The rise of inexpensive Chinese electric vehicles has upped the pressure on legacy automakers who have turned to suppliers, from battery materials makers to chipmakers, to squeeze out costs and develop affordable EVs quicker than previously planned.
While that is part of it, the other, bigger part is that Western countries actually do have higher labour costs: better salaries and conditions for our workers.
When China was outcompeting us on undesirable, low productivity, jobs, we accepted that. It was better to raise a billion Chinese out of poverty than to protect our lowest productivity factory workers. And those workers mostly transitioned to other jobs with higher productivity.
But now China is richer and their labour force is shrinking, so they will compete with highly productive factory jobs.
Politically, it is unlikely that car workers will accept unemployment. Nor will other highly paid workers.
So a trade war is brewing, you better brace yourself for it.
China wasn’t “outcompeting us on undesirable, low productivity, jobs”. Corporations were shipping jobs to China to undercut highly productive factory jobs back then, too, so they could save on labor costs. It’s only now that China is undercutting corporate profits that these same corporations come crying and shitting their pants. That’s also why you see a ramping up of negative media pieces on China. It was never about charitably raising people out of poverty. It was always about corporations undercutting labor to gain greater profits. Fuck 'em, bring on the cheap cars.
I hate it when corpos use the “oh we can’t lower prices because our staff is getting paid too much”-narrative. What about the CEO who takes half the profits for himself?
It’s the workers who create value for a company, they don’t take it away by getting paid for their work.
A corporation might have 10 C-level guys dividing $50 million amongst themselves and 10.000 workers earning $70K, which costs about $100K due to overheads (health insurance, retirement, etc). Together, that’s a billion, which is 20x more than the C level guys.
The C level guys aren’t the big expense, not by a long shot.
Labour, government and shareholders divide most of the earnings amongst themselves.
For the record, I do think we need to tax the wealthy more and the workers less.
Making toys and other plastic shit was never a high paying job in the West.
And no, it wasn’t charity, it was a win-win that increased living standards on both sides.
But it did have an impact on low paying manufacturing jobs in the West and that impact was accepted by Labour unions for the two reasons I gave: we (rightfully) concluded there were enough other, better jobs available and didn’t want to keep Chinese workers poor.
The “good for people” argument (which has been misportrayed here as “charity”) was made by politicians to justify tearing down the trade barriers that allowed wealthiest countries such as the US to be a higher-income bubble.
Once those trade barriers were down, all those jobs which had no other price protections than said trade barriers (jobs like, for example, assembly workers, but not things like Legal professions specialized in a country’s Law and which require registering with a local Law Society to practice) were suddenly competing with similar people all over the World, and a lot of countries in the World are full of people who would sell their work in those areas much cheaper than equivalent workers in high-income nations.
The people it was good for were people in those “open to competition” occupations in Low Income but reasonably safe countries like China (whose income went up as manufacturing moved there) and the people who owned the means of production (who got higher dividends due to the higher profits being made by paying low-income country manpower costs and receiving high-income country prices for products and services) but nobody else as even the eventual fall in prices that occurred (over the years, as all those companies with China costs started competing on price because they could thanks to the bigger profit margins due to much lower manpower costs) was not enough to make up for the faster and deeper downwards pressure on salaries in high-income countries that happenned due to said manpower competition with workers in countries with much cheaper salaries (for example, in the mid-70s about 23% of corporate revenue in American went to salaries, whilst by 2012 it was down to 7%).
Heres the problem with the talking point of needing to bring manufacturing jobs back: we can’t fill the manufacturing jobs that we have
I work for a company that sells services to warehouses and industrial facilities. We can’t fully staff our locations, we can’t keep most of the people we hire and neither can our customers, and it comes down to the fact that the jobs absolutely suck. Who wants to work in a loud, poorly temperature controlled factory with heavy equipment and a high risk of injury while doing backbreaking work when you could work at a store or resteraunt for not much less and put far less risk to your life, limb and sanity? Bring the automation on, these jobs need to become a thing of the past.
