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I always find it odd that companies always want to be build things outside of their home state TSMC -> US Intel -> EU Toyota -> US Honda -> US Ford -> MX /

I always find it odd that companies always want to be build things outside of their home state TSMC -> US Intel -> EU Toyota -> US Honda -> US Ford -> MX / Canada GM -> MX / Canada

huijzer 4y ago
The most common reason is typically cheaper labour. That’s why Nike produced in Japan and then moved to even cheaper countries. Related might be that some countries have a lot of knowledge workers in their 40-50s who can then manage factories in other countries. Japanse companies producing cars in Europe is an example of that. For the current trend to move to the US. That has to be government funding. Luckily, fabs require large investments at the start which might break-even more expensive labor. Also, maybe some more automation in the fabs could also help in making the fabs cost competitive.
- phpisthebest 4y ago
  >>typically cheaper labour. While a factor, labor costs alone are the primary reason. In reality is more about the wider regulatory burden on a company, including environmental controls That said it does not explain why a Japan Company can make cars profitably in the US but a US Manufacturer can not. If it was only labor why would Toyota not have a factory right next to GM's in Mexico and import cars from Mexico to the US?
  - helsinkiandrew 4y ago
    I guess its that the Japanese Company can make cars profitably anywhere but making cars for the US market in the US means there's no/less import taxes, also because the factories are huge they often get local tax breaks, and the cars may also eligible for EV/hybrid tax credits (I think Toyota have sold over 200K so there cars can no longer get this). I think making cars in Mexico for the US became less worthwhile when Trump pulled the US out of NAFTA.
    - phpisthebest 4y ago
      >US became less worthwhile when Trump pulled the US out of NAFTA. lol, trump did not "pull the US Out of NAFTA" not only is that not with in the power of the president to do, it was never on the table, NATA was replaced with USMCA, and only made a few small changes, for Automotive that means 75% of the vehicle components must be made in MX, US, or Canada, up from 64% under NAFTA Nothing in the law would impact making at car in the US vs MX, and was aimed at preventing increased parts from China or other non-north American nations, and all of the changes were passed by congress with wide bipartisan support
      - helsinkiandrew 4y ago
        OK - but he signed a deal with Mexico that replaced it and didn't the new deal mean that more parts had to be from the US and half the car factory workers needed to pay $16 an hour - which would make Mexico less attractive?
        phpisthebest 4y ago
        > didn't the new deal mean that more parts had to be from the US and half the car factory workers needed to pay $16 an hour Both were proposed changes that were not adopted in the final version.
  - lmz 4y ago
    I thought Japanese car factories in the US were all non-union (as opposed to the US brands)? Toyota does have a Mexico factory at least according to Wikipedia.
    - bluedino 4y ago
      Correct, the Honda/Toyota plants in the USA are non-union. Interestingly enough the “Clean Energy for America” bill pushes for additional tax incentives on EV's built by companies using union labor: More specifically, the proposal says that electric vehicles assembled in the United States would qualify for a $10,000 tax credit while EVs that are built at facilities whose production workers are members of, or represented by, a labor union would be eligible for the full $12,500 credit.
      - ApolloFortyNine 4y ago
        Aren't clauses like this just a clear cut sign of corruption? It doesn't even make a lot of sense as an incentive to have workers unionize, since why would workers care what price what they're selling cars for. The law would only exist to benefit existing unions.
ekianjo 4y ago
> Toyota -> US you dont pay tariffs if you produce locally. not hard to understand.
- zrail 4y ago
  Toyota builds trucks in the US because of the chicken tax. https://en.m.wikipedia.org/wiki/Chicken_tax https://en.m.wikipedia.org/wiki/Chicken_tax
- fomine3 4y ago
  US-Japan trade war was a big thing, and Japan relies on US for national security. There was no option not to manufacturing in the US.
  - ekianjo 4y ago
    > and Japan relies on US for national security Good luck with that bet in the future.
    - deleted 4y ago
      [deleted]
jasonwatkinspdx 4y ago
It's not that odd that international companies would build local facilities for major markets they're selling into. Toyota sold cars to the US, and building plants here made sense relative to that for a variety of economic and political reasons. Everyone makes more money together so everyone's happy with the arrangement. I find it more odd to presume that corporations have some nationalistic competitive interest.
- atq2119 4y ago
  Cars are big and heavy, and so building them near the buyer has a logistics benefit. Chips have higher value per weight and size by orders of magnitude.
  - stonemetal12 4y ago
    Chips are strategically valuable, would the EU back a competitor to have local manufacturing capacity?
indymike 4y ago
Three reasons: 1. By operating a local subsidiary, you avoid unfavorable regulation and sometimes protectionism (Toyota/Honda/Intel). 2. Cost savings (transportation, labor, taxes, etc). 3.Proximity to customers.
bfgoodrich 4y ago
These are all international companies. Ford of Canada builds in Canada. GM of Canada builds in Canada. Honda US builds in the US. It's incredibly provincial to think of multinational companies so simply.

