At first glance, the idea that the ‘Big Three’ American automakers (Chrysler, Ford and GM) would stop manufacturing their cars and trucks in other countries might seem like a ground-breaking idea.
But it’s not as shocking as some new ideas that have come to light, such as putting an engine in sailing ships enabling them to cross entire oceans, or passenger travel by aircraft instead of train, or that man should walk on the Moon by 1970.
Still, the idea that America’s Big Three automakers would stop building their cars in other countries might be seen as a novel idea.
Why Would American Automakers Want to Stop Building Cars in Other Countries?
Let’s take the case of the North American car market:
Chrysler, Ford, and GM have auto assembly plants in Canada, the United States and Mexico where they produce millions of cars and trucks per year. The majority of those vehicles are then sold into the U.S. because it’s a far bigger market than the Canadian and Mexican vehicle market combined.
Which means that many American auto industry jobs are lost to Canada and Mexico.
President Trump wants to lower the unemployment rate in his country and help make his domestic auto industry stronger and more responsive to the American market via high tariffs or restrictions on the number of cars Canada and Mexico could export to the United States.
The trade-off of that move would be worse relations with Canada and Mexico which have long benefited from Big Three auto factories located in their respective countries and Canada and Mexico would be loathe to lose those economic benefits.
And although I see U.S. President Donald Trump’s point on this — I’d rather talk about solutions that could work for all three countries.
What if There’s a Way for Each of the NAFTA Countries to Win?
Let’s pretend for a minute that we’re looking at the North American auto industry from the vantage point of 5-years in the future.
Five years on, let’s say that every Chrysler, Ford, and GM car and truck sold in the United States is manufactured in the United States, unemployment is at an all-time low, and the American economy is rocketing along like it was in the 1960’s. Great!
What about Canada?
As the Big Three factories presently located in Canada would still remain, new licensee companies approved by Chrysler, Ford, and GM could build all the Chrysler, Ford and GM vehicles required for the Canadian market, and build 100% of them in Canada, while still keeping to U.S. auto company specifications and quality. Such licensee companies would be required to meet the same manufacturing standards and warranty terms.
Companies like Magna International already produce a significant number of the parts required for all of the Big Three automakers; Extending their license to include vehicle assembly on behalf of one of the U.S. auto companies would be an easy transition.
Or, entirely new companies could be formed; One company (‘Chryton Co.’) could build all Chrysler cars and trucks for the Canadian market by purchasing the existing Chrysler manufacturing plants in Canada and paying the required per-unit license fees to Fiat Chrysler USA, while ‘FordX’ would build every Ford car and truck for its Canadian dealers after paying its per-unit license fee to Ford USA. Likewise, GM vehicles would be built by a GM-approved company (‘AC Delco’) that would pay a license fee to GM USA for each vehicle it builds for the Canadian market.
In that way, all Chrysler, Ford, and GM vehicles destined for the Canadian market would be manufactured in Canada by Canadian workers — and other than paying license fees to the respective USA auto manufacturer — the Canadian automotive manufacturing industry would be 100% Canadian. That’s 100% Canadian-owned and 100% Canadian-staffed. (They would still need to match U.S. manufacturing and warranty standards however)
Exactly the same could be done in Mexico for Mexican companies and consumers. (They would still need to match U.S. manufacturing and warranty standards however)
And all Chrysler, Ford, and GM cars and trucks destined for the U.S. market would be manufactured in the United States by American workers and the U.S. auto industry would find itself in the middle of an economic boom!
In an Era of 3D Printing, License Fees Will be Everything
Welcome to the future!
If you live in Canada and you want a Ford car you simply order the car online and the Ford-approved Canadian company 3D prints and otherwise assembles your Ford car and the car arrives at your local dealership a few days later.
You might even choose to watch it being 3D printed, painted, and assembled on your tablet or laptop computer.
Yes, other than upholstery and tires, etc. all 3D printed cars and trucks will be made from aircraft grade aluminum alloy as aluminum works better than steel for 3D printing.
Not Only The Big Three, But European and Japanese Automakers Too!
Imagine if EVERY new car and truck sold in Canada is built in Canada by Canadian companies that pay a license fee to the respective American, European, or Japanese automaker. That equals full employment in the Canadian auto sector, without the (understandable) griping by President Trump about American job losses.
Imagine if EVERY new car and truck sold in the U.S.A. would be built in the United States by American workers, and even European and Japanese vehicles sold in the U.S. would be built by U.S. companies that paid for the rights to 3D print and assemble those cars. That equals full employment in the American auto sector.
Imagine if EVERY new car and truck sold in Mexico would be built by Mexican companies that pay a license fee to the respective American, European, or Japanese automakers. That equals full employment in the Mexican auto sector, without any griping by President Trump about American job losses.
NOTE: I understand that hand-built cars like Rolls Royce, Ferrari, Aston Martin, etc. would decline to take part in such an arrangement, but those cars account for less than 1% of the North American market share. They would simply continue to export their cars to their North American customers as usual.
Again, manufacturing and warranty standards would need to be carefully vetted by the licensor before granting manufacturing rights to licensees. Even so, every country in this equation would ‘Win-Win-Win’.
And consumers could purchase a locally built vehicle that wasn’t shipped across the continent or thousands of miles of ocean.
Shop Local, and still get the ‘foreign’ car of your dreams!
