Why American Automakers Should Stop Building Cars in Other Countries

by John Brian Shannon | Reposted from JohnBrianShannon.com

At first glance, the idea that the ‘Big Three’ American automakers (Chrysler, Ford and GM) would stop manufacturing their cars and trucks in other countries might seem like a ground-breaking idea.

But it’s not as shocking as some new ideas that have come to light, such as putting engines in sailing ships enabling them to easily cross entire oceans, or passenger travel by aircraft instead of train, or that man should walk on the Moon by 1970.

Still, the idea that America’s Big Three automakers could stop building their cars in other countries might be seen as a novel idea.


Why Would American Automakers Want to Stop Building Cars in Other Countries?

Let’s take the case of the North American car market:

Chrysler, Ford, and GM have auto assembly plants in Canada, the United States and Mexico where they produce millions of cars and trucks per year. The majority of those vehicles are then sold into the U.S. because it’s a far bigger market than the Canadian and Mexican vehicle market combined.

Which means that many American auto industry jobs are lost to Canada and Mexico.

President Trump wants to lower the unemployment rate in his country and help make his domestic auto industry stronger and more responsive to the American market via high tariffs or restrictions on the number of cars Canada and Mexico could export to the United States.

The trade-off of that move would be worse relations with Canada and Mexico which have long benefited from Big Three auto factories located in their respective countries and Canada and Mexico would be loathe to lose those economic benefits.

And although I see U.S. President Donald Trump’s point on this — I’d rather talk about solutions that could work for all three countries.


What if There’s a Way for Each of the NAFTA Countries to Win?

Let’s pretend for a minute that we’re looking at the North American auto industry from the vantage point of 5-years in the future.

Five years on, let’s say that every Chrysler, Ford and GM car and truck sold in the United States is manufactured in the United States, unemployment is at an all-time low, and the American economy is rocketing along like it was in the 1960’s. Great!

What about Canada?

As the Big Three factories presently located in Canada would still remain, new licensee companies approved by Chrysler, Ford and GM could build all the Chrysler, Ford and GM vehicles required for the Canadian market and build 100% of them in Canada, while still keeping to U.S. auto company specifications and quality. Such licensee companies would be required to meet the same manufacturing standards and warranty terms.

Canadian companies like Magna International already produce a significant number of the parts required for all of the Big Three automakers; Extending their license to include vehicle assembly on behalf of one of the U.S. auto companies would be an easy transition.

Or, entirely new companies could be formed; One company (‘Chryton Co.’) could build all Chrysler cars and trucks for the Canadian market by purchasing the existing Chrysler manufacturing plants in Canada and paying the required per-unit license fees to Fiat Chrysler USA, while Canadian-owned ‘FordX’ could build every Ford car and truck for its Canadian dealers after paying its per-unit license fee to Ford USA. Likewise, GM vehicles would be built by a Canadian-owned and GM-approved company (‘AC Delco’) that would pay a license fee to GM USA for each vehicle it builds for the Canadian market.

In that way, all Chrysler, Ford and GM vehicles destined for the Canadian market would be manufactured in Canada by Canadian workers — and other than paying license fees to the respective USA auto manufacturer — the Canadian automotive manufacturing industry would be 100% Canadian. That’s 100% Canadian-owned and 100% Canadian-staffed. (They would still need to match U.S. manufacturing and warranty standards however)

Exactly the same could be done in Mexico for Mexican companies and consumers. (They would still need to match U.S. manufacturing and warranty standards)

And all Chrysler, Ford and GM cars and trucks destined for the U.S. market would be manufactured in the United States by American workers and the U.S. auto industry would find itself in the middle of an economic boom!


In an Era of 3D Printing, License Fees Will be Everything

Welcome to the future!

If you live in Canada and you want a Ford car you’d simply order the car online and the Ford-approved Canadian company 3D prints and otherwise assembles your Ford car and the car arrives at your local dealership a few days later.

You might even choose to watch it being 3D printed, painted, and assembled on your tablet or laptop computer.

Yes, other than upholstery and tires, etc. all 3D printed cars and trucks will be made from aircraft grade aluminum alloy as aluminum works better than steel for 3D printing.


Not Only The Big Three, But European and Japanese Automakers Too!

Imagine if EVERY new car and truck sold in Canada is built in Canada by Canadian companies that pay a license fee to the respective American, European, or Japanese automaker. That equals full employment in the Canadian auto sector, without the (understandable) griping by President Trump about American job losses.

Imagine if EVERY new car and truck sold in the U.S.A. would be built in the United States by American workers, and even European and Japanese vehicles sold in the U.S. would be built by U.S. companies that paid for the rights to 3D print and assemble those cars. That equals full employment in the American auto sector.

Imagine if EVERY new car and truck sold in Mexico would be built by Mexican companies that pay a license fee to the respective American, European, or Japanese automakers. That equals full employment in the Mexican auto sector, without any griping by President Trump about American job losses.

NOTE: I understand that hand-built cars like Rolls Royce, Ferrari, Aston Martin, etc. would decline to take part in such an arrangement, but those cars account for less than 1% of the North American market share. They would simply continue to export their cars to their North American customers as usual.

Again, manufacturing and warranty standards would need to be carefully vetted by the licensor before granting manufacturing rights to licensees. Even so, every country in this equation would ‘Win-Win-Win’.

And consumers could purchase a locally built vehicle that wasn’t shipped across the continent or thousands of miles of ocean.

Shop Local, and still get the ‘foreign’ car of your dreams!


