Here’s an interesting blog entry from CNET about how Toyota plans to make Prius cars for the US market in the US while cutting production of large trucks and SUV’s to meet the changing demand of the US auto customer. There are a couple of things I find interesting about this. First are some things unsaid. If I’m not mistaken, foreign automakers product cars in the US for the US market to avoid trade tariffs. The other recent factor is that the fall of the US dollar has made production in the US cheaper. I haven’t fully grasped the implications of a low valued dollar yet. I understand that it is blamed for some the reason oil prices are high, it’s keeping US tourists out of Europe for vacation, it makes it more expensive for Americas to buy imported goods, and it feels like a blow to the nation’s psyche as the current value falls. However, I guess I haven’t been thinking so negatively about it. I see this as the leveling of playing field as part of globalization. We all knew that it had to happen, though, I don’t think many understood the consequences of it. So as other nations rise and the US recedes, the balance of imports and exports changes. If becomes more expensive to import goods in the US, but the other side of that reality is that it become cheaper to make stuff in the US for US consumption and export to other countries. Will it ever get to the point where production in the US is favorable over China? — well that seems like a far reach for the near future, but perhaps further on down the road that could be a valid question, however, given the nature of business, companies will search for the next cheap source of labor on the planet, until eventually everything levels out — hopefully in a peaceful manner, although history doesn’t predict that kind of outcome. Oops, I’ve begun to ramble … Anyhow, back to the topic — consequently, due to falling currently, we could see more stuff like this happening in which foreign companies invest in the US worker for the US market.
The other interesting thing is the speed at which Toyota just decided to turn the truck factories off and transition work to more relevant vehicles. So far there have been no announcements of job cuts and if it stays that way, that is Toyota maintains it’s workforce and moves them onto more relevant work, then kudos to Toyota for being able to actively care about employees, customers, and shareholders at the same time (not so fast, though, apparently Toyota worked the lead engineer on the Camry hybrid to death — no joke).
It seems that the US auto industry is also slowing the production of trucks and SUV’s too, however, because their factories are not flexible, they cannot as easily shift to making new products as the Japanese and European automakers can. Here’s an article from Knowledge @ Wharton discussing the matter.