Kings College London Globalization and Intro to International Business Paper

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Core 193 Globalization/IB 241 Spring 2020 Assignment One 212612020 The primary purpose of this assignment is to see that you can identify important information and express it clearly, precisely and briefly. Use precise and focused language. Good business writing gets to the point quickly with precision and clarity. Be as thorough as possible but write no more than one page per article. There are two parts to this assignment and you should do them for each article on one page (single spaced). 1) Read each article and describe all relevant information. Describe it in significant detail. 2) At the end of each article write a concluding paragraph telling the main thing you take away from the article and how it applies to globalization. Articles: "Steelmakers Press Luck on Pricing," Wall Street Journal, April 20, 2017. Due Date: February 27, 2020. Global Car Industry Runs on NAFTA," Wall Street Journal, November 11, 2016. Due Date: March 17, 2020. Strong Dollar Forces Factories to Lose Flab," Wall Street Journal, January 25, 2015, Due Date March 24, 2020. 2 GLOBAL CAR INDUSTRY RUNS ON NAFTA Auto parts come from multiple producers and can cross borders several times; jobs shift to overseas plants BY DUZLET ÁLTHAUS is AND CSTINA Rocas QUERÉTARO, Medico-Jody Fled- derman is one of five original employ- ees at the auto parts factory his father founded in rural Batesville, Ind. He also spends a lot of time at the com- pany's 97000-square-foot plant in central Medico. The two operations have expanded together as automotive production in both countries boomed. Mr. Pledder- man credits the success of Batesville Tool & Die Inc., where he is president, in part to the addition of a Mexican plant 15 years ago that helps service Honda Motor Co., Nissan Motor Co. and other clients on both sides of the border. "We have three or four clients back in Indiana that we wouldn't have had if we weren't here," Mr. Fledderman, 54 years old, said in an interview at the plant in Querétaro President-elect Donald Trump has said that in his first days in office he will reopen talks on the North Ameri- can Free Trade Agreement, which con- nects Canada, the U.S. and Medico, and leave the pact if Messico doesn't agree to improved terms for the US He blames unfair trade, in particular with Mexico and China, for the loss of millions of factory jobs Ending the 1994 trade pact is rela- tively easy. The US. legally can pull out of Nafta six months after Mr. Trump as president notifies Mexico and Canada of his intention to do so, Please see NAFTA page A12 such according to a September study by the Peterson Institute for In- ternational Economics in Wash- ington. Imposing tariffs on im- ports lies within the authority of U.S. presidents For the auto industry, as Mr. Fledderman's business shows, a change would be sub- stantially more complicated, be cause of the multilayered con- nections between U.S. and foreign suppliers and assembly points. The tens of thousands of parts that make up any vehicle often come from multiple pro- ducers in different countries and travel back and forth across borders several times. This is a tenet of modern manufacturing: Where a prod- uct is ultimately assembled in- creasingly has little bearing on where its component parts are made. Assembly plants are prized engines of local economies be- cause they tend to pay better than most factories. Mr. Trump has repeatedly criticized Ford Motor Co.'s plan to move as- sembly of its Focus compact its value, according to the Mo- from Wayne, Mich., to Mexico, tor & Equipment Manufacturers vowing to impose a steep tariff Association, a trade group. on the car if Ford follows U.S. assembly plants vary on through. Ford executives have the amount of U.S.-made com- said moving the Focus to Mex- ponents they use. A Chevy Sil- lco won't result in American job verado pickup built in Indiana losses and that the company re- has 51% parts content from mains committed to producing Mexico, according to the win- in the US dow sticker, while Ford's exclu- But more than half the parts sively U.S.-assembled F-Series in the focus today are made truck, the country's top selling outside the US and Canada, in- vehicle for 39 years straight has cluding 20% in Mexico. Ford 70% U.S. and Canadian content. also ships in some of the car's "This industry, particularly in engines from Spain and trans- North America, has integrated a missions from Germany. lot," said Thomas Klier, an econ- Similarly, only 10% of the omist at the Federal Reserve parts that go into the 200,000 Bank of Chicago who specializes BMW luxury crossovers built on automotive supply chains. each year in Spartanburg, S.C., come from U.S. and Canadian plants, according to US govern- American made ment data. The rest are im- Such integration poses a ported from Europe and else- challenge for anyone wanting to where. BMW in turn exports buy an entirely U.S.-made vehi- most of the Spartanburg plant's cle production around the world. "You can't buy an American- made car anymore. You can buy Where a product is an American-assembled car," said Loren Baisden, 32, a 13- assembled has little year veteran of Ford's assembly bearing on where its line now working at the com- pany's heavy-truck chassis plant components are made. in Avon Lake, Ohio. Auto makers and many pri- mary suppliers have moved By contrast, 70% of the com- some high-tech production to ponents in the Honda CR-Vs as- Mexico and elsewhere. Lower- sembled in Guadalajara, Mex- tier suppliers typically relegate ico-the production of which labor-intensive production such soon will be moved to central as assembling wire harnesses or Indiana-are currently made by sewing materials for seats to US and Canada-based factories, low-wage Mexico plants while data show, keeping more highly skilled and The parts that make up a car automated tasks at their US. or truck, from bolts to motor factories. blocks, window lifts to oil fil- That strategy allows auto ters, account for two-thirds of makers and their suppliers to be cost competitive with Asian and European imports, analysts say. "The free flow of compo- nents is integral to the supply chain in auto manufacturing Steve Arthur, an automotive an- alyst at RBC Capital Markets, said Thursday. It is a situation not easily