Foreign Invesment, another example of "I told you so"

[Davemuzz]

I know I get on my soap box about this and I know that foreign companies have made invesments on US soil and created US jobs. But don't get me started about all the good that they have done 'cause I will ask exactely how many US guys are in top management in these plants....and that's just the start.

Yesterday, Sony corporation of America, located in New Stanton Pennsylvania (the site of the former Volswagon of America plant....remember those guys???) announced that they are going to lay off immediately 300 TV production workers. And, by the end of next year they are going to lay off another 600 produciton workers while another 100 workers will be "let go".

And why?  Well, it seems that the TV tubes that have been made in this plant for the last 10 years will now be made in.......Mexico! Yup.....because of cheaper labor cost they are moving production to Mexico. Man.....am I glad the state of Pennsylvania gave Sony all of those State tax breaks to come to this state and plop their production here. Why, the tax breaks ran out.....hey....just in time for them to move the plant to Mexico!!!! How about that!!!!

Oh....they are going to now produce a flat screen TV at the New Stanton facility. However, this production is a FULLY AUTOMATED one that doesn't require anywhere near the skilled workforce that the tube TV production one did.

So, I'll keep buyin Chevy's. Period.

Dave

[Keith L]

I was looking at a Saturn Ion yesterday, and the salesman told me that after this year Saturn production was being moved off  shore for one year so their plant could be re-tooled.  I was thinking of buying one until then...

[Keith L]

The interesting thing is that in many of my former client companies they assumed they were saving lots of money having parts made in Asia.  When we looked at the cost of the part only they were making a killing.  When we added things like the transportation costs, shrinkage due to loss and to spoilage (even on hard goods), storage, customs costs, the cost of money buying in the quantities needed to keep the factory running with an international supply chain, defects caused by language and culture differences, and parts that had to be reworked by the container load (or scrapped) when design changes occurred then we were often able to buy the parts locally from the most expensive source we could find and it would be cheaper.

I think it makes more sense to take waste out of the manufacturing process (Lean Manufacturing), and make the factory agile and responsive to the needs of the customer.  All of a sudden we have lots of work, and happy customers.  This happens with union and non union factories.  And the best part is that the workers are able to make a living wage, and can keep the American economy perking.  Paying sweat shop wages in a "low cost country" doesn't get that done at all.

Sorry about the rant.  I just want the economy here to be robust, and to have a strong, healthy middle class.  Sometimes I think the "Barons of Industry" just want to make the gap between the rich and the rest of us wider.  Ticks me off.

[Keith L]

Back into rant mode. 

I understand Haliburton is relocating corporate headquarters off shore to end paying US income tax.  This is the company famous for no bid government contracts and "loosing" 15 billion dollars of our tax money. 

Settle down Keith.  Settle down...

[Davemuzz]

Well, if Haliburton continues to get US government contracts, it would be considered "US source income" and still subject to US income tax. At least the net income on the US source contracts. In other words, you can't move overseas, still get income from a US source, and avoid paying US income tax on it.

Plus, if the officers are US citizens, then they still have to pay US income tax on their income. Yeah, there is a foreign income exclusion on the first $85,000 if you don't step foot in the US in a 365 day period for more than 13 consecutive days (or something like that) but I think the big boys at "H" are doing far better than $85K per year.

Don't get me wrong....I'm not sticking up for "H", but they don't just walk away "tax free".

Dave

[Keith L]

There are plenty of companies that shirk the vast majority of their US tax responsiblilty by moving offshore.  Apparently their accountants know some loopholes you don't.

Haliburton should never again get the special deals they have been living on the past six years if they cut and run from the US.

[Davemuzz]

Keith, actually, I don't think their accountant's know one tiny bit more about the US tax code than I do. If it was such a lucrative idea to move to the big "H" out of the US, then you gotta ask why that wasn't done last year, or 5 years ago, or even 10 years ago.

When I worked as a partner in a CPA firm and specialized in taxation, our clients had operations in other states, and other countries like England, Purto Rico (yeah...is that foreign??), Mexico, Canada and China.....and a few small ones in some obscure small eastern countries.

My diversions are ballistics and hunting. This "stuff" is enjoyment.

What you don't want to get me started on is why in the world does our congress even listen to the World Trade Organization and how they thought the Extraterritorial Income Exclusion deduction was in effect, a back door US Government subsidy and essentially told our Congress to repeal the law. The law, (EIT) was a great benefit to US manufactures who exported US made goods. Yeah....and we let the WTO tell us our tax code "wasn't fair"??

Like I said....don't get me started.

[Brett]

I'm a little confused... you mean to tell me that Sony Corp. could not find enough cheap Mexican labor in New Stranton, PA?
 Seems to me that there will soon be more Mexicans in the US than in Mexico.  Then what will the big corporations do?   

[Davemuzz]

I'm a little confused... you mean to tell me that Sony Corp. could not find enough cheap Mexican labor in New Stranton, PA?
 Seems to me that there will soon be more Mexicans in the US than in Mexico.  Then what will the big corporations do?   

LOL!!! Yer killin me here Brett!!!  Funniest part is.....about a year or so ago....the local police pulled over a van full of illegal's. They notified immigration and immigration told them they were too busy to deal with 'em and to just let 'em go! So...they did! (Maybe that's Sony's secrete underground labor training supply chain???)

[gypsyman]

About 2-3 years ago, Public Broadcasting did a special on Walmart. Seems Walmart went to a factory in Circleville,Ohio, were they had some parts made for TV's.(picture tube I think) Said, you have to make them cheaper, or we're going to have them made in China. So they, the workers, took a pay cut, and the company dropped their price. Less than a year later, Walmart said, to bad, we're going to have them made in China anyway, and the plant closed!! Then, to top it off, Walmart built a store right next to the closed factory.
I'm afraid that these big business's, are going to out think themselves. And sooner or later, this economy is going to take a dump.(watched a show on the History channel about the Great Depression. Main reason wasn't the stock market crash, banks over lent themselves, way to much credit extended, and people got scared and stopped spending-sound familiar-- hmm) Since I've shopped at Walmart, and the rest of the market place is just about as guilty as WallyWorld, I'm as much to blame as the rest. Really don't know how to avoid it, as so many things are made over seas,Mexico, S.America, you don't know what to buy withou  sending money abroad. We keep trying peace, it usually doesn't work!!Remember(12/7/41)(9/11/01) gypsyman