Saturday, May 27, 2017

The 'Evil' Comment by Trump

This week as President Trump visited Germany.....he had a meeting with the top EU official, and hyped up the 'evil' nature of Germany and it's export situation.

How does this get picked up and dramatically hyped in Germany?

First, let's be honest about German exports.  Fifty years ago, there would have been a long list of things that might have been imported into the US from Germany.  Over the past fifty years....a lot of German companies went down, and various things shifted to China, Asia, or eastern Europe.

The list of the primary things that come from Germany into the US?  Four items mostly, cars, chemicals, electrical items, and machinery.

If you want precise equipment for manufacturing go to Germany and buy their equipment.  If you want high quality cars, you buy German.  If you want chemicals that are on the cutting edge of technology, then you mostly buy German.

The typical average American?  Other than some Craftsman-like tool set, the average guy has never bought anything German in his life.  If you had a decent income, you might have bought a German car.

Second, where the Trump leads onto is this one odd feature of the US-Canada-Mexico trade agreement where BMW built a factory in Mexico.  Does BMW-Mexico sell beyond the US?  Yes.  It's an international situation that has developed.  Lower pay scale attracted BMW to Mexico?  Yes.  BMW vehicles imported into Germany?  No.....that will probably never occur.  You can ask the Germans about this who are aware of the situation, and they will mostly grin and say nothing.

Third, global manufacturing and trading have created this fairly screwed up situation, which I tend to see as being unfixable.  This BMW-500 series vehicle made in Mexico and sold in the US?  If you were to compare the German version and the Mexico's the same vehicle, just made by two different folks.  The cost difference is never discussed in public but I would take a humble guess that it's at least 25-percent cheaper if Mexican-made.  The thing is....there's nothing wrong with a cheaper manufacturing profile.  It's not unethical or illegal.

So, you come to the Trump comment to the EU guy....'evil' is uttered.  What Trump refers to is the way that BMW is taking advantage of the trade agreement with Mexico.  One might look at the trend, and suggest that in twenty years....dozens of major brand names from Europe will also have Mexico plants and eventually....Mexico might be some dynamic player in car manufacture through North and South the expense of the US.  "Evil" has a way of fitting into this discussion if you look long-term.

Germans hyped up?  Well....the German news media, particularly the public news media (ARD/ZDF) might have a fairly negative view.  They've yet to go and really profile into the topic of BMW-Mexico and the jobs siphoned off from Germany to Mexico.  I doubt if this is something that BMW would openly like to discuss.

US plants in Germany?  Well....yes.  Ford has been around for decades.  Oddly, Ford has increased it's production line in Romania where they find cheaper cost values.  So, in the same way....various companies are finding Romania and Bulgaria somewhat like Mexico.  Nokia moved it's German cellphone production line out of Germany more than a decade ago....into Romania.

There's a lot of 'evil' stuff going on, and being driven by commercial desires of a cheaper product.  It's that simple.

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