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Commodity ICE cars bankrupted Detroit Tamny

edited July 2013 in General
Interesting POV from John Tamny, economist.

Cars became easy to make well, so margins shrank.

http://www.forbes.com/sites/johntamny/2013/07/21/the-unions-didnt-bankrupt-detroit-but-great-american-cars-did/

Comments

  • edited November -1
    bump
  • edited November -1
    Many foreign car companies also build in the U.S., so not sure I'm following the point of the article. Higher quality product and lack of unions are a factor for foreign > domestic.
  • edited November -1
    The article is saying Detroit tried to stick with an over-mature product (ICE).
  • edited November -1
    But that completely fails the reason. Only 1 out 4 cars bought in the US are made in the US and the one car includes all foreign brands like BMW, VW,... The reason to assemble outside the US is because of the tax treatment. My company is doing it for 25+ years... send value parts at cost offshore and realize the profits at final assembly offshore tax exempt. The problem is you can't bring back your profits back to the US without the IRS wanting to have its share - so you invest outside the US. This was just recently highlighted in the Apple hearings - absolutely legal, but a major quirk in the US tax treatment which is hurting this country big time.
  • edited November -1
    Missing the point completely. Not recommending getting better at making cars. Suggests look for and creating new ideas with growth still ahead of them.
  • edited November -1
    Brian - and how would you do that? The money is outside the US... oh, lets build a research lab in Singapore. Everyone is looking outside, we are not sponsoring our inside talent. Tesla is different and that's why I own stock and bought the car.
  • edited November -1
    I thought it was a good article.
  • edited November -1
    Iowa92x: My understanding is that foreign companies produce cars in the US mainly because tariffs make importing cars overly expensive. This is all well and good for encouraging a domestic car manufacturing industry for a domestic audience, but it doesn't do much to help drive down costs for exporting cars out of the country. What high tariffs instead effectively tend to do is exempt your domestic industry from having to become internationally competitive which is a very bad thing for encouraging exports.
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