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In a message dated 96-01-30 15:23:12 EST, email@example.com (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