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Delphi asks for new pay scales


PBJ

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I agree. While it is one thing to import fully assembled consumer items from China and Latin America, it is quite another to supply subcomponents to an assembly plant here in the USA. Just in time inventory and build to order assembly makes it very difficult to mass import parts from overseas. So as long as there are auto assembly plants in the USA, there will be companies such as Delphi building subcomponents for those plants. However Delphi's wages are far above what the standard is now for that type of work in the US.

There are always efficiencies to be gained by being close to market, but the bottom line goal for increasing efficiency is reducing cost and hence increasing profit. If a less than efficient inventory management methodology is more than offset by much cheaper labor cost, then it makes sense to import the parts from the cheap labor source, notwithstanding the logistical inefficiency.

The US is the most coveted consumer market on the globe, due to the size of this nation and high per capita income. That is why manufacturers want the efficiency of locating production in the heart of the consumer market. There is cost saving from such a strategy. However, with the downward pressure on wages and salaries from a global free market, the disposable income of many Americans will be reduced to the point that consumers in other nations will start to look more attractive (more attractive relative to what they used to be) at which point final assembly in other nations will make sense.

As income increases in China, as a result of direct foreign capital investment from American corporations, the more Chinese will be able to afford cars and the less Americans will be able to given the lose of job and reduced wages. This would be happening more but the Chinese are Saving their increased income and not consuming it like Americans do. Unfortunately, we seemed to have entered an era of increasing zero sum economics. One sides gains produces other sides losses in the long term.

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