American Jobs Again Flowing Into Mexico

[Y_Participant 4591]

American Jobs Once Again Flowing Into Mexico After Brief, Trump-Induced Pause

If Trump believes he can change the way the economy of the world works by signing a few pieces of paper and advertising on Twitter – then his administration is in for a lot of self-inflicted pain.

The world will always rebalance around unfavourable policies that restrict free market trade. Sooner or later.

As ZeroHedge points out that after Ford scrapped plans for a new facility in Mexico and continues to flood the White House with press releases detailing normal course capital expenditures to be made on domestic plants, investments that would have been made irrespective of their outsourcing ambitions – economics is making a comeback in guiding the capital allocations of other companies. ‘Outsourcing’ is once again picking up steam among American companies.

The protectionist dam is leaking in another place. And the little Dutch boy has no more fingers to plug the cracks.

As Bloomberg points out, after a brief pause, consultants who help American companies relocate to Mexico are once again finding themselves flush with business.

But now the pace is picking back up. Illinois Tool Works Inc. will close an auto-parts plant in Mazon, Illinois, this month and head to Ciudad Juarez. Triumph Group Inc. is reducing the Spokane, Washington, workforce that makes fiber-composite parts for Boeing Co. aircraft and moving production to Zacatecas and Baja California. TE Connectivity Ltd. is shuttering a pressure-sensor plant in Pennsauken, New Jersey, in favor of a facility in Hermosillo.

While Trump hasn’t stopped pounding his America First bully pulpit, and the future of NAFTA remains uncertain, “there’s cautious optimism and a hopeful attitude that cooler heads will prevail in Washington,” said Ross Baldwin, chief executive officer of Tacna Services Inc., which facilitates relocations

The evidence is there. After business ground to a halt back in November, he’s now juggling two Mexico-bound clients. San Diego-based Tacna helps manage 4,500 workers in Mexico, where factory wages are about a fifth of those in the U.S. That may explain why Mexican manufacturing jobs rose 3.2 percent in January from a year ago as they dropped 0.3 percent in the U.S.

In the end, of course, the massive wage divide between the U.S. and Mexico means that, even with a border tax, it’s still cheaper to manufacture certain products in Mexico

It is suspected the renewed wave of outsourcing has been sparked, at least in part, by Trump’s early failures to implement healthcare reform or impose his travel ban as companies grow increasingly comfortable that an import tariff will be harder to implement than the President once thought.

A plan by House Republicans to implement a 20% border adjustment tax has raised concerns, especially among retailers such as Wal-Mart Stores Inc. that import many of their wares. The tax would be applied to sales of imported goods to reduce the U.S. trade deficit, which reached $734 billion in 2016.

Trump repeated to a joint session of Congress last month his refrain that that he will make it “much, much harder for companies to leave our country.” But his recent stumbles — travel bans blocked by courts and a health-care bill scuttled by his own party — underscore the limitations on presidential power and the difficulty he may have punishing companies or overhauling NAFTA.

This would ultimtely lead to American citizens paying for the rise in cost of imports while the government profits from both the tariffs and extra taxes on goods and services. Neat trick.

It’s simply never going to make sense to pay a UAW worker a fully-loaded wage $70 an hour to perform a low-skill task that someone else will do for less than $5 per hour.

American Business Trends

For companies unable to relocate the choices are clear – lower costs by automation, job cuts, salary cuts, product substitution – or go out of business. This means a lot of Americans working today are expected to see continuing domestic production contraction as a result of economic forces beyond Trump’s control. Mexico is symbolic in representing the laws of economics.

New research shows that the United States’ rate of new business creation, which peaked about decade ago, plunged more than 30% during the economic collapse (in 2008) and has been slow to bounce back following the recession.

