US imposes 300% import tariff on Bombardier

[SpyderNeil]

This is old, old, news. Applies only to the Bombardier C Series aircraft.

Bombardier partnered with AirBus over a month ago to side step that ruling, so American buyers won't have to pay the tariff.
Also the Canadian Gov. has appeared to have cancelled their order for a bunch of F18 fighter jets from Boeing, so it looks like Boeing will loose a big sale over their actions!

Neil

 

[IdahoMtnSpyder]

This is old, old, news. Applies only to the Bombardier C Series aircraft.

There must be something fairly recent about it. The article is dated Oct 7, 2017.

 

[ARtraveler]

You're correct, no simple answers. I think it was about 20 years ago, but guess who the highest paid auto workers were. If you said US you would be wrong. It was Japan. Don't know how they compare today. Automation was the big difference in cost of producing cars, plus, and this may surprise many, medical insurance benefits. Don't know what the number is today but 10 or 15 years ago about $1000 of the cost of every car produced in the US was to pay medical costs for employees. For Japanese cars the cost is zero. That is one impact a national health program can have.

Today, it is about $3,000 per car--or higher.

 

[RinconRyder]

When did things change? Because when I grew up, almost everything was made in America and somehow we could still afford to buy stuff. It was that way for sure through the 1970s. In fact, it wasn't that many years ago that Wal-Mart was advertising all the products they carried that were made in America.

Things changed because the rest of the world recovered from the devastation of WWII. Among first world countries the USA was the only significant one with virtually no battle damage and its industries were in high gear as a result of producing war materiel for the previous six years. In addition, there was tremendous pent up demand from the US population for cars, houses and other material things that could not be bought during the war years - and civilians had money to pay for these things because of the mandatory wage and price controls during the war.

But during these same 1950's and 60's not everything was Made in America. If you wanted precision camera equipment it came from Germany. England produced quality musical instruments. Japan began with cheap toys, much as China is today, but quickly became the world leader in automobiles and took motorcycle manufacturing away from the Brits.

 

[UtahPete]

Things changed because the rest of the world recovered from the devastation of WWII. Among first world countries the USA was the only significant one with virtually no battle damage and its industries were in high gear as a result of producing war materiel for the previous six years. In addition, there was tremendous pent up demand from the US population for cars, houses and other material things that could not be bought during the war years - and civilians had money to pay for these things because of the mandatory wage and price controls during the war.

But during these same 1950's and 60's not everything was Made in America. If you wanted precision camera equipment it came from Germany. England produced quality musical instruments. Japan began with cheap toys, much as China is today, but quickly became the world leader in automobiles and took motorcycle manufacturing away from the Brits.

Well said.

 

[JerryB]

Hi Idaho,

Re: That is one impact a national health program can have.

About 30 yrs ago I read an article by this reporter who had been planning on writing a book about automobile manufacturing in this country. While interviewing the president of one of the big three, the president said that he was not in the automobile business, he was in the health care business. He said that more than 70% of his time was spent on trying to reduce costs of health insurance to his company.

Jerry Baumchen

 

[UtahPete]

Re: That is one impact a national health program can have. About 30 yrs ago I read an article by this reporter who had been planning on writing a book about automobile manufacturing in this country. While interviewing the president of one of the big three, the president said that he was not in the automobile business, he was in the health care business. He said that more than 70% of his time was spent on trying to reduce costs of health insurance to his company. Jerry Baumchen

Yep. The entire country would benefit, socially and economically, if we could have a rational, nonpartisan study of reducing the cost of health care in the USA. Too many special interests (mostly insurance companies and pharmaceutical companies) for that to ever happen.

 

[blitzkreig]

It was shortly after AMF sold HD to the investor group that the tariffs were put in place to help HD to recover.

In the end I believe that it was HD’s experiment with Total Quality Management (TQM) principles first put into Japan after WWII.

Once HD had the management tools that could make a machine that didn’t shake apart and leak oil like a sieve the US buyer came out of the woodwork and tariffs didn’t have a lot to do with it ...

 

[IdahoMtnSpyder]

In the end I believe that it was HD’s experiment with Total Quality Management (TQM) principles first put into Japan after WWII.

Once HD had the management tools that could make a machine that didn’t shake apart and leak oil like a sieve the US buyer came out of the woodwork and tariffs didn’t have a lot to do with it ...

