Major Auto Industry News Part III
Big news in the auto industry.
(After this post I am going to start a series on healthcare and leave the auto industry alone, well, except that the first healthcare post will deal with a major development in the auto industry regarding healthcare. If any of you have any topics you want addressed let me know below.)
Chrysler, in the midst of a private equity buyout, has done a deal with a Chinese manufacturer to manufacture cars for the US market.
Neither the Big 2+1 or the foreign brands (Toyota, Honda, etc.) will be able to compete with labor which will likely cost $10 – $20 per worker per day.
This will not be an overnight phenomena, but I fear this is one more nail in the coffin of US manufacturing in general, not just the auto sector.
Update: Delphi is not going to offshore 80% of blue collar jobs immediately. Delphi is going to offshore 90% of blue collar jobs as soon as possible.
In the next 10 years or so most auto parts manufacturing jobs will be gone, chasing cheaper labor. Within 20 years many of the auto assembly jobs could be gone.
So what do the workers do? Can they all work at Wal-Mart and Home Depot? What happens to blue collar America? Will income inequality continue to grow? How will this impact retirements and healthcare? More questions than answers.
Economists love to talk about comparative advantage and creative destruction, but there are real people at the end of those policies.