Auto Manufacturers Would Make the Same Per Vehicle Profit in Foreign Countries as Now — But Via License Fees (only)

The era of ‘things-based’ globalization is morphing into ‘ideas-based’ globalization where things are designed in country ‘A’ by a company that retains 100% rights over who is allowed to 3D print and assemble its products in country ‘B’ — which could be literally anywhere on the planet.

Whether it’s T-shirt graphics electronically transmitted and licensed to a company thousands of miles away (as is done now) or whether licensed companies 3D print and assemble your foreign car in the city where you live — globalization might finally become all that it can and should be — creating hundreds of thousands of jobs in each country for workers in 3D printing/manufacturing factories that could literally build anything, anytime, for anyone, as long as they have purchased the proper license.

Such ‘On Demand’ manufacturing might become the biggest job creator ever and lower the tensions brought on by the endless competition between the world’s free trading nations.


Ready for the future? Order your locally-manufactured foreign car here.

(OK, just kidding… But it might be that easy in only a few years!)

Will Theresa May and Donald Trump Solve the #1 Challenge of Our Time?

by John Brian Shannon – Originally posted at LetterToBritain.com

UK Prime Minister Theresa May was invited to the White House on January 27 to be the first foreign leader to meet with the new American president, Donald Trump.

It’s always an honour to be the first invitee of the new president, and the timing couldn’t be better as the Western economic order is beginning to churn.

In the West, the past 70 years have been a relatively stable era with increasing wealth (although since the Reagan-era tax cuts, obscene inequality has become a destabilizing force) and social mobility has increased dramatically since the creation of the internet.

This combination could prove extraordinarily useful to motivate leaders to provide the kind of leadership required of the times — or 2017 could prove to be the pivotal moment in the unravelling of the Western democracies.

President Trump wasn’t elected U.S. president because American citizens were bored by the Democrats.

Americans voted Trump/Pence to overthrow the existing plutocracy in Washington, not to overthrow foreign governments.

Regardless how many Middle Eastern conflicts the West has prosecuted, the rich keep getting richer and the poor keep getting poorer. But this time the problems are here at home, not in some faraway country.

Americans voted for Barack Obama (2008 and 2012) and now Donald Trump (2016) in large part to stop the unfolding economic disaster in the West. Britons may have held similar ideas to American voters about a sustainable economic plan when they voted for Brexit.

Will Prime Minister of Britain Theresa May and President of the United States Donald Trump work together to solve the existential challenge of our time? Image displays the share of the world’s total wealth for the Top 1% vs. the Bottom 99%. Image courtesy of OXFAM
Will Prime Minister of Britain Theresa May and President of the United States Donald Trump work together to solve inequality, the existential challenge of our time? Image displays the share of the world’s total wealth for the Top 1% vs. the Bottom 99%. Image courtesy of OXFAM.

The chart below (from 2010) reveals the bottom 80 percent of Americans share just 7 percent of the nation’s wealth, but it’s much worse now (in 2017) and this phenomenon is no longer confined to the United States.

Theresa May must work with Donald Trump to roll back record inequality
Britain’s Theresa May must work with U.S. president Donald Trump to roll back record inequality that will eventually destroy the entire middle class. You can see the bottom 80% compete for only 7% of America’s total wealth. (This image is from 2010. It’s actually much worse now)

That trend will not change until politicians are bigger than the challenges that confront them, and actually do something about the record inequality sweeping the West.

It’s not a call to ‘do something, anything, anything at all’ — as some so-called ‘solutions’ might be worse than the problem.

But what citizens of the Western nations require is an acknowledgement by politicians of the sheer scale of the problem, and some initial steps to slow the rapid transfer of wealth away from the bottom three quintiles to the top 1 percent. (Even tiny baby-steps are preferable to the decades-long stony silence on the matter)

Theresa May and Donald Trump must ensure that globalization and free trade work for everyone.
Britain and the United States must ensure that globalization and free trade work for everyone. Image courtesy of the New York Times, You can’t feed a family with GDP by Neil Irwin.

Inequality ignored, will only result in citizens ‘giving up’ on their governments and ‘giving up’ on democracy — and we know how that will end. Badly. For everyone.

Including powerful politicians who serve for amazingly short stints of time in office. Once you’re in politics, four years pass by like a long summer!

Today’s toxic combination of ultra-low taxes on the rich and unrestricted globalization aren’t working for 3/5ths of the population. In 10 years, it won’t be working for 4/5ths of the population. And let’s remember, all of them are voters.

Here’s how that looks

In 2016, more than 50 percent of the world’s wealth was owned by the 1 percent.
By 2030, more than 70 percent of the world’s wealth will be owned by the 1 percent.
By 2045, more than 85 percent of the world’s wealth will be owned by the 1 percent.

Put another way; Do you really want to live in a world where 8 billion people are fighting over the then-remaining 30 percent of the world’s wealth?

Can you imagine what it’s going to look like in 2045 when 9 billion people are fighting over the then-remaining 15 percent of the world’s wealth?

At that time, you’d better be living on an island in the mid-Pacific that doesn’t appear on any map, in a castle with 100-metre high concrete walls.

I respectfully suggest to Prime Minister Theresa May and President Donald Trump that if inequality isn’t addressed this year, it’ll be too late. Just look for a remote island in the Pacific Ocean… now, before the rush begins.

The time involved in getting new legislation passed, combined with the lag time involved for it to take effect during the following fiscal cycle, is years after the day it is first discussed.

Can Theresa May and president Donald Trump cooperate to solve record inequality.

Let’s hope that January 27, 2017 will come to be known as, ‘The day the decline of the bottom-three quintiles was halted and reversed’ by these two great leaders.

Renewable Energy dena Start Up Energy Transition Award - Banner_Startup_Energy_700x116px