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  1. #1
    Senior Member BetsyRoss's Avatar
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    Weak Dollar: Airbus, VW Plants in U.S.?

    Weak Dollar: Airbus, VW Plants in U.S.?
    A rising euro and high labor costs are leading at least two European manufacturers to consider building new plants in the U.S.

    The euro's seemingly inexorable drive toward the $1.50 mark may have slowed down for now, but companies in Europe seem to have sped up their search for strategies in dealing with the newly weak dollar. European jet-maker Airbus and auto manufacturer Volkswagen both have decided on a solution: The two companies are actively looking into building factories in the United States.

    According to a report in the Monday edition of the Munich daily Süddeutsche Zeitung, Airbus is looking into building a final assembly plant in Mobile, Alabama. The prerequisite for such a move, the paper reports, is a contract for 180 refueling aircraft the United States Air Force has tendered. Airbus is competing against Boeing for the sale, and a final decision won't be made until the beginning of next year. Airbus is targeting the relatively poor state of Alabama in an effort to win political support for its bid.

    Were it to win the contract, Airbus would modify the passenger jet A330 to meet the US military's requirements. The factory would also be able to produce the civilian version of the plane, resulting in massive exchange-rate savings to Airbus. Because the plane-maker sells its products in dollars, a $0.10 change in the exchange rate cuts a €1 billion (nearly $1.5 billion) hole in the Airbus bottom line. Furthermore, the company's Power 8 savings program, announced earlier this year, is based on an exchange rate of $1.35 to the euro.

    Recent drops in the dollar's value have led Airbus CEO Thomas Enders to warn that more savings measures may be on the way. On Monday, the euro climbed down further from last week's high of just under $1.50 and was trading at $1.466.

    Meanwhile, Volkswagen is also looking to build a factory in North America in order to minimize the hit it might take should the euro remain strong. "Our scouts are looking intensively for possible sites in the US and Mexico," Jochen Heizmann, VW's head of production, told the industry weekly Automobilwoche over the weekend. He said the company needed to develop production capacity outside the euro zone.

    The move had been hinted at in mid-November by the head of Volkswagen of America, Stefan Jacoby. He said that the factory would likely be built in the Eastern Time Zone to facilitate communications with the mother ship in Germany, but no concrete plans have been mentioned. Jacoby said at the November Los Angeles Auto Show that an announcement on a North American factory would be made within the next six months.

    A recent study by the Center for Automotive Research, completed prior to the recent fall of the dollar, found that autoworkers in Western Europe make almost $10 more per hour than their colleagues in the United States make.

    Volkswagen could ultimately decide to expand its factory located in Puebla, Mexico, but the company mostly produces smaller models there. VW is interested in expanding the number of models available in the US and seeks to double its current sales on the continent to 800,000 units per year.

    VW used to produce cars in a factory located in Pennsylvania but closed it in 1987 after sales of the models built there took a dive. The German carmaker said last week that it was investing $14.1 billion in production capacity around the world. Last week, the company opened its first factory in Russia.

    Provided by Spiegel Online—Read the latest from Europe's largest newsmagazine

    http://www.businessweek.com/globalbiz/c ... l+business
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  2. #2
    Senior Member Coto's Avatar
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    Good morning, Betsy Ross,

    I think you're more informed than I am. I want to point out to website readers that Tata employees domociled in Bangalore, India, are required to work "off the clock" on Saturdays to compensate for the rising rupee (falling dollar). Unfortunate these Tata workers don't have the backbone to seek out union representation.

    Recommendation - pay NON-immigrant H-1Bs in rupees, not dollars.
    Better Recommendation - Terminate the non-immigrant H-1B and L-1 visas entirely, and deport those non-immigrants (along with their illegal alien allies).

    Yet even better recommendation - Lawmakers listen to constituents. Constituents are fed up with training replacement workers, then getting fired.

    What part of "We don't owe our jobs to India" are you unable to understand, Senator?

  3. #3
    Senior Member BetsyRoss's Avatar
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    Good morning Coto - it seems there is a silver lining to the falling dollar. I had indeed heard about Indian companies demanding unpaid Saturday work. Sounds gruesome. Here's more on the effects of the dollar on export-dependent industries abroad: http://economictimes.indiatimes.com/20_ ... 595097.cms
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  4. #4

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    I've been in career hell - too bad I think this is good news. I look at the bright side - falling dollar, lower tax rates, more companies coming in, less off-shoring, more awareness of tax inequity, more demands to remove illegal immigrants (incl. overstayed visas), less H1Bs, lower housing prices.... maybe some of the disenfranchised will have a chance again as the market levels?

  5. #5

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    I had an argument with a poster on another board about working for a foreign company in America. I would rather work in the Japanese run plant, where everyone speaks English, than in the American run plant that requires me to learn Spanish and work with a bunch of illegals.

  6. #6
    Senior Member BetsyRoss's Avatar
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    Yes, Honda and Toyota figured out that if they wanted to sell here, they needed to hire here. Some of the other foreign companies are simply in the business of coring out business processes and removing them from the natives, and simply earning all the money for themselves. Very rapacious business model.
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  7. #7

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    dollar should slide further and lifet Americans out of pover

    Im a happy man to see dollar taking a dive. This will bring manufacturing jobs back to America. However dollar has fallen just 10%. I would like to see dollar lose 50% value that will bring America back to itz past glory with jobs everywhere

  8. #8
    wmb1957's Avatar
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    Re: dollar should slide further and lifet Americans out of p

    Actually the slide of the dollar encourages investors to move their money away from the U.S. It helps with exports supposedly, but in truth it would take the dollar falling so far that we'd all be in poverty while working that it wouldn't be that good for us.

    Manufacturing jobs are gone from the U.S. as long as we have the unfair trade agreements we have.

    Quote Originally Posted by bluecollar
    Im a happy man to see dollar taking a dive. This will bring manufacturing jobs back to America. However dollar has fallen just 10%. I would like to see dollar lose 50% value that will bring America back to itz past glory with jobs everywhere

  9. #9
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    I am trying to understand why foreign companies can locate here and make a profit, yet American companies say they can't operate here?

    Or - will these foreign companies just be more magnets for illegals. In other words, will we be expected to support subsidized labor for these foreign manufacturers?

    Also, does it bother anyone that we are considering buying military aircraft from a foreign manufacturer.
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