ZFC writer Bryan White offers us this "these-are-jobs-in-China-from-the-U.S." citation from the Toledo Blade to back up the veracity of Romney's literal statement that Fiat/Chrysler is going to build Jeeps in China.
Jeep currently exports U.S.-made vehicles to China, which is Jeep’s largest market outside of North America. Last year, Jeep sold 22,294 vehicles in China. The company is expected to exceed that this year.
He then asks "If a Chinese Jeep plant takes over production of some or all of the more than 20,000 vehicles Jeeps sells in China then how does this not affect workers in the United States?"
Let's first start with the 22,294 vehicles from a relative perspective. One Detroit Jeep plant produces about 950 vehicles per day in 2 shifts. That means if the plant was working a normal 5-day work week, this would be roughly one month's production. Not very much, less than 10% of total annual production, and would be even less if the plant was at maximum production (3 shifts) or was working overtime. The Chinese production is what is called low volume. Even the 33,463 vehicles cited from the Business Standard fit the same definition: not enough for full production, not enough for a plant.
ZFC might counter that this could still be 10 percent of the workers being replaced....but that's not quite so black and white. If ZFC had been thorough in its fact-checking like it claims it is, it should have noted the paragraph at the bottom of the Toledo Blade article:
That commitment means Chrysler will not fully build and assemble Wranglers outside America. The automaker does currently ship low volumes of what the industry calls “knock-down kits” for final assembly in Egypt. Mr. Bragman said that's fairly common in the automotive industry, and the kits are not equitable to full-scale production plants. Parts would still have to be made and partially assembled elsewhere.
Knock-down kits (CKD = Complete Knock Down) contain "the parts needed to assemble a product" and are used when there is a low volume for export as "a method of supplying parts to a market, particularly in shipping to foreign nations, and serves as a way of counting or pricing." That is how Jeeps were produced in China up until 2009. The kits are assembled in the United States...and guess who does the assembly of the parts in those kits here for shipment to China? Now, if ZFC or counterirritant want to call Chrysler to find out if fewer workers are needed for CKD kit assembly than for full-scale assembly, they're more than welcome to find out. And, it is possible the kit assembly could be outsourced to a local supplier--but then, additional jobs would be created there to replace any auto plant jobs.
So when Aaron Bragman, a senior automotive analyst at IHS Automotive, was quoted to say that the Chinese production "doesn't take any jobs away from anyone else" he was correct. Romney is not correct, and neither is ZFC nor counterirritant.
Finally, the original Bloomberg article said that Fiat was in "detailed conversations" about making Jeeps in China. It wasn't definite nor confirmed. So, what happens if the deal with Guangzhou Automobile Group doesn't materialize? I didn't mention this in my original criticism, but it is another large gray area on the Zebra. Because while Romney himself said the Italians ( I could do another post on that one as well) were "thinking" of moving the production to China, the ad (which was aired much more) said it was a sure thing...which it wasn't. That alone makes Romney's literal statement false.
But what else would one expect from right-wing fact-checkers.
7 comments:
Yet another stellar example of your illogic, encapsulated in the following sentence:
"So when Aaron Bragman, a senior automotive analyst at IHS Automotive, was quoted to say that the Chinese production "doesn't take any jobs away from anyone else" he was correct. Romney is not correct, and neither is ZFC nor counterirritant."
Big businessmen never lie, do they? Good thing for you!
The 33k figure was as of October. That indicates a growing market in China (compared to 20k last year), and that's also why Fiat is considering assembling all Jeep models in that country.
The bottom line is you prove my point when you admit that an assembly line is needed elsewhere to put Jeeps together. Workers do that work, and every hour is a paid hour. It absolutely has to affect American jobs. Every one of the current workers might retain a job if (a big if) Jeep production continues to climb in places apart from China. But that's just a way of glossing over work that's being exported to China.
"Fiat SpA (F), majority owner of Chrysler Group LLC, plans to return Jeep output to China and may eventually make all of its models in that country, according to the head of both automakers’ operations in the region."
"Plans" is pretty definite. If talks with its current partner fall through then talks with an alternative partner are likely if Fiat plans to build Jeep vehicles in China.
The CKD kits do nothing to replace automobile assembly line work. Your post is misleading, and so are fact checks that neglect the obvious fact that assembling a Jeep in China means not assembling somewhere else (like in Ohio).
