17 Nov trump has announced via Twitter that his “friend bill Ford, Chairman of Ford, informed about the intention to leave the plant for the production of “Lincoln” in Kentucky – no Mexico”. We are talking about a factory in the town of Louieville, Kentucky, where collected small SUVs Ford Escape and Lincoln MKC. However, as pointed out by broadcaster CNBC, the concern “Ford” was not approved plans to move the production of these machines in Mexico – this, perhaps, could go it is that in the future, as these Ford models sold poorly in the United States.
Reporting on his efforts (real or mythical) for the benefit of the “wonderful state of Kentucky”, trump killed two birds with one stone. First, he tossed wood into the stove fire-breathing its popularity among the working class left on the sidelines of globalization without attaching to it material goods. Second, he made a move as if towards the implementation of its election promise – to return to America money and jobs, let’s get corporations to lower-cost countries.
During his election campaign, trump has repeatedly criticized Ford’s decision to move production of some small models in Mexico. He threatened to introduce a duty on the importation of cars assembled in Mexico, in the amount of 35% of the car value. In September, the CEO of Ford mark fields gave a rebuke to the then candidate Trump: he said that the transfer to Mexico of the Assembly of the Ford Focus and hybrid C-Max in no way will mean job cuts in the United States. Fields stressed that the introduction of a 35 percent customs duty on cars assembled in Mexico (not only Ford, but other automobile corporations) will be a serious blow to the American economy.
Now, when the trump is preparing to take office as President, Ford may have decided not to continue the confrontation with him, and try to negotiate on good terms, agreeing to some concessions. Obviously, also says the management of the Corporation Apple, which, according to us media reports, is considering transferring the production of iPhones in America (today in the US is only management and logistics services “Apple” of the company, and the physical production of all its electronics is made in China). They say Apple has asked its Chinese partners to think about ways to relocate part of the production in the United States.
Interest trump the theme of the notorious “return of jobs to America” is clear: workers of the so-called “rust-belt” industrial States, formed the backbone of his electorate, awaiting the fulfilment of campaign promises, otherwise he would never see a second term. He will have at the same time to think – and quickly – about the acceleration of real wage growth, which lags behind the growth rate of the economy. But as for the “return of jobs”, many authoritative experts believe this is unrealistic.
First, measures such as a 35% tariff on the import of cars contrary to the rules of the world trade organization and North American free trade agreement (NAFTA). Second, trump promised a sharp reduction in the corporate income tax (so companies were encouraged to keep their money within the country’s borders) will worsen the balance of payments of the Federal government, which has and so don’t get a lot of money and the terms of some debts. Thirdly, to return to the United States departed abroad jobs is not economically feasible. Fourth, it does not solve the problem of reducing employment in the industry.
Journal of the Massachusetts Institute of technology MIT Technology Review lucidly explained the situation. The reduction in the number of jobs in industrial production began long before the globalization of the epidemic of free trade agreements, outsourcing, etc. – it happens since 1980. Since then, the number of jobs in the U.S. industry declined from 18.9 million to 12.2 million, i.e. one-third. And it happened mainly due to technical progress: work performed by people are now making robots. This is more efficient: today, the American industry reduced by one third produces a much greater volume of output than in 1980.
The publication cites Boston Consulting Group: widely used in the automotive industry spot welding costs $8 per hour, when it is performed by robots (as of now) and $25 per hour when it makes people (as it was then). In 1980, to create products worth $1 million (in today’s money) was required 25 working today to five people.
Whether the future President trump will force automakers to clear this place of all the industrial robots and to return to manual labor? Probably can’t do one. And it does not require proof.