And that’s despite the fact that, over the last few years, the portion of the U.S. population between the ages of 25 and 55 – historically the prime years for starting a business – has been expanding, according to data compiled by the Kauffman Foundation, an entrepreneurship research organization that hosted the event – the group’s annual State of Entrepreneurship symposium,

https://img.washingtonpost.com/wp-apps/imrs.php?src=https://img.washingtonpost.com/news/on-small-business/wp-content/uploads/sites/40/2015/02/Kauffman1.jpg&w=1484

Not surprisingly, fewer new businesses means fewer new jobs. Zandi cited Labor Department statistics showing that companies less than one year old contributed 5.2 million jobs in the year ending June 2014, down from the usual 6 million or so they generated in the years leading up to the recession and well off the normal pace of 7 million to 7.5 million jobs a year seen in the 1990’s.

“We’re getting less bang from our fast-growing companies,” said Wendy Guillies, Kauffman’s acting president. Echoing Zandi, she added: “I know the headlines look good, but when you dig a little deeper, something’s not quite right.”

It gets worse. While the rate of business formation has slowed, the pace of business closures, which had held steady over the previous decade, started to ascend in 2005 and spiked in 2008, according to data compiled by the Brookings Institute. Consequently, business deaths now outpace business births for the first time since researchers started collecting the data in the late 1970’s.

https://img.washingtonpost.com/wp-apps/imrs.php?src=https://img.washingtonpost.com/news/on-small-business/wp-content/uploads/sites/40/2015/02/Kauffman4.jpg&w=1484

For the first time on record, business deaths now outpace business. (Chart by Brookings Institute)

The result, as shown below, is that long-established companies represent an increasingly large share of U.S. firms, than those that have been in business for more than five years – and now account for more than two-thirds of companies. Meanwhile, the proportion of companies of every age from one to five years old has shrunk over the past 35 years

Previous research has shown that young businesses account for nearly all net new jobs (job gains minus job losses) created annually in the United States. Older businesses, by comparison, tend to collectively shed from their payrolls almost as many workers as they add

https://img.washingtonpost.com/wp-apps/imrs.php?src=https://img.washingtonpost.com/news/on-small-business/wp-content/uploads/sites/40/2015/02/Kauffman5.jpg&w=1484

In addition, new companies tend to continue adding jobs even during economic downturns, while hiring by established businesses has historically ebbed and flowed with the growth and decline of the economy.

Question is, who or what can help turn all this around?

Millennials, Kauffman researchers suggest, have the best shot at leading some entrepreneurial recovery in some sectors, as they grew up in the digital age, have had more exposure to entrepreneurship and have higher levels of education than previous generations. By 2020, they will also represent the largest age segment of the U.S. population. However the overall economic trend is not expected to change.

Here’s another problem: millinials aren’t starting businesses. In fact, the rate of business formation by Americans ages 20 to 34 has fallen sharply since 2010, and millennials aren’t starting nearly as many new enterprises today as baby boomers were creating when they were the same age

https://img.washingtonpost.com/wp-apps/imrs.php?src=https://img.washingtonpost.com/news/on-small-business/wp-content/uploads/sites/40/2015/02/Kauffman2.jpg&w=1484

Zandi and Guillies urged Washington’s elected leaders to turn more attention to the decline in entrepreneurship and pursue policies that encourage more Americans of all ages and backgrounds to think seriously about starting new businesses.

This is just the beginning of a realisation that for possibly the first time in Trump’s business career – he will be unable to keep the most important and necessary promises of his campaign.

The world does not work that way.

Citation
http://www.zerohedge.com/news/2017-03-31/jobs
https://www.washingtonpost.com/news/on-small-business/wp/2015/02/12/the-decline-of-american-entrepreneurship-in-five-charts/?utm_term=.1924579f9817

[Faust For ScienceParticipant 22521]

Y_ wrote:

As Bloomberg points out,

The article is by Bloomberg. This is a hit piece against President Trump.

Y_ wrote:

A plan by House Republicans to implement a 20% border adjustment tax has raised concerns, especially among retailers such as Wal-Mart Stores Inc. that import many of their wares. The tax would be applied to sales of imported goods to reduce the U.S. trade deficit, which reached $734 billion in 2016.

This would ultimtely lead to American citizens paying for the rise in cost of imports while the government profits from both the tariffs and extra taxes on goods and services. Neat trick.

Note the term “neat trick” used at the end of this false narrative example.

This is a hit piece not even pretending to not be a hit piece.

