Friday, April 08, 2005
While perusing the net, I ran across the websites of the Mercedes Benz US Factory and the BMW US Factory. They're both well done, and the Mercedes factory will give you guided tours. At no point was either company secretive in protecting the mystique of a European marque, something you would think would be important to being a luxury brand. At these respective companies vehicles that are primarily for US consumption, SUVs, and roadsters, are what is made.
To me, building cars in the US, that are primarily for US consumption is a no-brainer. Why?
1. You immediately have a captive buying audience. Like every auto factory in the US, the workers have a sense of pride about what they make, and are peer pressured into purchasing that marque. Give them and their families employee discounts, and you just sold several thousand of your own vehicles.
2. You have an immunity to currency fluctuations. With the dollar's value tied to fuel prices, the longterm outlook for the dollar is weakness. That's going to kill European manufacturers who are stuck with a strong currency. The solution is to move building here.
3. You avoid tariffs. Obviously building here would avoid that. Another plus.
4. You pay your workers less. A Southern worker, who hates unions, will always make less than a unionized German worker, and probably work harder too. The Japanese and Germans have taken advantage of this, but they could still do more.
5. You have less fuel costs for transport. Obviously trucking a new car is less expensive than trucking and shipping across the Atlantic or Pacific.
6. Your workers will not strike. Even in Mexico, with incredibly low labor costs, the workers have been unionizing. VW which makes many vehicles in Mexico, has faced unionizing workers, and that means shutdowns. Because of a cultural dislike and distrust to unions in the South of America, you won't have this problem.
So to me the benefits are tremendous. They can also be a selling point. Since Americans don't care where a car is made, as long as it works well and looks good, you could sell the vehicles as being loyal to America and the American worker. It's basically one of the last selling points American manufacturers use. The Japanese have muscled in, but have not advertised their presence in America, though they've been here for decades. Increase that knowledge, and I guarantee you'll get some sales from xenophobic Americans.
On a side note, I never made mention of DeLorean's passing. I read his book, "On a Clear Day you can see GM" and made mention of it earlier in this blog. DeLorean rubbed people the wrong way, but under his administration we saw great success, and vehicles that were ahead of their time. I believe his personal sports car, his namesake, was ahead of its time. It's a shame he'll be remembered more for his failures than his successes like the GTO. I hope someone makes a film to his life, I think it'd do well. See you in a few days.