Shipping Costs Start to Crimp Globalization

[Joanne98]

By LARRY ROHTER
When Tesla Motors, a pioneer in electric-powered cars, set out to make a luxury roadster for the American market, it had the global supply chain in mind. Tesla planned to manufacture 1,000-pound battery packs in Thailand, ship them to Britain for installation, then bring the mostly assembled cars back to the United States.

But when it began production this spring, the company decided to make the batteries and assemble the cars near its home base in California, cutting more than 5,000 miles from the shipping bill for each vehicle.

“It was kind of a no-brain decision for us,” said Darryl Siry, the company’s senior vice president of global sales, marketing and service. “A major reason was to avoid the transportation costs, which are terrible.”

The world economy has become so integrated that shoppers find relatively few T-shirts and sneakers in Wal-Mart and Target carrying a “Made in the U.S.A.” label. But globalization may be losing some of the inexorable economic power it had for much of the past quarter-century, even as it faces fresh challenges as a political ideology.

Cheap oil, the lubricant of quick, inexpensive transportation links across the world, may not return anytime soon, upsetting the logic of diffuse global supply chains that treat geography as a footnote in the pursuit of lower wages. Rising concern about global warming, the reaction against lost jobs in rich countries, worries about food safety and security, and the collapse of world trade talks in Geneva last week also signal that political and environmental concerns may make the calculus of globalization far more complex.

“If we think about the Wal-Mart model, it is incredibly fuel-intensive at every stage, and at every one of those stages we are now seeing an inflation of the costs for boats, trucks, cars,” said Naomi Klein, the author of “The Shock Doctrine: The Rise of Disaster Capitalism.”

http://www.nytimes.com/2008/08/03/business/worldbusiness/03global.html?_r=1&hp=&adxnnl=1&adxnnlx=1217703878-RqzhSwdSdngKMxbdr966Dg<br><br>&oref=slogin

[Demeter]

1. About Time!

So much for "globalization". Let the Thais make their own electric cars, they can sell them to China.

[kestrel91316]

2. Globalism's achilles heel! Not a moment too soon......

[AdHocSolver]

3. Don't start applauding yet.

Shipping costs will just provide a rationale for the greedy, dim bulbs who control the corporations to look for a country with cheaper labor than China provides in order to offset the increased transportation costs.

To save the U.S. economy, we need to force the return of jobs to America. This means, among other things, that trade/financial agreements such as NAFTA, the WTO, the World Bank, and the IMF be rewritten or rescinded, and import tariffs and import quotas be established to give smaller American manufacturing companies an even playing field so that they can compete with the large multinational corporations.

Moreover, we have to untie health insurance from employment and implement a single-payer universal health care system like most other industrialized countries have.

Bringing jobs back to the U.S. will alleviate our federal deficit since working Americans pay income taxes. Moreover, buying goods manufactured here in America will reduce our trade deficit, and this will strengthen the value of the dollar thereby reducing inflation.

The causes of our economic problems and the solutions are straightforward Economics 101.

The corporations and rightwing pundits spout economic gibberish that confuses people because they do not point out that "classic" economic theory only works when you have "true" competition. True competition assumes markets in which NO buyer and NO seller (and NO group of buyers and NO group of sellers) can control the quantity of what is bought or sold, nor can they prevent competition from outside groups.

NAFTA, the IMF, the WTO, OPEC, and similar agreements and cartels are designed to prevent competition from affecting the monopolistic control of existing groups. Nothing will change until the power given to these cartels is removed.

There is no "invisible hand" controlling production and prices. The "invisible hand" is wielded by corporate executives of the multinational corporations.

[truedelphi]

4. Thank you for laying out this economic theory of yours so succinctly.

You are right to cvoer so many bases.

And when GMO cites the health insurance costs of its work force as one reason that it pulls jobs out of the uSA to other countries, then I guess that we must realize how much we are affecting our manufacturing base, and our employment rates, by letting the Powers that be dictate that Universal Single Payer Health Care is not needed.