[Author Prev][Author Next][Thread Prev][Thread Next][Author Index][Thread Index]

Re: Future......

In a message dated 96-01-30 15:23:12 EST, eliot@u.washington.edu (Eliot Lim)

>hmm, they already have a big plant in mexico, why would they want 
>another one so close with labor costs that are higher?

Low labor cost isn't such a big bonus, especially when you use a lot of it.
 Productivity in many low labor cost factories is mighty poor.  Witness also
the dramatic loss of a year's production and sales when the VW plant in
Mexico wasn't able to launch the current generation Golf/Jetta.  That's the
kind of thing that could put a company out of business.

You have to ask yourself why BMW, Mercedes-Benz, (and perhaps quite soon
Volvo) voted with their investment dollars for U.S. assembly.  Even the U.S.
domestics import primarily (but not exclusively) low cost/low prestige cars
from their Mexican assembly plants.  A luxury car manufacturer with a fragile
reputation would have to think twice before voluntarily taking on any
unnecessary image risk.  Imagine the "negative selling" opportunity this
would open up for competitors.

Discalimer: No offense intended to any social, political, or economic