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Originally Posted by rj1
I work for a major American manufacturer and the weak dollar is actually hurting us. Why? Cause we offshored a lot of our suppliers. Yeah, I'd prefer domestic too, but welcome to how corporations work, they have to continually look everywhere to improve profits otherwise Wall Street will look bad at our stock.
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That's an ongoing process for every single business regardless of how the dollar does.
Quote:
Originally Posted by rj1
(That's why everything moved to Mexico for some industries, and the Mexican peso has gone up little to none versus the American dollar despite the American dollar's plunge, so that production's still not moving back.)
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You should be happy. The money is not going to China and Mexicans are employed in their own country rather than coming over here to "do the jobs Americans won't do."
Quote:
Originally Posted by rj1
Anyway, we have one part for example we assemble that we offshored to India and it saved us $50 per one. We use one of these parts for one of our end units we sell to customers. We make roughly 600 units a day at my factory alone. Multiply that by 300 days' worth of production and we make 180,000 units per year. Multiply by that $50 savings per unit and it comes out to $9,000,000 yearly savings. That's not even counting our other half dozen factories in the United States.
Now, say the dollar goes lower and that original $50 saving per part is now only $40. We're not moving that production back to the United States cause we're saving $40 per part. But we lose $10 of our expected $50 savings per part per unit, which means that the $9,000,000 yearly savings is now only $7,200,000. So in this example, the lower dollar costs my company $1,800,000. This is not a hypothetical, I know this has happened.
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This is a very specific example. It may be true, but economics doesn't deal with specific examples. It deals with large number statistics. With every penny drop in the dollar's worth, there's a marginal consumer/business change in attitude. For example, your company may have lost money, but the next company might be breaking even because they're sell more of their widgets to overseas market. And yet another company that was planning to ship jobs overseas to improve cost structure, might scrap that idea because foreign labor is now relatively expensive. Jobs saved.
Over a longer period, jobs will move back. Dell has already moved a large part of their customer service back from India, even before the dollar drop. Why? They lost more money from poor customer service (no offense to Indians, but when we look for customer service, we want fluent english) than they gained in cost savings. Now the dollar is cheaper, more will move back because it makes even more sense.
Quote:
Originally Posted by rj1
We're not receiving any more production cause of the lower dollar either. As any good multinational Fortune 500 company does, we have plants overseas that make those engines, and those plants are responsible for end units in their respective geographic regions by contract.
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They moved manufacturing overseas because cost is too high here. Lower environmental regulations, lower corporate taxes, lower wages (why does a worker at American Axle make $150,000 a year in wages and benefits?), along with a weak dollar will guarantee the return of jobs. Don't blame businesses for moving offshore when you treat them like crap here. Make it worth their while and they'll be back.
Quote:
Originally Posted by rj1
The price of a gallon of gasoline has tripled in eight years, has gasoline usage gone down any in that timeframe? I don't use oil or its resultant products cause I want to, it's cause I have to.
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Total usage of gasoline has dropped for the first time in....probably ever, this past quarter. The rise in gas usage in recent years has lagged behind the increase in population.
I welcome high gasoline prices, as long as it's due to market condition and not taxes. It'll make people think twice about buying one of those huge trucks that I can't see through, around, over, or under.
