Why are they building new US car plants?

Seems to me this may be true for computer manufacturing but car making is not so knowledge-based yet. I think labor and material cost is still a large chunk of the total cost.

 

It's not impossible that a big part of this move is strategic. This is a big "what if", but if GM becomes a shadow of it's former self, that/those manufactures at the ready to supply the gap left by a loss of another major manufacturer would be in a good position to take advantage. And certainly, the Japanese think VERY long term.

 

There are OTC forward contracts and options for the purposes you are describing, exchange traded derivatives aren't the only instruments that companies have access to.

 

That's the most believable argument put forth so far.

 

Its simply cheaper to build them here. No transport cost, very favorable tax deals, and ultra modern and efficient plants in low wage areas (Tennessee, Carolinas).

That is the reason.

 

Agree. Somewhere there is a little japanese been counter, with a 200 page spreadsheet, with thousands of variables, and the final cost to build in the US, to sell to US consumers, ended up lower than building it anywhere else. That simple.

 

environment created to insure we have the industrial capacity to counter the "looming China". No conspiracy, but (chuckle), what do you think the boys at Fort Leavenworth do with their time in think tanks and strategic planning? China will become a global superpower (to include a formidable submarine fleet) by 2015.

 

Obvious. Part of it is a hedge against the U.S. debt they own. It’s also better to open plants in Canada and America because the social and financial outcome is FAR more predictable.

China, as it grows powerful, has unresolved grievances with Japan. Added to that, China’s labor force won’t be gleefully working for nothing forever. America’s labor force has been through all of that 100 years ago.

Brazil is one of the hopefuls in Capitalism but Latin America, as a whole, is a culture of Marxism, which always scares the best and brightest away. Latin American governments, as a whole, also place foreign investors and companies at the mercy of flash populism, which makes everything less predictable. India also has too much protectionism and bureaucracy to make anything work.

 

I don't know the automaking business, but it seems reasonable that auto manufacturing has become so highly automated that labor costs may very well be less than transportation costs. Especially in a rising energy cost environment.

Plus the fact that they have all these dollars they need to spend somewhere and this is the one of the few politically correct ways they can spend it!

 

Not only this, but I work in economic development for the government and there are often cash and tax incentive deals made to attract such factories.