You're mostly correct!! HD didn't experiment with TQM, they implemented TQM. That was the operating principle that got them back into the graces of the American motorcycle market while the tariffs shielded them from onerous Japanese competition. When HD had become fit and trim and in super fighting form and could hold their own is when they asked the administration, or Congress, or whoever, to rescind the tariffs.

 

[CrashDavis]

The article states: "The US Chamber of Commerce has rejected an appeal against the huge tariffs it has imposed..."

I must be missing something, as the COC is not a government agency, when does a private organization get to impose tariffs?

 

[UtahPete]

Things changed because the rest of the world recovered from the devastation of WWII. Among first world countries the USA was the only significant one with virtually no battle damage and its industries were in high gear as a result of producing war materiel for the previous six years. In addition, there was tremendous pent up demand from the US population for cars, houses and other material things that could not be bought during the war years - and civilians had money to pay for these things because of the mandatory wage and price controls during the war.

But during these same 1950's and 60's not everything was Made in America. If you wanted precision camera equipment it came from Germany. England produced quality musical instruments. Japan began with cheap toys, much as China is today, but quickly became the world leader in automobiles and took motorcycle manufacturing away from the Brits.

I never really thought about it that way, but it makes sense.

 

[IdahoMtnSpyder]

Things changed because the rest of the world recovered from the devastation of WWII. Among first world countries the USA was the only significant one with virtually no battle damage and its industries were in high gear as a result of producing war materiel for the previous six years. In addition, there was tremendous pent up demand from the US population for cars, houses and other material things that could not be bought during the war years - and civilians had money to pay for these things because of the mandatory wage and price controls during the war.

But during these same 1950's and 60's not everything was Made in America. If you wanted precision camera equipment it came from Germany. England produced quality musical instruments. Japan began with cheap toys, much as China is today, but quickly became the world leader in automobiles and took motorcycle manufacturing away from the Brits.

About 1969, two years after I graduated from college, the front cover of a Machine Design magazine had the title, "Invented in Europe, Developed in America, Produced in Japan"! It was interesting how product evolution took place by crossing from one side of the earth to the other. Cameras were one of the examples cited.

Not only did pent up demand fuel manufacturing growth, but so did high taxes. Personal income taxes topped out at over 90% in the 50's and 60's. I don't know how high corporate taxes were, but they were up there. So, one way to avoid paying taxes was invest income in manufacturing facilities. Interesting contrast to much of current thinking about taxes. Also, ready access to and abundant supply of, raw materials such as iron ore helped spur growth. Eventually, by the 80's, low wages, no pollution controls, and easier recovery of iron ore made iron ingots cheaper to bring into Pittsburgh from Brazil than smelted from iron ore from Minnesota.

 

[Docster]

When did things change? Because when I grew up, almost everything was made in America and somehow we could still afford to buy stuff. It was that way for sure through the 1970s. In fact, it wasn't that many years ago that Wal-Mart was advertising all the products they carried that were made in America.

I likely grew up in a different income class. We couldn't afford most non-essential consumer goodies until the Chinese imports started coming in. They were cheap in quality but also in cost.

 

[ARtraveler]

About 1969, two years after I graduated from college, the front cover of a Machine Design magazine had the title, "Invented in Europe, Developed in America, Produced in Japan"! It was interesting how product evolution took place by crossing from one side of the earth to the other. Cameras were one of the examples cited.

Not only did pent up demand fuel manufacturing growth, but so did high taxes. Personal income taxes topped out at over 90% in the 50's and 60's. I don't know how high corporate taxes were, but they were up there. So, one way to avoid paying taxes was invest income in manufacturing facilities. Interesting contrast to much of current thinking about taxes. Also, ready access to and abundant supply of, raw materials such as iron ore helped spur growth. Eventually, by the 80's, low wages, no pollution controls, and easier recovery of iron ore made iron ingots cheaper to bring into Pittsburgh from Brazil than smelted from iron ore from Minnesota.

MN solved that problem. They began using "Taconite," a derivative of iron ore. They mixed iron ore with something, and pelletized it. They have been shipping taconite to the steel mills since the late 60's. The Fitzgerald, as well as all other ore boats were loaded with taconite when it went down.

The open pit mines were still up and running in Northern MN (the iron range) when I left the area in 2001. Taconite was the product. :thumbup:

 

[IdahoMtnSpyder]

MN solved that problem. They began using "Taconite," a derivative of iron ore. They mixed iron ore with something, and pelletized it. They have been shipping taconite to the steel mills since the late 60's. The Fitzgerald, as well as all other ore boats were loaded with taconite when it went down.

