If it meant that they could put more power per dollar (and thus put it within reach of most people in the US), I'd save up for one and buy it.

 
At 7/05/2010 4:42 PM, Anonymous grant said...

It seems to me that the Columbian FTA is only a small part of the problem of the on-going dreadful non-improving foreign policy failed state of USA/ South American relations.
Because of their spartan emerging nation status -vis- the US propensity to consume,these countries are slowly emerging from their past history of abject poverty,to have economies that will be more broadly based and sound than the USA.
The USA is not realizing this or trying to cater more to understanding of how these countries think.More effort needs to be made by the USA to draw them in closer as friends by defusing current issues for the longer term benefit of good ongoing long term relations.
Currently Russian Federation sells about 18% of total world arms [and growing]. Currently 40% of that is going into South America. The main arms purchaser being suspected crazy Hugo Chavez of Venezuela.
A lot of US foreign policy effort needs to go in here to improve this situation particularly now with a softer Democrat government in power better relations may be more easily attained.

 
At 7/05/2010 4:44 PM, Anonymous gettingrational said...

Walt G. said: Sethstorm,

I appreciate your loyalty to North American products, but you can't ignore the fact that all companies will have to be global to survive in the 21st century. As far as automobiles, the U.S. is a mature market. Businesses expand or die, so we (the UAW and GM) don't really have a choice except to go overseas.


Walt, how many cars did your folks make for the Chinese market?

 
At 7/05/2010 4:54 PM, Blogger sethstorm said...


Seth, did you work for IBM at one time? You have made several references that suggest that.

No, just a once-satisfied customer of their products. I just happen to follow what they've done. I just don't want GM to go that route, since it seems that China does the same exact thing every single time.

 
At 7/05/2010 5:07 PM, Blogger Ron H. said...

"Now if they started making solidly performing RWD platform cars, I'd at least do a test drive. If it meant that they could put more power per dollar (and thus put it within reach of most people in the US), I'd save up for one and buy it."

Seth, I can never be sure I read you correctly, so I have to ask: does the above mean you would buy a Chinese made RWD vehicle if it was powerful, and inexpensive?

 
At 7/05/2010 5:32 PM, Blogger sethstorm said...

This comment has been removed by the author.

 
At 7/05/2010 5:35 PM, Blogger sethstorm said...


Seth, I can never be sure I read you correctly, so I have to ask: does the above mean you would buy a Chinese made RWD vehicle if it was powerful, and inexpensive?


Only if it was GM's doing, and up to the same high standards(design, reliability) that would be in a GM car built in the US or Canada. In other words, I'd be expecting only the country of origin to change, nothing else.

Knowing that is China, that is asking for something that they usually don't deliver. They usually detune the car and make it smaller than the original. Whether it is GM, Honda, Toyota, or anyone else.

I'd have to be able to look through the car and be surprised it's Chinese. Just as I am surprised some GM cars are Canadian-built.

 
At 7/05/2010 5:38 PM, Anonymous grant said...

PT:
European countries and USA were/are facing the issue of their current and past competitiveness because they are/were losing market share to China/Asia.
Exports that decreased were labor intensive.
In the past decade wages were growing more/faster than ``"PRODUCTIVITY"``
Hence wages need to be adjustable and tied to productivity employers can reduce wages when they are too high compared to output.
In the recent meltdown wages should have been reduced 10% in line with the then situation.

 
At 7/05/2010 5:47 PM, Anonymous grant said...

The US auto manufacturing sector should concentrate on raising the quality standard of vehicles they produce.
Quite a number of their models are chunky and ugly designs that need to follow the smoother style of the Europeans.
Taxes need to be placed on gasoline and raised and lowered according to demand this new revenue needs to go into freeway/road construction and Obamas fast trains, And of course defecit reduction.

 
At 7/05/2010 6:02 PM, Blogger Ron H. said...

"I'd have to be able to look through the car and be surprised it's Chinese."

How about Japanese? How about Korean?

You should be aware that you are bordering on complete contradiction of some of your earlier statements. I can find them for you if you wish. Are you changing your tune, Seth? after all, even the union guy told you that you had to think globally.

