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Sunday, January 08, 2017

WSJ writers suffer Trumphobia

On Friday, the editorial writers of the Wall Street Journal sneered at President Trump's business acumen, as if any of them had run so much as a summer camp.

The editorial, "Trump’s Auto Bluster: He should stick to making the U.S. a better place to invest," blew off his 40 years as a chief executive officer, as well as his unprecedented success as president-elect in getting companies to invest in the United States.

From the editorial:
Does Donald Trump understand business? Real estate, no doubt, and branding, sure. But the President-elect’s  Twitter assaults on auto companies make us wonder if he understands cross-border supply chains, relative business costs, regulatory mandates, or anything else about building and selling modern cars and trucks.
Given his success in broad range of endeavors -- building skyscrapers, running resorts, writing best-sellers, and television -- a fact-checker should have flagged that paragraph for being off sides.

I hear that the construction trade uses suppliers (including Chinese steel) , contractors, and is regulated at the local, state, and federal levels.

Apparently the writers of Wall Street Journal editorials are unaware of this and think buildings are erected without having to purchase material, rent cranes, get permits, and the like.

The reality is manufacturing and construction share the same business model: keep costs down and get the best price.

Left out of the editorial was any reference to financing, something Donald John Trump learned in bankruptcy court two decades ago. I understand the lesson cost him a cool $915 million.

And yet President Trump prevailed in a manner that is now given as a lesson for others.

Given that we are now $20 trillion in debt, the survivor of one of history's most spectacular bankruptcy court negotiations -- the man who inspired the term Too Big to Fail -- is the person most suited for the presidency today.

But ignore all his experience. The Wall Street Journal editorial writers just want taxes and regulations cut, and are horrified by Trump's use of the presidency to get things done.

What galled the writers is his success:
Mr. Trump also took credit for  Ford Motor’s announcement on Tuesday to invest $700 million in electric and self-driving cars in Flat Rock, Michigan, while calling off plans to build a $1.6 billion plant in Mexico to make its Focus compact. Close inspection suggests that Ford is attempting to mask business necessity as Trumpian political virtue.
Ford CEO Mark Fields called the decision a “vote of confidence” in the Trump Administration. And no doubt the company is betting on Mr. Trump and Congress to lower corporate tax rates and relax fuel-economy rules. Mr. Trump tweeted that the Ford announcement was “just the beginning—much more to follow.”
Yet Ford is still planning to move production of its Focus and other small cars to Mexico. The only change is that the Focus will now be made at an existing plant in Hermosillo, Mexico. U.S. sales of the Focus declined 16.6% last year in line with a 13% reduction in Ford’s small car sales. This has muted the need for additional plant capacity in Mexico. But this is nothing to celebrate: A fall-off in Mexican production could hurt American auto suppliers that furnish 40% of the parts for cars exported to the U.S. 
Yes, who knows more about what is going on at Ford -- its CEO or a pack of newspaper writers?

And that last line is telling.

Only 40% of the Mexican Ford's suppliers -- you know, the people Trump supposedly is ignorant of -- are in the United States.

Which is the dirty little secret of the free trade job loss. It is not just the 1,000 jobs Carrier planned to move to Mexico but the hundreds of jobs that suppliers would have cut as Carrier would seek more local suppliers. 

There was a time when 100% of the parts of a Ford were made in America or Canada. 

The editorial ended:
Mr. Trump seems to think he can conjure job growth by beating up business. But to the extent he cows CEOs into making non-economic decisions, he’ll be helping their Korean, Japanese and German competitors. 
Now that he’s about to become President, Mr. Trump will have a tough enough job trying to make America an easier and less costly place to work and invest. He’ll embarrass himself less if he leaves investment decisions to CEOs who understand their businesses.
Interesting thing about those "Korean, Japanese and German competitors" -- they make cars here. 

Why is that?

Because President Reagan made them an offer they couldn't refuse -- after he squeezed them with quotas.

Helping "Korean, Japanese and German competitors" who make cars here at the cost of "American companies" that don't is in the best interest of the United States. Factories provide war matériel in war time, something that won World War II for the United States and its allies.

The Wall Street Journal's demand that President Trump conform to some airy ideological perfection is precisely why 65 million of us voted for President Trump.

Ideological purity does not pay the bills for many people outside of Manhattan and Washington DC.


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  1. Don, remember that Trump is JUST a television guy.
    By the way my Chrysler 300 was built in Canada, as are a great many Chrysler cars for many years.

    1. Canada has built USA cars all along. Chrysler 300? Convertible?

    2. No, but it does have a sun roof. I was not knocking Canada building cars, just that a good many people forgot or don't know. It's 2016, traded in the 14 for more electronic safety features. Alas however, I gave up the HEMI- the heart aches.

  2. I'm a Ford guy. Have bought three Mustangs, a Taurus, and an Escape from them and am now looking at a Fusion. But you better be damn sure that if I do, I'm going to ask the salesperson, Where was this car built? If he says anywhere but the USA, I'm out.

  3. As I recall, my '85 Plymouth Voyager was built in Canada. My current Subaru was made in Indiana (bought used).

  4. "Ideological purity does not pay the bills for many people outside of Manhattan and Washington DC."

    They say that only the impotent are pure.

  5. Mark Fields said the decision to invest in the Flat Rock plant was made because Ford believes the regulatory burden will be eased under Trump and the GOP, and corporate taxation will be reformed as well. That makes sense and I have see reason to doubt him.

    What he didn't say was the MI has been a right-to-work state for a couple of years now. Realistically Flat Rock will remain a UAW plant, but in ROW states the employers typically are able to negotiate far saner work rules. YUGE!

  6. kick all the murdoch's out of the country, now! rupert and his sons are a cancer, expel them now.

  7. And the news this morning is that Fiat Chrysler is investing a billion or two in the US. I love all this winning! Too bad the WSJ can't get enough butthurt salve to see it that way.

  8. A VIN check revealed that my 1981 Ford F-100 pickup was built in Canada. 35+ years later it is still on the road. - Elric