[Law]

Originally Posted by Germanauto

Look at all these economic experts here.

Fact is that nobody, not even God, know what the long-term implications of these tariffs will be. Only time will tell. BMW building a few X5s abroad is not a marker for the entire economy.

See, that's the thing though.
It shouldn't even take a PhD in Economics to be able to grasp this concept.
Businesses will follow the money, it's basic Economics 101, not rocket-science.
Create a hostile environment for businesses and they will either fold or take their money elsewhere.

Okay so you see today's article as small potato stuff.
So a few more X5's are gonna be built abroad instead of the US, right?
But really, it's not that simple.

Today's article is about only one company, BMW.
When you zoom-out and look at the big picture, the tariff war is affecting virtually every single global business that involves import-export.
And then, with each business & industry there is a specific supply-chain, where one hiccup affects the entire thing, kind of like dominoes.

Every single step from the original extraction of the raw material in the earth, to forming it into a shape, to its integration into a component, to its installation into the final consumer product...all the way until it reaches its distribution network and finally the customer...Anywhere along the line where there is an impediment to the "flow", that affects everything after.

Even a small change in cost (for whatever reason) of a small component, part, or material, can affect the larger industry as a whole and every company in between (as well as those employed there), as in evanevery 's example.

Now, BMW, like every company, is profit-driven.
It will utilize the most of its resources to minimize cost and maximize profit.
Right now, there is situation where BMW products (i.e., X5) can potentially be noncompetitive/less profitable because tariffs have increased the cost of getting the USA manufactured BMW vehicle to its distribution network (i.e., dealers in China).

Solution? Well, the plant in Thailand was already planned for in 2016, but BMW is a global company and when the government of a certain country makes it difficult or economically unfeasible to do business, then they will simply reallocate resources from said country to a different country, USA to Thailand, in this case.
So now, that's one more thing the US economy just lost out on. Yeah the US economy loses money on the exporting of "a few X5s" but mind you, this is not the only US product that the tariffs affect.
Only time will tell to what degree the reallocation entails, but you'd be hard-pressed to find any company retaining the same number of factory workers at the same pay to stare at dormant machines when the volume of production slows down.

[MacOSR]

Originally Posted by Law

See, that's the thing though.
It shouldn't even take a PhD in Economics to be able to grasp this concept.
Businesses will follow the money, it's basic Economics 101, not rocket-science.
Create a hostile environment for businesses and they will either fold or take their money elsewhere.

Okay so you see today's article as small potato stuff.
So a few more X5's are gonna be built abroad instead of the US, right?
But really, it's not that simple.

Today's article is about only one company, BMW.
When you zoom-out and look at the big picture, the tariff war is affecting virtually every single global business that involves import-export.
And then, with each business & industry there is a specific supply-chain, where one hiccup affects the entire thing, kind of like dominoes.

Every single step from the original extraction of the raw material in the earth, to forming it into a shape, to its integration into a component, to its installation into the final consumer product...all the way until it reaches its distribution network and finally the customer...Anywhere along the line where there is an impediment to the "flow", that affects everything after.

Even a small change in cost (for whatever reason) of a small component, part, or material, can affect the larger industry as a whole and every company in between (as well as those employed there), as in evanevery 's example.

Now, BMW, like every company, is profit-driven.
It will utilize the most of its resources to minimize cost and maximize profit.
Right now, there is situation where BMW products (i.e., X5) can potentially be noncompetitive/less profitable because tariffs have increased the cost of getting the USA manufactured BMW vehicle to its distribution network (i.e., dealers in China).

Solution? Well, the plant in Thailand was already planned for in 2016, but BMW is a global company and when the government of a certain country makes it difficult or economically unfeasible to do business, then they will simply reallocate resources from said country to a different country, USA to Thailand, in this case.
So now, that's one more thing the US economy just lost out on.
Only time will tell to what degree the reallocation entails, but you'd be hard-pressed to find any company retaining the same number of factory workers at the same pay to stare at dormant machines when the volume of production slows down.