You can choose to be known for changing your mind, or for being a hypocrite. Which will it be, Seth?

 
At 7/05/2010 6:05 PM, Anonymous grant said...

Gettingrational:
Malaysia used to have a 150% tarrif on foreign produced vehicle imports. How does this fit into your future view of worldwide sales for one factory produced vehicles.

 
At 7/05/2010 6:09 PM, Blogger Walt G. said...

gettingrational: I am not aware of GM shipping cars to China, if that is what you mean, or if China even lets that happen. We can't be too picky about that. Only 1 person out of 100 in China owns a car where 9 out of 10 people in the U.S. do. And China has somewhere around 1 billion people. That's a huge market even if you have a small slice, and GM is the top automaker there. Here's a primary source of information for anyone interested in GM and their operations (it's a big file and takes a while to load) GM

 
At 7/05/2010 6:22 PM, Blogger Ron H. said...

"Should GM move things out of Detroit and to hostile territory, I will no longer buy from that company. Any model made by that company is a car made by a hostile Chinese regime, undeserving of the name General Motors."

"...and up to the same hig standards(reliability) that would be in a GM car built in the US or Canada. In other words, I'd be expecting only the country of origin to change, nothing else...I'd have to be able to look through the car and be surprised it's Chinese."

How about these two statements, seth, you made both of them today on this thread. what's going on here?

 
At 7/05/2010 6:24 PM, Anonymous grant said...

Titus pullo:
"it isn't 25% unemployed in central park either"
No it is not!! and thats because Bin Binankle stepped in,very quickly and started/tried to put a floor under the absolute catastrophe that lied ahead for USA so that confidence was not totally destroyed as happened in the great "depression"

 
At 7/05/2010 6:36 PM, Blogger PeakTrader said...

Ron, you're correct. Don't know why the online scientific calculator I used before gave me that amount. I used another one and it gave me $36,000:

1.15 y^x 20 = 16.36 * 2,200 = $36,000

 
At 7/05/2010 6:37 PM, Blogger sethstorm said...


You can choose to be known for changing your mind

What I am saying is that if the Chinese take control of GM, all bets are off. They would be no better than if Hummer got sold off to Tengzhong, since GM would have no control over quality.

If GM(as they are now) simply built models in China that were imperceptibly different in design and quality vs. their US counterparts, I would have no issue. However, I have yet to see a single car/model from China meet that standard on a consistent basis.

What I am suggesting there by the comment about a RWD-powered vehicle is a simple test. If they can make cars that the US once did - and to the same quality/construction for a lower cost - then they would be fine.

However, it would require them to make things in ways that are foreign to China, which is putting some actual quality into the product.

 
At 7/05/2010 6:48 PM, Anonymous grant said...

David:2.08
Assembly plants were a big problem in Europe in the 1980's when Japanese companies set them up to get around trade barriers to entry to the EEC. These "SCREW DRIVER PLANTS" by EEC unions but were better than nothing.

 
At 7/05/2010 7:37 PM, Anonymous Anonymous said...

When Great Britain tried free trade we were the worlds most trade protected economy. The result was we overtook them the same way trade protected China is overtaking us today. No country ever went from poor to rich without trade protection. No country ever stayed rich for long as a free trade economy.

 
At 7/05/2010 7:39 PM, Anonymous grant said...

Walt 4:06
"Japans success-and there is no precedent for it in history" BULLSHIT you are blind with those sunglasses on.
The""BIGGEST""success story in history is the one you are standing on``````````````""THE UNITED STATES of AMERICA""```````
Japan rose to economic power on their manchurrian slave state policies and run by ex facists recycled from their failed "tojo" offensive attempt at world domination.Re-invented losing clowns moved into the business arena to try again.
Straight shooting Texas knight of US democracy JAMES BAKER warned the Japanese about their policies and when there was no obvious change""""DE-VALUED"""" the $USD in one king hit and deservedly killed them and their stupidity of fools.

