It has been an interesting news cycle this week. With the United States heading for trade war with some of her closest allies at full speed, one has to wonder how much damage is being done or is their some back room dealing going on we do not know about. We will not see the ripple effect of the tariffs until later in the summer unless a deal could be made between our trade partners that is beneficial for all involved. How is this going to affect the average American? Higher prices? Lost Jobs? I am not an economist and I consider myself a moderate when it comes to politics. My blogs are not meant to be a mudslinging contest. These are just my observations.
Let’s face it, American companies have been outsourcing their labor for years, from call centers to manufacturing. They do this to escape U.S. regulations, lower costs by paying lower wages, and free up resources for other priorities such as R&D and to increase their profit margin. Detroit is only a shell of what it use to be when the major car corporations once manufactured cars there. Harley Davidson, Kimberly-Clark, P&G, Caterpillar, and Ford have reduced production or shut down plants in the United States this year. Just to think I bought my Dodge Pickup truck 13 years ago to support Americans. When I look under the truck to do some work and I noticed the frame is stamped, ‘Made in Mexico’. It is good to grow our neighbor to the south’s economy for many reasons. Some may argue that it is not good to do that at the expense of American jobs.
So the big question during the 2016 presidential campaign and for the current administration is how do we get American companies to close their overseas manufacturing facilities and bring jobs back to America?
The average union auto worker makes 28 dollars an hour in the United States. The average Mexican auto worker makes 8 dollars an hour.
Just those figures alone would cause a smart businessman to produce their products down south with a strong profit for board members. It will be a long uphill battle to convince companies that coming back to the United States will enhance their outcomes. Outsourcing has become a trend, steeped deep in our global business planning of profits to be banked.
However, I feel optimistic that may not be needed. As you drive across the south, you will see evidence of foreign investments benefiting the American people.
The French company Airbus Helicopters employ hundreds of people at their facilities in Texas and Mississippi. Hyundai and Mercedes-Benz have manufacturing facilities in Alabama. BMW has a plant in South Carolina. Honda has a plant in Ohio. KIA has a plant in Georgia. Nissan manufactures cars in Mississippi and Tennessee. The list goes on. Not to mention all the stores, sandwich shops, and other small businesses that pop up around these facilities to support the needs of the community.
Big investments are being made at the port of Savannah to get more ocean-going container ships and car carriers in to get American made products and raw material overseas to the market.
According to Enterprise Florida there are currently close to 300 Canadian companies with a presence in Florida, operating throughout the state and in virtually every sector of Florida’s economy.
Toyota finished building its North American Headquarters in Frisco, Texas last year. The company has invested about $1 billion on the project to build its new corporate campus on 100 acres in Plano, Texas. David Shepardson from Reuters reports that Toyota, which employs 40,000 in the United States, adding more than 5,000 U.S. jobs over the last five years and they are due to invest 10 billion more dollars in the next four years.
It is not just cars or helicopters that are being built in the United States. Many other companies from other countries have invested in the American Worker. The German Compression Sock company SIGVARIS invested in American workers in Georgia and the Swiss owned candy company Nestle employ 28,000 Americans.
There is a report in CNBC last year that Chinese capital-intensive industries such as textiles, chemicals, paper, packaging, and auto parts might be making their way back to the United States where they will save an average of 25% in production cost due to cheaper land, cotton, and electricity.
According to the Kristen Bialik of the Pew Research Center and the U.S. Bureau of Economic Analysis, Foreign-owned companies employed 6.8 million workers in the United States in 2015, up 22% from 2007. U.S. workers received overall $539.1 billion in total compensation from Foreign-owned companies which averages around $79,000 per employee. This is somewhat higher than the average among all U.S. private industry employers which is around $63,600, according the Bureau of Economic Analysis.
Like it or not, we are part of a global economy where everyone can benefit.
When some American companies left for greener pastures, foreign companies stepped in to give the American worker a hand. These foreign companies from countries such as Germany, France, South Korea, Japan, Canada, and China are investing billions of dollars into the United States. The American worker is benefiting from these investments. Hopefully a trade deal can negotiated with our allies that is beneficial for all sides, before these countries decide to pull their investments out.