Or when one country imposes a 25% tariff on the “import” of the US manufactured X5 you’ll build a plant in that country and shift manufacturing to avoid the 25% tariff.

BUT, is it then less expensive to build the X5 there and do more vehicles get produced in Thailand and shipped to Europe?

Again, just like we’re all saying...it’s not so simple and everyone has an opinion on what they THINK will be the outcome.

[Law]

Originally Posted by MacOSR

Or when one country imposes a 25% tariff on the “import” of the US manufactured X5 you’ll build a plant in that country and shift manufacturing to avoid the 25% tariff.

BUT, is it then less expensive to build the X5 there and do more vehicles get produced in Thailand and shipped to Europe?

Again, just like we’re all saying...it’s not so simple and everyone has an opinion on what they THINK will be the outcome.

Read the article, this reallocation is being implemented with respect to the Chinese market.
The jury is still out for European market X5s

[allinon72]

Originally Posted by evanevery

You don't jump off a cliff and then say "lets just wait and see how this plays out".

Smart folks don't jump off the cliff in the first place... Smart folks know it isn't going to end well...

I know, the sky is falling every day for 37 different reasons because of Trump. I'm disappointed there isn't a Russian connection!

Outrage culture getting old to just me?

[MrMoo]

Originally Posted by evanevery

The article states the Chinese Tariff is actually 40% (not 25%)...

BMW is the largest exporter of cars made in the USA. (Not Chevy, Ford, or Dodge...)

So the US wants to tax BMW cars 25% as we import them and then the Chinese want to tax BMW cars 40% as we export them.

BMW is taking it up the A$$ both coming and going. BMW can't win here. I wonder how all the Trump voters in Spartanburg are feeling right now? Probably a lot like the folks at Harley Davidson (and Chevy, and Ford)...

Trump will blame the chinese, the Trump voters will agree because technically his right the Chinese are to blame since they are implementing the new tariffs. Trump will vow vengeance the trump voters will vote for him. All in a days work

[DeeKay]

Originally Posted by evanevery

The article states the Chinese Tariff is actually 40% (not 25%)...

BMW is the largest exporter of cars made in the USA. (Not Chevy, Ford, or Dodge...)

So the US wants to tax BMW cars 25% as we import them and then the Chinese want to tax BMW cars 40% as we export them.

BMW is taking it up the A$$ both coming and going. BMW can't win here. I wonder how all the Trump voters in Spartanburg are feeling right now? Probably a lot like the folks at Harley Davidson (and Chevy, and Ford)...

They should be happy BMW continues to invest in USA, despite stuff like this... They only "win" when they sell a X-car in the US that has been assembled there.

[F32Fleet]

Originally Posted by desertfox73

It's not fake news, it's actual news. And the OP clearly stated that the factory dates to 2016, so they aren't being deceptive.

Really? Clearly the reporter framed the story as a response to US tariffs.

"..said it is producing between 10,000 and 20,000 X5 sports utility vehicles in Thailand as a way to supply Chinese customers now that imported vehicles from the United States face a 40 percent tariff."

The keywors are "now that"

[F32Fleet]

Originally Posted by menelaos

There's no uneducated stupidity as to the big picture sir.
Eventually, jobs will be lost... Just ask the subsidized farmers who are being kept hostage of DJT's stupidity.

US farmers have been receiving subsidies since the 1930's.

[F32Fleet]

Originally Posted by dkhm3

It is ramping up production at the plant. This is a reallocation on resources to counteract market tariffs. This means there will be more opportunities shifted exporting from SC, to other markets. BMW is a business and it makes more sense now to make more cars elsewhere instead of exporting the cars from America. We need to find ways to export more of our stuff to other countries and not the other way around. Otherwise things just become more expensive to American consumers from Tariffs our OWN government hits us with.