The open pit mines were still up and running in Northern MN (the iron range) when I left the area in 2001. Taconite was the product. :thumbup:

MN iron is now less than 2% of global production at about 40 million tons annually. Production back in 1974 was 65 million tons and from 1941 to 1945 411 tons total.
http://minnesotabrown.com/2017/02/mn-fifth-largest-minerals-source.html
http://minnesotairon.org/education/history/

The comment about Brazil vs MN was made to me around 1984 by a guy whose specialty was installation and repair of exhaust flues of large industrial furnaces.

 

[ARtraveler]

MN iron is now less than 2% of global production at about 40 million tons annually. Production back in 1974 was 65 million tons and from 1941 to 1945 411 tons total.
http://minnesotabrown.com/2017/02/mn-fifth-largest-minerals-source.html
http://minnesotairon.org/education/history/

The comment about Brazil vs MN was made to me around 1984 by a guy whose specialty was installation and repair of exhaust flues of large industrial furnaces.

Thanks for posting the articles. Sad to see the decline though. That appears to be steady over the years. The iron range was a heck of a place and a large driver of the economy back in its heyday. Not so much anymore.

 

[IdahoMtnSpyder]

Nice to see that MN is still the 5th largest source of taconite in the US.

Minerals, not taconite. It falls behind coal, gravel and stone I believe.

 

[RinconRyder]

Not only did pent up demand fuel manufacturing growth, but so did high taxes. Personal income taxes topped out at over 90% in the 50's and 60's.

What you stated is technically true but very, VERY few people paid that percentage. If you check the tables on taxfoundation.org you will see the history of Federal tax rates from 1913 through 2013. One dollar today has the same buying power as 10 cents did in 1955. In 1955 the median income in the USA was $5,000 per year. That would mean that the average marginal tax rate was 26%. Actual percentage would depend on many different situations/deductions so it is safe to assume most people paid less than 26%.

What would be interesting is to know the actual tax monies paid then as compared to now. I remember sitting with my parents when they were filling out their returns sometime in the mid/late 50's and I don't remember any complaints or discussion about how much tax they paid (and my dad was known to complain about such things).

 

[Fat Baxter]

Things changed because the rest of the world recovered from the devastation of WWII. Among first world countries the USA was the only significant one with virtually no battle damage and its industries were in high gear as a result of producing war materiel for the previous six years. In addition, there was tremendous pent up demand from the US population for cars, houses and other material things that could not be bought during the war years - and civilians had money to pay for these things because of the mandatory wage and price controls during the war.

But during these same 1950's and 60's not everything was Made in America. If you wanted precision camera equipment it came from Germany. England produced quality musical instruments. Japan began with cheap toys, much as China is today, but quickly became the world leader in automobiles and took motorcycle manufacturing away from the Brits.

Another key thing here was that everyone other than the US had their industrial base flattened during the war. A large reason we came roaring back after WW2 was that we we the only country capable of building things. Everybody wanted (heck, needed) our stuff.

So, everyone else had to, over time, rebuild their factories, while we kept using what we had. The eventual result was that everyone else had newer, modern plants while the US was still using its older, less modern facilities.

Another factor was that some of the rebuilding economies (especially Japan) took the time to examine such outlandish concepts as statistical process control and management engineering concepts (these eventually matured into what we now call Total Quality Management). But these same practices were not implemented in the US for quite some time, especially in the auto industry, due largely to union resistance to change.

So, it was a combination of newer production facilities and better management practices that allowed foreign competition to eventually overtake the US and kick our butt.

 

[IdahoMtnSpyder]

Another factor was that some of the rebuilding economies (especially Japan) took the time to examine such outlandish concepts as statistical process control and management engineering concepts (these eventually matured into what we now call Total Quality Management). But these same practices were not implemented in the US for quite some time, especially in the auto industry, due largely to union resistance to change.

It wasn't just unions, if in fact they really were much of the resistance. Management attitude and the bean counters were a big part of the resistance. When I was working for the Army in Rock Island in 1984 to 1991 one of the new engineers came to us from General Motors. His specialty had been window crank/lift mechanisms. Engineers were directed to establish tolerances for manufacturing that would result in about a 7% reject rate. The bean counters said that resulted in the lowest overall manufacturing cost for the part! You can be sure not all of the defective parts were caught before they got put into cars.