We Don't Make Anything In America — Except Passats: You hear, again and
again, that we don't make anything in the United States anymore. And
then, if you read the business pages, you learn that, not only do we
make lots of things, foreign manufacturers invest here because this is
the best place to make many things.
For example, Volkswagen Passats.
Signaling that it is more committed to the North American market than
ever before, the company has designed a version of its midsize sedan,
the Passat, specifically for American tastes and is building it in a $1
billion plant in Tennessee rather than importing the same car sold in
Europe.
They are building it here for the most practical of reasons, costs:
By manufacturing locally, and buying 85 percent of the North American
Passat's parts from nearby suppliers, the company is able to greatly
reduce its costs. Executives said the savings was the biggest reason
Volkswagen could charge less for the Passat, even while adding standard
features like dual-zone climate control and Bluetooth connectivity. Some
specifications were also changed from the 2010 version — no 2011 model
was built — like dropping a turbocharged engine from the base model.
Building Passat in Tennessee reduces shipping and labor costs, but more
important it keeps profits from being wiped out by unfavorable currency
exchange rates. That is a big reason other foreign carmakers like Toyota
and Honda build a majority of the vehicles they sell in North America at
plants on the same continent.
(The article doesn't mention that some of those same manufacturers are
now exporting some of the cars they build here, again because of cost
advantages.)
This decision by VW is especially significant because they tried, once
before, to build cars in the United States — and failed. (They had a
plant in Pennsylvania in the 1980s. A unionized plant. The new one in
Tennessee is non-union.)
- 2:15 PM, 25 May 2011 [link]
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