FORD FIRST TO INSOURCE

It is very refreshing to hear the news that the big three US automakers General Motors Corporation (GM:NYSE), Ford Motor Company (F:NYSE), and the now privately held Chrysler LLC will be making a move to insource some of the parts it uses in the manufacturing of their automobiles. This is due, in part, thanks to contract negotiations between the big three and the UAW last year which allowed the companies, among other things, to reduce starting wages to $14 an hour, and therefore make it more competitively advantageous to manufacture parts inside the US rather than what has been the prior trend to outsource to cheaper labor cost countries like China and Mexico. Thankfully the unions finally understood that their stubborness and brashness at the negotiating tables was doing more damage than helping their cause, and that they were making it increasingly more difficult for US automakers to operate competitively and profitably in a global market. I strongly believe that if we can create more jobs in this country and through government, consumer, and corporate actions work to sustain those newly created jobs, then higher wages and economic growth are natural progressions.

The falling dollar has had some role in this as well, and while the falling dollar means that Americans will have to shell out slightly more cash for the same goods they could buy with a dollar even just a year ago, it also means it will cost more for foreign companies to export their goods into the United States and cost less to make goods here. In my opinion this bodes well for the American economy which is not so much based on the value of our dollar, but rather on consumer spending. If Americans are working and making money then they will spend it, and the economy will prosper.

Ford Motor Company will be the first to insource starting in the spring of 2008 making instrument panels for the Taurus and the new Lincoln MKS sedans. This is a start. Although, in order to have a lasting impact and maintain this positive developing trend we need to build on the habit I talked about in an earlier post. Whenever possible, we have to buy American.