I always find it odd that companies always want to be build things outside of their home state TSMC -> US Intel -> EU Toyota -> US Honda -> US Ford -> MX / Canada GM -> MX / Canada

huijzer 4y ago

The most common reason is typically cheaper labour. That’s why Nike produced in Japan and then moved to even cheaper countries. Related might be that some countries have a lot of knowledge workers in their 40-50s who can then manage factories in other countries. Japanse companies producing cars in Europe is an example of that. For the current trend to move to the US. That has to be government funding. Luckily, fabs require large investments at the start which might break-even more expensive labor. Also, maybe some more automation in the fabs could also help in making the fabs cost competitive.

phpisthebest 4y ago
>>typically cheaper labour. While a factor, labor costs alone are the primary reason. In reality is more about the wider regulatory burden on a company, including environmental controls That said it does not explain why a Japan Company can make cars profitably in the US but a US Manufacturer can not. If it was only labor why would Toyota not have a factory right next to GM's in Mexico and import cars from Mexico to the US?
- helsinkiandrew 4y ago
  I guess its that the Japanese Company can make cars profitably anywhere but making cars for the US market in the US means there's no/less import taxes, also because the factories are huge they often get local tax breaks, and the cars may also eligible for EV/hybrid tax credits (I think Toyota have sold over 200K so there cars can no longer get this). I think making cars in Mexico for the US became less worthwhile when Trump pulled the US out of NAFTA.
  - phpisthebest 4y ago
    >US became less worthwhile when Trump pulled the US out of NAFTA. lol, trump did not "pull the US Out of NAFTA" not only is that not with in the power of the president to do, it was never on the table, NATA was replaced with USMCA, and only made a few small changes, for Automotive that means 75% of the vehicle components must be made in MX, US, or Canada, up from 64% under NAFTA Nothing in the law would impact making at car in the US vs MX, and was aimed at preventing increased parts from China or other non-north American nations, and all of the changes were passed by congress with wide bipartisan support
    - helsinkiandrew 4y ago
      OK - but he signed a deal with Mexico that replaced it and didn't the new deal mean that more parts had to be from the US and half the car factory workers needed to pay $16 an hour - which would make Mexico less attractive?
      - phpisthebest 4y ago
        > didn't the new deal mean that more parts had to be from the US and half the car factory workers needed to pay $16 an hour Both were proposed changes that were not adopted in the final version.
- lmz 4y ago
  I thought Japanese car factories in the US were all non-union (as opposed to the US brands)? Toyota does have a Mexico factory at least according to Wikipedia.
  - bluedino 4y ago
    Correct, the Honda/Toyota plants in the USA are non-union. Interestingly enough the “Clean Energy for America” bill pushes for additional tax incentives on EV's built by companies using union labor: More specifically, the proposal says that electric vehicles assembled in the United States would qualify for a $10,000 tax credit while EVs that are built at facilities whose production workers are members of, or represented by, a labor union would be eligible for the full $12,500 credit.
    - ApolloFortyNine 4y ago
      Aren't clauses like this just a clear cut sign of corruption? It doesn't even make a lot of sense as an incentive to have workers unionize, since why would workers care what price what they're selling cars for. The law would only exist to benefit existing unions.

ekianjo 4y ago

> Toyota -> US you dont pay tariffs if you produce locally. not hard to understand.

zrail 4y ago
Toyota builds trucks in the US because of the chicken tax. https://en.m.wikipedia.org/wiki/Chicken_tax https://en.m.wikipedia.org/wiki/Chicken_tax
fomine3 4y ago
US-Japan trade war was a big thing, and Japan relies on US for national security. There was no option not to manufacturing in the US.
- ekianjo 4y ago
  > and Japan relies on US for national security Good luck with that bet in the future.
  - deleted 4y ago
    [deleted]

jasonwatkinspdx 4y ago

It's not that odd that international companies would build local facilities for major markets they're selling into. Toyota sold cars to the US, and building plants here made sense relative to that for a variety of economic and political reasons. Everyone makes more money together so everyone's happy with the arrangement. I find it more odd to presume that corporations have some nationalistic competitive interest.

atq2119 4y ago
Cars are big and heavy, and so building them near the buyer has a logistics benefit. Chips have higher value per weight and size by orders of magnitude.
- stonemetal12 4y ago
  Chips are strategically valuable, would the EU back a competitor to have local manufacturing capacity?

indymike 4y ago

Three reasons: 1. By operating a local subsidiary, you avoid unfavorable regulation and sometimes protectionism (Toyota/Honda/Intel). 2. Cost savings (transportation, labor, taxes, etc). 3.Proximity to customers.

bfgoodrich 4y ago

These are all international companies. Ford of Canada builds in Canada. GM of Canada builds in Canada. Honda US builds in the US. It's incredibly provincial to think of multinational companies so simply.