OK, let us assume I am an electrical engineer and a businessman and I’ve developed a new revolutionary electric motor and it is such a hit that I have received initial orders for 100,000 of these motors if I can mass produce them. Of course I want to produce them so I get the financing and embark upon setting up an electric motor manufacturing operation that will employ about 100 manufacturing employees. I live in Missouri and being a loyal Missourian I want to keep the jobs in my state and in my country. So I get ready to move forward and go out and look for a manufacturing facility. I find a 19,000 square foot facility for about $24 per square foot. Before I can get started, I have to submit a proposal and a plan to the City Council and the County Zoning Commission for approval. Of course, they will require that City and County inspectors come out and do an inspection and that I comply with all of their recommendations before I can begin operations. But so far, so good… All goes well and it costs me a little more than I anticipated securing my business license but I’m in good shape so far.
Moving forward, I set up my operation and get ready to hire my workforce. I put an ad in the local paper for workers and I’m offering $14/hour to start and a 401k matching up to 6% of employee contributions and after 90 days a health plan where I pay 60% and the employee pays 40%. OK $14 per hour is not a great wage but it gives me a chance to pay down some of the debt I’ve incurred and it also gives me some leeway for unexpected expenses, etc. The motors we will be producing will sell for $300 and all in, they will cost between $150 and $175 per unit.
Just as I get to begin hiring workers, EPA inspectors show up and tell me I’m going to have to pay to have an environmental impact
study done before I can begin operations. Next Obamacare is upheld and now the premiums for the group health plan are going to be raised by 40% because my plan is considered a Cadillac plan. Then I get an inquiry from the Labor Department because the people that I have hired are not racially diverse enough to reflect the ethnicity of the surrounding community. And then to top it all off, a union organizer is planning to picket my facility because we are a non-union shop.
Then along comes a Chinese trade representative whose job it is to seek out manufacturing opportunities for China and tells me he can
produce and deliver my motor to my specifications for less than half the cost of what it was going to cost me to produce my motors at home in Missouri! No Facility Overhead, No OSHA, No Labor Department, No Obamacare, and No Unions! It sounds too good to be true so skeptically I ask him how can he do this at such a low price and his answer? “Simple, we only pay our workers $1.50 per hour.” What would you do? Lower cost of goods? No regulatory headaches? No Union harrassment?
Well given the economy and my hometown loyalty, I would like to say that I for one would try and stay the course and keep the jobs in the country. But such is not the case for the big shots... For example, “General Motors Corp. will shift more production of vehicles bound for the U.S. market to China, Mexico, South Korea and Japan," the Detroit News reported in May 2009, when the Obama administration was exerting control over the giant automaker. Further, “General Motors CEO Dan Akerson said Tuesday that the company plans to begin building Cadillacs outside the United States by the end of 2012," Autoweek reported in June 2011. Then, GM plans to "nearly double the number of cars it builds in China by 2016," USA Today reported in April.
So much for President Obama’s “rescuing General Motors.” And so much for the Administration’s claim that it’s economic policies are going to return manufacturing jobs to the United States labor market. Can U.S. Labor compete with $1.50 Chinese wages? Yes. But only if it acts politically and contrary to popular belief, Obama isn’t Labor’s man to get this job done. One of the ways China is able to pull off paying its workers such low wages is through the way it manipulates the values of its currency so it’s workers can live on a $1.50 per hour. In the 3 ½ years the President has been in office, not once has he engaged the Chinese in any serious attempt to stop the practice! Why, you may ask? Because it is GM’s China Operations that is keeping GM afloat and it would not be in the best interest of a President seeking a second term in office to bring attention to this subject by addressing the disparity.
So far in this election, the only candidate campaigning with a platform that includes bringing China in line and putting a halt to its currency manipulation is Mitt Romney. That’s right! The man the Unions love to hate. But if you look at the bigger picture, as GM looms on the brink of a second bankruptcy (Don’t laugh just wait until after the election) you will see that Obama’s fix was only a temporary
fix at best and Romney’s plan would repair the problem for good! Otherwise, Autoworkers better get ready for a huge pay cut because if our leaders don’t fix the disparity, get ready to have to compete head to head with China’s $1.50 wages!