Auto Manufacturers Would Make the Same Per Vehicle Profit in Foreign Countries as Now — But Via License Fees (only)
The era of ‘things-based’ globalization is morphing into ‘ideas-based’ globalization where things are designed in country ‘A’ by a company that retains 100% rights over who is allowed to 3D print and assemble its products in country ‘B’ — which could be literally anywhere on the planet.
Whether it’s T-shirt graphics electronically transmitted and licensed to a company thousands of miles away (as is done now) or whether licensed companies 3D print and assemble your foreign car in the city where you live — globalization might finally become all that it can and should be — creating hundreds of thousands of jobs in each country for workers in 3D printing/manufacturing factories that could literally build anything, anytime, for anyone, as long as they have purchased the proper license.
Such ‘On Demand’ manufacturing might become the biggest job creator ever and lower the tensions brought on by the endless competition between the world’s free trading nations.
Ready for the future? Order your locally-manufactured foreign car here.
(OK, just kidding… But it might be that easy in only a few years!)
It’s always helpful to look at a country’s actions over the past 200 years to help understand what its intentions may be here and now, and in the future.
The burgeoning but relatively isolated country of Iran hasn’t militarily attacked another country for over 200 years, and it was Saddam Hussein’s Iraq that militarily attacked Iran in September 1980 — a conflict that finally ended in August 1988 with 1 million casualties and an economic cost of $680 million to $1 trillion dollars — with no clear winner and no benefit to either country.
After all that blood and treasure, no benefit to either country(!) although via the UN-sponsored peace accord and as a penalty to Iraq for starting the war, Iran gained access to the Shatt al-Arab waterway which runs into the Persian Gulf.
Since 2000, Iran has purportedly financed organizations (some listed as terrorist organizations, and others not) throughout the Middle East and most recently in Syria, Iraq, and perhaps Lebanon, in an attempt to exert some control on the various forces operating around their region. (Every country uses various methods to control what happens in its own region, so no news there)
But nothing captures the world’s attention like the Iran nuclear deal.
U.S. President Donald Trump says the deal is a bad one for the West and shouldn’t have been signed and wants to walk away from the deal, reserving the right to act unilaterally if he feels the country is a danger to the U.S.A. or its Middle East allies.
Last week, France’s President Emmanuel Macron flew to Washington to meet with the U.S. President to convince him to stay in the deal or to embrace a ‘third way’ which means renegotiating some of the agreement to better suit U.S. concerns.
Iran barely signed the previous agreement… so it will be interesting to see how the U.S. can get everything it wants from a renegotiated deal while still obtaining Iran’s signature to a new agreement. A deal isn’t a deal unless both sides sign on the dotted line.
Why Would the U.S. Care About Iran? (and Syria, for that matter)
From a strategic perspective, there isn’t a country in the world that could be less important to the security of the United States than Iran, and the same goes for Syria.
Neither country has the kind of military that could threaten America, nor could they project their power anywhere near the North American continent.
Unless the United States is actively working for Israel — a country which has an irrational fear of Iran (again, Iran hasn’t invaded any other country for over 200 years) and is willing to spend billions or even another trillion dollars to wage another Iraq War-style conflict against Iran, there’s no reason for the U.S. to have any dealings with Iran whatsoever.
Iran is a regional power at best, and will remain so for approximately the next 30-years as it hasn’t the capacity to be anything else.
If the United States is actively working for Saudi Arabia — a country that views Iran as an unwelcome competitor in the race to dominate the region, the same advice applies. Why should the U.S. spend multi-billions and sacrifice thousands of young soldiers to satisfy the Saudi ambition to be the local hegemon?
It’s not like Iran is withholding oil deliveries. On the contrary, Iranian oil is easily obtainable with a phone call — the country is highly motivated to sell every drop of oil due to high spending on social programmes by the Iranian government that are funded by oil revenue.
And Iran’s crude oil is rated either #2 (sweet) or #3 (semi-sweet) which means it’s in high demand around the world. Global oil producers have already pumped all of their #2 sweet crude out of the ground years ago; only Iran and Venezuela have significant reserves of sweet crude in the 21st-century.
As for oil refineries, they need Iran’s (or Venezuela’s) #2 sweet crude oil to blend with the oil supplied by their producers which is almost always #4 (sour) or #4.75 (very sour) like the Canadian oil sands product.
Most refineries won’t accept sour crude oil unless there is plenty of #2 or #3 sweet crude blended into the sour crude. It’s just too toxic to refine ‘sour’ as it requires a much more stringent maintenance protocol, meaning the refinery needs to shut down and go into ‘maintenance mode’ more often. That downtime represents a significant loss of revenue for oil refineries.
Therefore, as long as Iran continues to ship huge quantities of sweet crude, the United States should be facilitating that oil business instead of trying to curtail it.
The EU View of Iran is a Mature View
Say what you want about the Europeans, but they don’t allow themselves to be used by countries like Israel that have an irrational fear of Iran and want to use the United States and the EU to keep the Iranians ‘down’ and in their ‘proper’ place, or countries like Saudi Arabia that want to use the United States and the EU to keep the Iranians ‘down’ so that the regional superpower will be Saudi Arabia by default.
To oversimplify the EU view; As long as Iran’s sweet crude continues to flow (it is) and as long as Iran isn’t actively invading any other country (it isn’t) then there’s there’s no reason to use some imagined breach of the Iranian nuclear deal to launch another trillion dollar war in the Middle East. And, as always, the EU continues to refuse to allow itself to be used by regional powers such as Israel and Saudi Arabia.
In the final analysis, the EU’s position on the Iranian nuclear deal is the most enlightened of all and it is the view the United States should support.