"it will simply build more SUVs at its Thailand facility."

"CEO Harald Krueger told analysts ramping up production in Thailand was one action to counteract the tariffs."

https://www.carscoops.com/2018/08/bm...china-tariffs/

Thing is that we don't know how many vehicles BMW planned to build out of Thailand over the life of the plant. Surely you don't think a multinational isn't capable of putting out a little spin themselves?
see
Here's what is probablygoing on. The Chinese luxury car buyer generally doesn't like to wait for a vehicle to be built and some will gladly pay 2x for a car if they can get it off a lot from the US. In fact Mercedes and BMW are having to contend with Chinese brokers using US based strawbuyers to buy and then ship vehicles overseas to China.

A Thailand based facility will cut into that underground market and capture those customers who would normally just walk away.

Yes tariffs will have an impact in some way but imo the Reuters article framed it as if tariffs were the sole reason.

[menelaos]

Originally Posted by F32Fleet

Thing is that we don't know how many vehicles BMW planned to build out of Thailand over the life of the plant. Surely you don't think a multinational isn't capable of putting out a little spin themselves?
see
Here's what is probablygoing on. The Chinese luxury car buyer generally doesn't like to wait for a vehicle to be built and some will gladly pay 2x for a car if they can get it off a lot from the US. In fact Mercedes and BMW are having to contend with Chinese brokers using US based strawbuyers to buy and then ship vehicles overseas to China.

A Thailand based facility will cut into that underground market and capture those customers who would normally just walk away.

Yes tariffs will have an impact in some way but imo the Reuters article framed it as if tariffs were the sole reason.

Originally Posted by F32Fleet

Thing is that we don't know how many vehicles BMW planned to build out of Thailand over the life of the plant. Surely you don't think a multinational isn't capable of putting out a little spin themselves?
see
Here's what is probablygoing on. The Chinese luxury car buyer generally doesn't like to wait for a vehicle to be built and some will gladly pay 2x for a car if they can get it off a lot from the US. In fact Mercedes and BMW are having to contend with Chinese brokers using US based strawbuyers to buy and then ship vehicles overseas to China.

A Thailand based facility will cut into that underground market and capture those customers who would normally just walk away.

Yes tariffs will have an impact in some way but imo the Reuters article framed it as if tariffs were the sole reason.

Personally, I don't understand why they'd ship cars out of Spartanburg for Southeast Asian customers to begin with when they had a plant there.
The labor conditions are much looser over there.

[Laki021]

I'm failing to understand why some people are so obsessed with returning some of the hardest jobs back to the US.

The unemployment in the US is ~3.8%, which is considered a full employment, not like you are missing jobs. So really, no need for some extra jobs, especially not the tough ones with low salaries. It just means that with more jobs, the US would need more workers/immigrants. But at the same time, the same people who want those jobs back are against immigration.

Why would somebody want to bring back the steel and mining jobs when those jobs are poorly paid and at the same time are some of the most difficult and dangerous jobs around. Not to mention the environmental impact of such industries.
You should be happy for getting rid of those jobs and focus on better quality jobs such as engineering, services, design, manufacturing of complex devices (such as BMWs ) etc. Why would anyone want to work in a coal mine if he can work in a BMW factory?
I don't get why some folks are obsessed with "HARD WORKING", that should not be the goal of the progress. Why is MANUFACTURING better than engineering?


I agree that China is not playing fair and that something has to be done (jointly by the US, Europe, Canada, Japan etc.), but the taxes are not the solution since they are hurting the American companies the most.

[beammeupscottie]

I tell ya this administration is more like a heavy ministration! Direct result of their dumb policy! Can't make this up folks. We are losing "bigley."

[MacOSR]

Originally Posted by beammeupscottie

I tell ya this administration is more like a heavy ministration! Direct result of their dumb policy! Can't make this up folks. We are losing "bigley."

I don’t agree.

What would your solution be to a country that imposes import tariffs on your goods?