or inexpensively re- versed" Still, with so much final as- sembly moving to Mexico, the LE Dual Citizen The components in American vehicles can be made from elements manufactured all over the world. Seat-maker Adient incorporates pieces from four states and four Mexican locations into products it makes in the Midwest, and then sells on to major car makers. Fabrics South Carolina Leather Saltillo, Mexico Headrest/Armrest Saltillo, Mexico Fabrics South Carolina Fabric Trim Covers - Juárez, Mexico Leather Saltillo, Mexico Leather Trim Covers- Julirez, Merce Final Assembly at Adient Plant Foam Pads Pulaski, Tern Stampings Athens, Tenn Frames (backs, cushions) Ramos, Mexico Battle Creek, Mich: Athens, Tenn. Plastics Michigart: Tennessee Manual Seat tracks Illinois Power track rails-Power Seat tracks Matamoros, Mexico Holland. Tenn Batesville growth Some components, including engine hood hinges, oil filter seals and air bag parts, are made on both sides of the bor- der to be closer to customers who demand quick and reliable delivery of parts The plant in Batesville, a town of 6,000 staked amid the com and soy fields of hilly southern Indiana, also handles product design and employs ro bots and a 3-D printer to make more intricate or larger parts. The Batesville factory has ex panded five times in recent years as the company's North American business has surged. The company now employs 800 people, evenly divided between its two factories, and has annual revenue of $130 million, up from $8 million in 1989, when Mr. Fledderman took over "You don't make any money producing things that every body in every corner of the world can make," said Mr. Fled- derman, who recently returned to Indiaria from his latest tour of Eastern Europe, where he sniffed out opportunities. "If it's not Mexico, then it's Poland or Vietnam or wherever. We're not the low-cost country in the world." Auto production in Mexico by U.S., Asian and European auto makers has boomed in the past decade, nearly doubling to reach 34 million light vehicles last year. Despite the surge in Mexico, nearly 60% of the 17.5 million light vehicles sold in the U.S. last year were assembled within a so-called auto alley that runs from the Great Lakes to the Gulf of Mexico, said James Ruben- stein, a geographer at Miami University of Ohio who writes extensively about the industry. Imports from Nafta partners Mexico and Canada, which con tain a heavy mix of North Amer- ican made parts, account for much of the rest. The auto parts industry alone accounted for about 14% of the $531 billion in U.S.-Mexico trade in 2015, ac cording to U.S. government data. "In this day and age, when so much manufacturing has left the US, the auto Industry is a striking exception," Mr. Ruben- stein said. "It's not a win-lose situation. It's dividing up the growth. Mexico is winning, but so is auto alley." Source Mint PLC THE WALL STREET JOURNAL epicenter of North American duces, primarily to Mexico, US and Canada-based facto auto production, which for more company president Todd Murries shipped nearly $29 billion than a century has been deeply ray said. rooted in the Midwest, is mov- The company is losing two 2015, according to INA, the worth of parts to Medico in ing an average of 14 miles to product lines to suppliers lo- Mexican auto parts industry's ward the Southwest annually, cated near his customers' Mex national association. Mexican according to a 2014 analysis by ico plants, he said. IHS Markit Automotive Advi- plants in turn sent more than "That scares me," said Mr. $61 billion worth of parts to the sory, the consultancy, Murray, 47, whose company two Nafta partners, accounting The neighboring small Indi: opened a plant in China 11 years for much of the trade surplus ana cities of Anderson and go to win business there. "I see Mexico has with the U.S. Muncie, which straddle Inter that competition) becoming About a third of Mexico's state 69 less than hour's drive more aggressive in the years to 1,300 suppliers, which employ north of Indianapolis, have been come." some 720,000 people, are U.S. suffering that migration for Mr. Murray said Wednesday owned, according INA. Mexican, more than three decades, as that if a Trump administration Asian and European companies General Motors Co. and its sup- overhauls or scraps Nafta, and make up a growing share of pliers have decamped for the gets tough with China, it could U.S.-based suppliers, which the south. The cities collectively ultimately help him fend off that US. Labor Department says pro- have lost tens of thousands of competition. vide jobs for nearly 600,000 high paying factory jobs. In the short run, he said, the Americans Mursix Corp, a family-owned healthier operating margins Mr. Fledderman's Batesville supplier company on the edge available to companies produc- Tool & Die produces an array of of Muncie, has been under in-ing in Medco will outweigh any components for the automotive, creasing pressure to move some new U.S. Import duties. With appliance and other supply operations to Mexico to be the right policy mix, including chains. The 38-year-old com- closer to big Japanese and U.S. lower corporate taxes, Mr. Mur pany is a primary supplier to firms located there. The maker ray said, any profits from Mex Honds and makes parts for of switches, connectors and cooperations could be invested Swedish air bag maker Autoliv other electronic components to create cutting-edge technol- AB, currently its biggest Medico ports about 60% of what it pro oy Jobs in the US. customer.
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Globalization
Global Car Industry Runs on NAFTA
The 11th of November 2016 Wall Street Journal article, Global Car Industry Runs on
NAFTA by Dudley Althaus, and Christina Rogers outlines the influence and impacts the North
American Free Trade Agreement has on the American and global car industry. The article makes
reference to the operations of Jody Fledderman’s Batesville Tool & Die company to elaborate
just how vital the trade agreement is to the North American car industry. Tool & Die Inc.
supplies crucial parts to automakers and assemblers in the three NAFTA states in America. Like
many auto-part makers, the company has to deal with widely distributed customers. The
assembly lines for major car manufacturers are spread all over North America, w...


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