RV manufacturing moves south of the border

[jawilson]

Figures it would be Fleetwood...

http://rvtravel.com/blog/rvsinthenews/2007/03/fleetwood-to-build-rvs-in-mexico.html

[tlhdoc]

Gee do you think they will lower the prices or have higher profits???  I know which I think they will do.  :mad:

[AustinBoston]

I think their problems go deeper than it seems.  They lost three quarters of a billion dollars over the last five years.  The labor savings they might see from doing this will come to less than 4.5 million dollars a year, less than the Coleman/Fleetwood judgement.

Complain and argue if you want, but Fleetwood is probably only trying to stay in business.  If they don't, ALL the U.S. (and Mexican) jobs will be lost.

Austin

[jawilson]

Gee do you think they will lower the prices or have higher profits???  I know which I think they will do.  :mad:

Sadly, I think we all know which one it will be.

[jawilson]

I think their problems go deeper than it seems.  They lost three quarters of a billion dollars over the last five years.  The labor savings they might see from doing this will come to less than 4.5 million dollars a year, less than the Coleman/Fleetwood judgement.

Complain and argue if you want, but Fleetwood is probably only trying to stay in business.  If they don't, ALL the U.S. (and Mexican) jobs will be lost.

4.5 million is about 1/2% of what they lost (based upon 750 million). I can't imagine such a paltry amount will affect their bottom line in any material way. It's quiet obvious their motive is purely profit, and not the more "competitive" prices they mentioned might be a motivating factor. Such a minuscule amount certainly can't be enough to even offset the lose of sales from people who won't buy anything from them ever again because of this BS (and I'm in that group myself).

Judging from some of the replies this same post has garnered in other forums there's an awful lot of people pretty ticked off at Fleetwood for doing something like this in the first place, let alone right after closing plants right here in the US. They may end up filling for bankruptcy anyway, regardless of what desperation measures they take.

[wavery]

It will be interesting to see how the move effects the company, over the long haul.

Every company that I have ever had experience with, that has set up manufacturing in Mexico, has regretted it. GM lost 10s of millions on their engine assembly plant.

I had a lot of (closely held, family owned) stock in a large American foundry that set up a plant in Mexico in 1998. As soon as they made the announcement, I sold the stock. They are now nearly bankrupt and the Mexican operation was a horrible fiasco. The stock went from $142 per share to $0.21.

The bureaucracy and corruption down there makes it nearly impossible to succeed.

[AustinBoston]

4.5 million is about 1/2% of what they lost (based upon 750 million). I can't imagine such a paltry amount will affect their bottom line in any material way. It's quiet obvious their motive is purely profit, and not the more "competitive" prices they mentioned might be a motivating factor. Such a minuscule amount certainly can't be enough to even offset the lose of sales from people who won't buy anything from them ever again because of this BS (and I'm in that group myself).

It might be enough of a price difference so that they can sell their cheapest units in Mexico, which may be the real intent.  If they don't cut the price, they won't sell in Mexico.

Judging from some of the replies this same post has garnered in other forums there's an awful lot of people pretty ticked off at Fleetwood for doing something like this in the first place, let alone right after closing plants right here in the US. They may end up filling for bankruptcy anyway, regardless of what desperation measures they take.

The truth is, 99% of that is just posturing.  Those with the biggest mouths are those who rush to Wal-mart to buy Chineese-made goods that used to be made in the United States, and buy "American" vehicles that were actually made in Japan or Korea.  This will blow over, and Fleetwood knows it.

Austin

[AustinBoston]

It will be interesting to see how the move effects the company, over the long haul.

Every company that I have ever had experience with, that has set up manufacturing in Mexico, has regretted it. GM lost 10s of millions on their engine assembly plant.

I had a lot of (closely held, family owned) stock in a large American foundry that set up a plant in Mexico in 1998. As soon as they made the announcement, I sold the stock. They are now nearly bankrupt and the Mexican operation was a horrible fiasco. The stock went from $142 per share to $0.21.

The bureaucracy and corruption down there makes it nearly impossible to succeed.

My brother set up manufacturing plants for a plastics company for more than 20 years.  If a company goes into a place like Mexico with the intent to do business the "Mexican way" it may succeed.  The three plants he set up there are still going.  Any company that plans to do things the "American way" (does not buget enough for graft) is doomed.

He told me the worst place to do business was Russia.  He set up a budget that was 30% graft, and that was not enough.  Things have changed some, but for generations the Soviet Union essentially taught people to not work.

The place he personally least liked going was New Delhi.  As a street-hardened former hockey player, he found the level of human misery more than he could take.  He compared a plywood box in Rio Dejanero or Tijuana as a mansion compared to some of the living conditions he saw in New Delhi.

The only place the company had a factory fail (before his time) was in France.  Labor union activity got so bad that they simply abandoned the plant, leaving everything behind - inventories, equipment, computers, local bank accounts - everything.

He told me the easiest place to work was Singapore.  From the top of the government to the bottom, and from the top of the labor pool to the bottom, he said he saw nothing but efficiency, trust, and technical competency.  The society, at every level, was orderly and cooperative.  He said it took him a bit of time to get used to working where there seemed to be no idiots.

Austin

[chasd60]

It's good for the Global Economy and market.

[wavery]

It's good for the Global Economy and market.

I would agree that the theory is good but the reality often falls short due to variables beyond the control of the company or the laws as they are presented.

Remember, when you are in a foreign country or doing business in a foreign country, you are subject to their laws as they interpret them on that particular day. The only thing that you can do, if you don't like the way things are going, is leave (maybe). The US Embassy has ZERO power over any foreign government (possible exception Iraq) and our laws mean ZERO to them.

The reason that most companies choose to do business in Mexico is because labor is cheaper but the BIGGY is that the environmental restrictions are perceived to be less. This will come back to haunt any company that chooses to act irresponsibly with the environment by moving their business to the other side of the boarder. There is a reason that we have strict environmental laws. A lot of that has to do with land conservation but most of it has to do with health. Think it through to a logical conclusion and you may see that no good can come from that type of irresponsible behavior, over the long haul.

[chasd60]

There is a reason that we have strict environmental laws.

We have STRICTER environmental laws. Our laws aren't really strict, they allow for a measure of enviromental irresponsibility so our businesses can still operate without too much pressure.
 
Most of the countries US businesses are moving to are in the same conditon socially and economically that we were in 50-75 years ago. We didn't care too much about human rights or the environment then either. Yea, I think we knew, we just didn't want to stifle business.
 
I think globalization will work, just not in my lifetime.

[AustinBoston]

I think globalization will work, just not in my lifetime.

Like a lot of things, a global economy takes a long time to work - the time scale is one of generations.  But I do believe it is worth it.

The danger is, many of the countries we ship business to will never buy anything from us in return.  That was not true of Japan, Taiwan, Singapore, or many other countries we turned to to make cheap goods.  Eventually, they bought food, cars, and/or other products from us, bringing some of our money back here.  But what are the Mexicans going to ever buy from the U.S.?

Austin

[mjdfarm]

Like a lot of things, a global economy takes a long time to work - the time scale is one of generations.  But I do believe it is worth it.

The danger is, many of the countries we ship business to will never buy anything from us in return.  That was not true of Japan, Taiwan, Singapore, or many other countries we turned to to make cheap goods.  Eventually, they bought food, cars, and/or other products from us, bringing some of our money back here.  But what are the Mexicans going to ever buy from the U.S.?

Austin

Nothing we are letting them all come here....