Besides which, I checked the link you posted. I read the article at from that link. As of the time of this post the example I quoted is not in the article. Where did you get the example from?

[Y_Participant 4591]

Faust For Science wrote:

The article is by Bloomberg. This is a hit piece against President Trump.

Perhaps – but it does point out the problems businesses see as possibly a very hard ask by any means. Perception is nine-tenths of reality. The issues – as perceived – are considered real to businesses and this is a partial basis for the economic exodus.

The underlying issues are simply not being considered by businesses. They cannot afford to.

[Y_Participant 4591]

Y_ wrote:

Besides which, I checked the link you posted. I read the article at from that link. As of the time of this post the example I quoted is not in the article. Where did you get the example from?

Sorry do not understand. Can you clarify.

[Y_Participant 4591]

Faust For Science wrote:

Besides which, I checked the link you posted. I read the article at from that link. As of the time of this post the example I quoted is not in the article. Where did you get the example from?

@faust – it might be you read the post before I had finished uploadng and editing it. A post like this takes takes up to half an hour or longer to check through and edit after uploading. There were a few errors in the first uploaded draft in the areas you commented on so I hope the updated version has corrected these issues. Apologies for any confusion.

I hope this clarifies any issues you have raised.

However – I hope everyone will understand this is an ECONOMIC forum post and I try hard to dissociate political infighting from the topic. The only impact on the economic system is cause and effect.

The economic information, issues and outcomes are expected to be relevant and a stand-alone outside of the political climate contributing to it. This is the way real -world economic problems can be appreciated and solutions found.

Thanks for reading.

[It’sallbsParticipant]

The problem isn’t the government it is the employers taking advantage of lower wages. The same thing happens in Britain but anyone who points it out is called a racist and attacked.

http://www.leavemeansleave.eu

[Y_Participant 4591]

It’sallbs wrote:

The problem isn’t the government it is the employers taking advantage of lower wages. The same thing happens in Britain but anyone who points it out is called a racist and attacked.

In any functional market the duty of the government is to provide a legal and economic framework for employers to carry out a viable business.

The basic act of government is to uphold the constitution and the policing of errant employers in this regard. Employers will work on slave labour if allowed to. The government must be held accountable for its own sphere of duties in enforcing the rights of the working classes over the oligarchs.

Sadly this has not happened.

[It’sallbsParticipant]

Well no because, big pharma, big business, and politicians are all in the same corrupt little gang.

Look at some of the people trump has appointed he is Goldman Sach’s man.

It is exactly the same in Britain.

The ones shouting loudest about why we should not leave the EU are the ones on big fat EU pensions.

http://www.leavemeansleave.eu

[Faust For ScienceParticipant 22521]

Y_ wrote:

Sorry do not understand. Can you clarify.

The article from the link you posted does not have the comment you posted here which I pointed out in a quotation box.

Where did you get the comment from?

It’sallbs wrote:

The problem isn’t the government it is the employers taking advantage of lower wages. The same thing happens in Britain but anyone who points it out is called a racist and attacked.

The whole point of import tariffs to prevent this. With import tariffs, company owners cannot just fire all domestic jobs, ship the jobs overseas to pay cheap wages to import the same product at the same product with the company owners pocketing the different on cheaper wages.

Import tariffs making shipping jobs overseas to costly for companies.

President Trump even pointed this out in his speeches.

Those whom are against import tariffs are against American workers.

[It’sallbsParticipant]

How far do you take it though?
You have to be careful with Tariffs because it can reduce consumer spending power.
Unless you never buy anything that isn’t 100% made in America.
Plus then other countries put tariffs on American imports …
I agree re Mexico but you should have a free trade agreement with Britain-although it won’t happen. Trump won’t do a deal with Britain at all he is full of s~~~ on that.

http://www.leavemeansleave.eu

[Faust For ScienceParticipant 22521]

It’sallbs wrote:

Trump won’t do a deal with Britain at all he is full of s~~~ on that.

Oh President Trump will likely do a deal with the UK. It will not be free trade/steal trade from the U.S. The terms will be in favor of the U.S. But, the terms depend on how badly the EU treat the UK exit. The worse the EU treats the UK the better the terms for the U.S.