Previous administrations did nothing. This one is imposing reciprocal tariffs.

[F32Fleet]

Originally Posted by Laki021

I'm failing to understand why some people are so obsessed with returning some of the hardest jobs back to the US.

The unemployment in the US is ~3.8%, which is considered a full employment, not like you are missing jobs. So really, no need for some extra jobs, especially not the tough ones with low salaries. It just means that with more jobs, the US would need more workers/immigrants. But at the same time, the same people who want those jobs back are against immigration.

Why would somebody want to bring back the steel and mining jobs when those jobs are poorly paid and at the same time are some of the most difficult and dangerous jobs around. Not to mention the environmental impact of such industries.
You should be happy for getting rid of those jobs and focus on better quality jobs such as engineering, services, design, manufacturing of complex devices (such as BMWs ) etc. Why would anyone want to work in a coal mine if he can work in a BMW factory?
I don't get why some folks are obsessed with "HARD WORKING", that should not be the goal of the progress. Why is MANUFACTURING better than engineering?


I agree that China is not playing fair and that something has to be done (jointly by the US, Europe, Canada, Japan etc.), but the taxes are not the solution since they are hurting the American companies the most.

Not every 30-50 something can go back to school to obtain a job in the STEM field and come out with a new job with the same cost of living.

[DCG]

As long as they do NOT come to the United States.

[DCG]

As long as these vehicles do NOT come to the United States. If there for the Chinese market so be it.

[DCG]

Ff

[dkhm3]

Originally Posted by F32Fleet

Thing is that we don't know how many vehicles BMW planned to build out of Thailand over the life of the plant. Surely you don't think a multinational isn't capable of putting out a little spin themselves?
see
Here's what is probablygoing on. The Chinese luxury car buyer generally doesn't like to wait for a vehicle to be built and some will gladly pay 2x for a car if they can get it off a lot from the US. In fact Mercedes and BMW are having to contend with Chinese brokers using US based strawbuyers to buy and then ship vehicles overseas to China.

A Thailand based facility will cut into that underground market and capture those customers who would normally just walk away.

Yes tariffs will have an impact in some way but imo the Reuters article framed it as if tariffs were the sole reason.

Actually having ran a successful business and sold it, I think it is simpler than that.

BMW faces increased costs based on tariffs.
BMW shifts some production and investment to an existing facility that is cheaper to build the same item.
BMW saves money by avoiding tariffs.

Spartanburg is one plant of many BMW owns, one part of the whole, move resources as needed to maximize profit. That's business.

What do you want to spin? It's not bad news to investors, it's good news.

[allinon72]

It's just amazing how people beg for status quo. The same status quo that has gotten us nowhere.

Turn off your TV folks.

[DCG]

As long as they do NOT come to the United States.

[turboawd]

Originally Posted by MetalMK

So factories are moving out of US instead of opening new ones like Trump said on Twitter. What a joke.

Quit watching CNN.
We need tariffs. We have a huge trade deficit. If you can't understand why that's bad, then I don't know what to tell you....

[DJM4]

Originally Posted by evanevery

The article states the Chinese Tariff is actually 40% (not 25%)...

BMW is the largest exporter of cars made in the USA. (Not Chevy, Ford, or Dodge...)

So the US wants to tax BMW cars 25% as we import them and then the Chinese want to tax BMW cars 40% as we export them.

BMW is taking it up the A$$ both coming and going. BMW can't win here. I wonder how all the Trump voters in Spartanburg are feeling right now? Probably a lot like the folks at Harley Davidson (and Chevy, and Ford)...

If the US wants to compete at a world level we need to start building our own stuff. If a China built toaster costs $50 after tariff costs I promise you that a business person in the US will build toasters here for $15 and sell them for $30 making a 100% profit. People that speak about economics without having formal education in it might as well go work at McDonalds. BMW didn't get affected. They met the China demand by producing the cars in another country and avoiding the tariff.