Are We Sure We Don’t Like Free Trade?

Detroit Sets Bold Goal: Exporting U.S. Cars is the headline of a Wall Street Journal article about how a change in relative labor costs added to a weak dollar has made the US competitive again as a car EXPORTER. Most of the article is about planning but some of the shift has already happened:

“Chrysler had been using a contract manufacturer to assemble minivans for sale in Europe, but it chose not to extend the deal beyond 2007 and this year started exporting the Dodge Caravan minivan…made in a plant near St. Louis to Europe…It is also exporting increasing numbers of compact Dodge and Jeep models made in Belvidere, Ill., to several European countries. So far this year, more than 15,000 have been exported, up about 40% from the year-earlier period.”

And

“Spurred by the dollar, foreign auto makers are also devoting more attention to the U.S. BMW AG is pumping $750 million into its South Carolina plant to significantly expand U.S. output, much of which is earmarked for Europe [emphasis added]. Volkswagen AG is looking to build a new plant in North America, and many observers expect it to be in the U.S. Italy's Fiat SpA last week confirmed it is beginning discussions to find a partner that can assemble Alfa Romeo cars built in the U.S.”

The New York Times often decries the loss of American jobs caused by cheap imports. That doesn’t stop the times from finding bad news in imports becoming less cheap. Asian Inflation Begins to Sting U.S. Shoppers the headline says. “The free ride for American consumers is ending,” says the story. “Workers in the developing world facing higher prices have been increasingly vocal in demanding higher wages, with protests erupting in recent days in Vietnam, Cambodia and Egypt.” The Times could have added, but didn’t, that increasingly prosperous workers in China and India are in a position to demand higher wages and a better standard of living by job-shopping – so they do. The Times could have added, but didn’t, that Americans increasingly buy domestic goods when foreign prices go up AND foreigners buy our goods as well.

OK. Attention those of you campaigning in Pennsylvania: are you sure you hate NAFTA and other trade agreements now that the US in INCREASING exports? I know you checked with your pollsters but they measure yesterday’s attitudes towards the day before yesterday’s news.

Here’s a couple of factoids from the WSJ article to chew on between sound bites:

Re the rustbelt: “The company [GM] also has told UAW officials it is seriously considering building a future small car in Lordstown, Ohio, that would be exported to markets outside North America, people familiar with the matter said. It would be one of five new vehicles being produced there near the turn of the decade, one of these people said. The 42-year-old Lordstown assembly plant had been considered a candidate for closure due to high UAW labor costs.”

Re NAFTA: “The U.S. last year exported $50.66 billion worth of cars and light trucks…. Roughly half of its exports are to neighboring Mexico and Canada.”

And re the future: “The trend isn't limited to the big players. Tesla Motors, a Northern California start-up developing an electric car, recently decided to scrap plans to build its $20,000-plus batteries in Thailand. Instead, it will assemble the components in the U.S. because of currency values. Tesla has also pushed ahead its plan to sell cars in Europe by one year in hopes of banking big profits by selling cars to buyers paying in euros.”

Hope trade restrictions don’t stop us from a chance to lead the world in electric cars.

Comments

[Charlie Crystle]

Tom, it's taken this long for NAFTA to produce results? I would hate to be the 55 year old who lost his job 10 years ago at the plant in Oil City, PA.

The fact is that NAFTA, CAFTA, and the rest of the AFTAs are heavily weighted toward the large mulitnationals that can afford to straddle the hemispheres, and against small to mid-sized manufacturers, and the workers of all of them. our export levels would have been higher year over year since NAFTA and we would have retained good jobs. Those jobs didn't leave out of economic necessity; the net went to increased profitability at the expense of destablized towns and families across my state. Should've called it SHAFTA.