CKD kits certainly do--I know because I USED TO WORK THERE as a salary employee accounting for CKD. It's labor intensive to do pre-assembly and assemble those kits, and it's in the UAW contract for the work to be done by them, whether at the plant or contracted outside. When I was there we had *some* (most was done at plant warehouses and in the plant because there was also pre-assembly of some parts of the kit) work done by Lear which used UAW labor. We charged a big fat fee for this labor when we sell the kit (in Fiat/Chrysler's case, to China).
If you read the CKD definition on Wikipedia it talks about accounting for the parts. I remember having all these meetings when I worked about how to properly account for the cost of the CKD labor. Yes, workers do that work, and every hour is a paid hour! Whether it be assembling on a line or assembling a sub assembly or a kit!
Jeep/Chrysler NEVER had assembly plants in China. They sent kits there, because they can't get all the suppliers in China they need to do an assembly line. Volume in China has to get to about 300,000 units annually to justify a full assembly line, and even then they have to get the supplier logistics in line.
YOUR post is misleading because you clearly show you do not understand the (auto) manufacturing process. The statement by Bloomberg News was false (but then YOUR big businessmen never lie to you, right?), and you just assert it as true.
You can have your "plan"--I just noted that at the end of my post because it's not a sure thing like Romney falsely portrayed in his ads. It was fearmongering negative advertising at its best.
So, assembling a Jeep in China means not assembling it in Ohio--UNTIL you know how it's assembled. It is NOT a black and white issue of one replaces the other. I would also say I think Mitt should be embarrassed by this because it was American Motors (George Romney) who developed the whole concept of CKD. If he knows this that makes him all the more the liar.
In an ideal, generalized world of how "auto assembly" is commonly understood, it would seem "logical" that one job replaces the other. In the *real* world it seems counterintuitive but it's how manufacturing works when you take into account the shipping, the supplier logistics, etc. It's not Chinese jobs replacing American jobs but American jobs replacing American jobs, with additional Chinese jobs.
Fiat would have to think long and hard and endure great expense to build a plant in China for shipment of Jeeps to U.S. It is cheaper for Toyota, Honda, Volkswagon, Mercedes and Hyundai to have plants here for assembly than ship from respective countries.
"So, assembling a Jeep in China means not assembling it in Ohio--UNTIL you know how it's assembled. It is NOT a black and white issue of one replaces the other."
Good grief. Now we've got you equivocating between assembling a Jeep and assembling a Jeep CKD for later assembly. You're well aware that I haven't said that one replaces the other. I implied with a question that assembly in one country means that same assembly does not happen in the other and that as such it must affect American jobs. You should know this is true yet for some reason you apparently pretend otherwise.
It's also worth pointing out that Fiat's partner in China is not Chrysler's former partner. We have no reason to assume that the new arrangement will involve CKDs. Unless we count motivated reasoning.
"We charged a big fat fee for this labor when we sell the kit (in Fiat/Chrysler's case, to China)."
When did Fiat/Chrysler ever build Jeeps in China? And where is your evidence that the company plans to produce Jeeps using CKD kits in China in the future rather than simply using the same plant the currently builds Fiats for sale in China the traditional way?
Marchionne provides the key clue with his gallant proclamation that the Jeep Wrangler will never be produced entirely outside the United States. That's his admission that other Jeep models will be completely manufactured outside the U.S. And guess what? China is the largest market for Jeeps outside of North America.
karen, american manufactures will never produce any current vehicles in china for shipment to us.. because they have to allow advance technology to chinese to do business. otherwise chinee will appropriate technology to their own mfg faciliteis.
Yes, that's another facet of this. Appropriate as in steal. The Chinese government requires at least 51% ownership with the Chinese company joint venturing with any foreign company wanting to do business there (unless things have changed recently, which I doubt). That's why GM still built Buick Park Avenues there after the model was phased out here. They cannot be trusted for Jeep to move ALL production there. They theoretically could build plants, but it would be a different model based on previous generation engineering, only for Chinese consumers. If there was demand for the current American model, a kit would be shipped if they decided to build it there, with work to produce the kits would be here. But (new) Jeep production would not/could not be moved to China. Another good reason there'd be no "replacement" and the reason they would use CKDs. Complex web of trade restrictions, tariffs, legalities, shipping, etc.
And GOOD GRIEF back, Bryan! Headliners, clusters, completed seat assemblies, exhaust systems. Evidence from "I know an engineer in Detroit who's been there"...YOU KNOW I'm talking about Chrysler in Detroit....Bryan still doesn't understand--or maybe he doesn't *want* to understand as part of not wanting to engage in rational argument like he does with EVERYONE ELSE. I'm done with you in this thread.
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