 
At 7/05/2010 8:57 PM, Blogger Walt G. said...

grant,

Japan only spends 0.8% of their $4.1 trillion GDP on their military while the U.S. spends 4.06% of their $14.1 trillion GDP on their military (Source: CIA Factbook). Part of our money is spent to protect Japan. Who is the sucker?

Japan rose to be a formidable economic power mostly because we showed them how to do it, and they were very good students. Businesses in Japan are also allowed to use long-term planning of 10 to 30 years, but U.S. public businesses live and die on their SEC 10-Q quarterly and 10-K yearly reports. Long-term planning for the U.S. is 1 year. Maybe we should be more like the Japanese, but I doubt you will see many U.S. kamikaze pilots. Unlike our business acumen, we tend to think long-term when it comes to our lives.

 
At 7/06/2010 3:42 AM, Blogger Jet Beagle said...

Jason: "the new south is betting its prosperity on Toyota auto plants"

What do you mean by "the new south"?

Toyota built a plant in Texas recently, but this is hardly a key component of economic growth in the state. Significant industries in Texas cities include energy, high-technology, telecommunications, engineering, and air transportation.

Kia is building a $1 billion auto plant in Georgia, and Honda builds transmissions there. But none of the top 50 employers in Georgia are in the auto industry. Rather, the top employers include Home Depot, Mohawk (carpet), Gulfstream Aerospace, Delta Airlines, Georgia-Pacific, GE Energy, the Department of Defense, and Pilgrim's Pride (poultry).

The South's right-to-work laws are no doubt attractive to foreign automakers. But the economy of the South is hardly dependent on that industry alone for prosperity.

 
At 7/06/2010 12:51 PM, Anonymous Cherub's Revenge said...

Walt G - Businesses expand or die, so we (the UAW and GM) don't really have a choice except to go overseas.

http://bloggerblaster.blogspot.com/search?q=harvard&x=0&y=0

Blame Harvard Business School

"If its Not Growing, Its Dieing"

You want to know whats to blame for your current economic crisis? Greed you say? Harvard Business School says I. Its that theory.. that wretched buzzword style catch phrase... so often repeated... its impregnated every facet of American economics.


- snip

And all the while I find myself thinking of that little store up in Oark. The Oark General Store in Arkansas has operated continuously since 1890. Its the same general store today that it was 100 years ago.

It has not grown.

And look at that...

It has not died.

That's because 10% profit... over and over and over again... is successful business.

10% profit... followed by 20% profit... followed by 50% profit... followed by 60% profit.. followed by bankruptcy and collapse... Well we have a word for that to... We call that failure.

You want to fix the economy?

You can start by razing Harvard Business School... and salting the earth.

 
At 7/06/2010 3:41 PM, Blogger Walt G. said...

Cherub's Revenge,

You can only ignore economies of scale for so long, and you cannot maintain that 10% profit margin year-after-year by sitting still. Where is the nearest Walmart located to Oark General Store? Even a niche provider can survive a Walmart, but niche markets are usually way less than 5% of any market.

 
At 7/06/2010 5:57 PM, Blogger Ron H. said...

"And all the while I find myself thinking of that little store up in Oark. The Oark General Store in Arkansas has operated continuously since 1890. Its the same general store today that it was 100 years ago."

Well, of course it's the same. It's been in the middle of Ozark National Forest since 1908. There's no possibility of expansion or competition, or any other market force. It's a time capsule.

Without addressing your main argument or your bitter hatred for Harvard Business School, (did you have a bad experience there?) I can only recommend that you find an actual real world example of a non growing business to support your point.

 
At 7/06/2010 6:10 PM, Anonymous Lyle said...

Actually the big transplant states would be Alabama and Mississippi. Alabama has Merceddes, Hyundai and Honda, MS has Toyota (a plant in building and Nissan) In terms of the economy thats the top percentage. Tn comes close with the new VW plant and a nissan plant. Its also had a GM plant for a while (Saturn). So it is the true deep south that is dominant.

Re the GM IPO the UAW would have a conflict of interest if it held onto the stock, between the long term and short term interest of its members. Since the officers get elected only by active workers they have only a short term interest and would vote for officers who lean that way.

 

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