[It’sallbsParticipant]

Juncker has threatened to campaign to break up the USA.

The EU are backing Spain in an attempt to steel Gibraltar off us.

I think they want a war.

By the way our exports to the EU are nothing like 50% we actually have a trade defecit with the EU of £13.3 billion.

Operating under World Trade organisation rules won’t be the disaster they say it will.

The EU is collapsing and has %05 unemployment in some countries. After Germany, Britain pays in the most and that is why they are demanding £50 billion leaving payment because they are in trouble.

I suspect talks will collasse within 6 months and we will just walk away I hope without paying a penny.

http://www.leavemeansleave.eu

[BeerParticipant 11832]

It’sallbs wrote:

The problem isn’t the government it is the employers taking advantage of lower wages. The same thing happens in Britain but anyone who points it out is called a racist and attacked.

The government is the problem too. Why stay here and deal with way more regulations than a lot of other countries have and pay a higher corporate tax when with free trade agreements you can go somewhere with less regulations and lower corporate taxes and just import things tax free?

We can’t fix that some guy in some third world country is willing to work for a dollar an hour, but we can fix the f~~~ed up political landscape that is giving businesses even more incentive to leave than just lower wages.

Faust For Science wrote:

The whole point of import tariffs to prevent this. With import tariffs, company owners cannot just fire all domestic jobs, ship the jobs overseas to pay cheap wages to import the same product at the same product with the company owners pocketing the different on cheaper wages.

Import tariffs making shipping jobs overseas to costly for companies.

President Trump even pointed this out in his speeches.

Those whom are against import tariffs are against American workers.

We’ve had free trade agreements pretty much for longer than I was old enough to really care about or follow politics, and from what I’ve seen of them all they have really given us has been a slow, steady decline. When Clinton passed NAFTA he thought it would give us a bunch of places to export our goods too. Ross Perot said we’d here a big sucking noise, that would be all the jobs leaving our country. Ross was right and the retarded liberals that are still touting free trade agreements are too f~~~ing stupid to look at the damage they have done and think about changing course.

[Y_Participant 4591]

Faust For Science wrote:

The whole point of import tariffs to prevent this. With import tariffs, company owners cannot just fire all domestic jobs, ship the jobs overseas to pay cheap wages to import the same product at the same product with the company owners pocketing the different on cheaper wages.

Import tariffs making shipping jobs overseas to costly for companies.

President Trump even pointed this out in his speeches.

Those whom are against import tariffs are against American workers.

Import tariffs – the United States has over 12000 import tariffs.

All tariffs do is it makes goods more expensive for everyone else. The jobs that need to be culled as part of a country’s higher cost of living will go anyway as part of modernisation and production costs. It is the general public paying for these jobs.

Any country cannot have it both ways – to keep non-productive jobs and maintain a productive workforce. The economy will always streamline to meet fair value in the markets – market rigging cannot stop this eventuality.

To place tariffs is the equivalent of printing currency for the production sector. This is just another aspect of socialism.

The real challenge is to retrain the workers to the new jobs at hand. Not everyone can make the change – but then again no system is perfect.

Faust For Science wrote:

The article from the link you posted does not have the comment you posted here which I pointed out in a quotation box.

Where did you get the comment from?

In parts of the post I have added in my own comments – I have kept these outside the quoted sections in the final document. This would be the ones you are referring to. Hope that clarifies.

[Y_Participant 4591]

It’sallbs wrote:

How far do you take it though?
You have to be careful with Tariffs because it can reduce consumer spending power.
Unless you never buy anything that isn’t 100% made in America.
Plus then other countries put tariffs on American imports …
I agree re Mexico but you should have a free trade agreement with Britain-although it won’t happen. Trump won’t do a deal with Britain at all he is full of s~~~ on that.

Beer wrote:

We can’t fix that some guy in some third world country is willing to work for a dollar an hour, but we can fix the f~~~ed up political landscape that is giving businesses even more incentive to leave than just lower wages.

You both have made some excellent points. Kudos to you both.

[Author]

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