Sounds like the one thing you’re not mentioning - pay - is probably shit.
If the salary offered was enough for a whole family of 5 to live of it, including a good house and a car, like in the old days, I bet you would have trouble keeping candidates away.
The “people don’t want to work nowadays” arguments invariably forget to include the little detail that even a “competitive” salary in industry today is in real terms (of what it actually buys) nowhere as much as it was 50 years ago.
Manufacturing and union membership took such massive hits in the US over that period of time. It was win-win for the corporations who greatly expanded profit margins, and the Chinese government, who were happy to use their citizens as sweatshop labor to get ahead. You lived through the propaganda at the time and decided to accept it as the truth.
Don’t think labor costs is a big factor. Car production is the sector that is most automated. Just think of this endless bands of hanging cars with robot arms working on it. Tesla even topped this.
It’s mainly the unwillingness to design and sell cheap cars due to less profits. In Germany we had electric cars for 20k€ or even combustion cars under 15k€. But they stopped building it. Although it was sold out in weeks.
In my region there was a Startup by the Aachen University RWTH (which is an elite university in Germany) bulding small EVs for around 20k€. They simply bought all parts from suppliers and just assembled it. And engineered and designed it first. Unionized and still competitive. Unfortunately, they didn’t fly.
EV building is rather simple. The software is key. And this is the missing part at car makers capabilities.
I second your thoughts on trade war. However, I guess it will be much simpler with high taxes, high quality regulations, and may be less support by car workshops. We will see…
There‘s a word for that „Greedflation.“ This is what western car makers do. Luckily, the Cinese car makers grasp their chance and disrupt the market
While that is part of it, the other, bigger part is that Western countries actually do have higher labour costs: better salaries and conditions for our workers.
When China was outcompeting us on undesirable, low productivity, jobs, we accepted that. It was better to raise a billion Chinese out of poverty than to protect our lowest productivity factory workers. And those workers mostly transitioned to other jobs with higher productivity.
But now China is richer and their labour force is shrinking, so they will compete with highly productive factory jobs.
Politically, it is unlikely that car workers will accept unemployment. Nor will other highly paid workers.
So a trade war is brewing, you better brace yourself for it.
China wasn’t “outcompeting us on undesirable, low productivity, jobs”. Corporations were shipping jobs to China to undercut highly productive factory jobs back then, too, so they could save on labor costs. It’s only now that China is undercutting corporate profits that these same corporations come crying and shitting their pants. That’s also why you see a ramping up of negative media pieces on China. It was never about charitably raising people out of poverty. It was always about corporations undercutting labor to gain greater profits. Fuck 'em, bring on the cheap cars.
I hate it when corpos use the “oh we can’t lower prices because our staff is getting paid too much”-narrative. What about the CEO who takes half the profits for himself?
It’s the workers who create value for a company, they don’t take it away by getting paid for their work.
The sad fact of the matter is… math
A corporation might have 10 C-level guys dividing $50 million amongst themselves and 10.000 workers earning $70K, which costs about $100K due to overheads (health insurance, retirement, etc). Together, that’s a billion, which is 20x more than the C level guys.
The C level guys aren’t the big expense, not by a long shot.
Labour, government and shareholders divide most of the earnings amongst themselves.
For the record, I do think we need to tax the wealthy more and the workers less.
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I have no disagreement on this argument.
But C-suite compensation is not a significant part of prices.
Energy prices, tax, labour costs and the cost of capital (i.e. returns to shareholders and creditors) are what drives prices.
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You are literally contradicting yourself.
And it’s childish to downvote someone who is actually responding to you.
I’m not going to waste my time on someone who can’t be reasonable and civil.
Dude, I’m old enough to have lived through it.
Making toys and other plastic shit was never a high paying job in the West.
And no, it wasn’t charity, it was a win-win that increased living standards on both sides.
But it did have an impact on low paying manufacturing jobs in the West and that impact was accepted by Labour unions for the two reasons I gave: we (rightfully) concluded there were enough other, better jobs available and didn’t want to keep Chinese workers poor.
Yeah I’m confused by the charity argument. When have American corporations ever done anything out of the kindness of their hearts?
The “good for people” argument (which has been misportrayed here as “charity”) was made by politicians to justify tearing down the trade barriers that allowed wealthiest countries such as the US to be a higher-income bubble.
Once those trade barriers were down, all those jobs which had no other price protections than said trade barriers (jobs like, for example, assembly workers, but not things like Legal professions specialized in a country’s Law and which require registering with a local Law Society to practice) were suddenly competing with similar people all over the World, and a lot of countries in the World are full of people who would sell their work in those areas much cheaper than equivalent workers in high-income nations.
The people it was good for were people in those “open to competition” occupations in Low Income but reasonably safe countries like China (whose income went up as manufacturing moved there) and the people who owned the means of production (who got higher dividends due to the higher profits being made by paying low-income country manpower costs and receiving high-income country prices for products and services) but nobody else as even the eventual fall in prices that occurred (over the years, as all those companies with China costs started competing on price because they could thanks to the bigger profit margins due to much lower manpower costs) was not enough to make up for the faster and deeper downwards pressure on salaries in high-income countries that happenned due to said manpower competition with workers in countries with much cheaper salaries (for example, in the mid-70s about 23% of corporate revenue in American went to salaries, whilst by 2012 it was down to 7%).
Heres the problem with the talking point of needing to bring manufacturing jobs back: we can’t fill the manufacturing jobs that we have
I work for a company that sells services to warehouses and industrial facilities. We can’t fully staff our locations, we can’t keep most of the people we hire and neither can our customers, and it comes down to the fact that the jobs absolutely suck. Who wants to work in a loud, poorly temperature controlled factory with heavy equipment and a high risk of injury while doing backbreaking work when you could work at a store or resteraunt for not much less and put far less risk to your life, limb and sanity? Bring the automation on, these jobs need to become a thing of the past.
Sounds like the one thing you’re not mentioning - pay - is probably shit.
If the salary offered was enough for a whole family of 5 to live of it, including a good house and a car, like in the old days, I bet you would have trouble keeping candidates away.
The “people don’t want to work nowadays” arguments invariably forget to include the little detail that even a “competitive” salary in industry today is in real terms (of what it actually buys) nowhere as much as it was 50 years ago.
Most industrial jobs start at around 50-60k and in many cases it’s the best paying work someone can get without a college degree.
Also I’m not saying “people don’t want to work” I’m saying people have standards now and don’t want to work in factories, because really, who would?
Read what I said. Labour Unions, not corporations.
Manufacturing and union membership took such massive hits in the US over that period of time. It was win-win for the corporations who greatly expanded profit margins, and the Chinese government, who were happy to use their citizens as sweatshop labor to get ahead. You lived through the propaganda at the time and decided to accept it as the truth.
Don’t think labor costs is a big factor. Car production is the sector that is most automated. Just think of this endless bands of hanging cars with robot arms working on it. Tesla even topped this.
It’s mainly the unwillingness to design and sell cheap cars due to less profits. In Germany we had electric cars for 20k€ or even combustion cars under 15k€. But they stopped building it. Although it was sold out in weeks.
In my region there was a Startup by the Aachen University RWTH (which is an elite university in Germany) bulding small EVs for around 20k€. They simply bought all parts from suppliers and just assembled it. And engineered and designed it first. Unionized and still competitive. Unfortunately, they didn’t fly.
EV building is rather simple. The software is key. And this is the missing part at car makers capabilities.
I second your thoughts on trade war. However, I guess it will be much simpler with high taxes, high quality regulations, and may be less support by car workshops. We will see…
Greedflation is when you checks notes compete in a market by offering cheaper products?
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