Topic: Toyota to move Corolla production to Mexico

[Autos_Editor]

Cambridge plant to build "higher-value" vehicles
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[Northernridge]

I think we need more threads on the topic.

[Noto]

[Northernridge]

If you take Toyota at their word, this makes sense and Canadian operations will continue. On the other hand, if it's cheaper to produce the Corolla in Mexico, then it's probably cheaper to produce all other vehicles their too.

[Noto]

Meme Captions not on the picture:

Toyota is testing

the Mexican waters

[JohnM]

Since by 2019, gas prices should be much higher than they are now, I'd say that what you would want at that plant is a fuel efficient vehicle not a larger, more luxurious one.  How the government, any government has the effrontery to trade away a broad economic base for an incredibly volatile and short lived one is simply beyond my comprehension.

Money talks and money buys is about all I can chalk it up to.

Cheers,
John M.

[dirtyjeffer]

it's not surprising at all considering the hard work our provincial government has done to make Ontario a have-not province...they are working diligently every day to make sure we are the least attractive place to do business...the Green Energy Act, College of Trades, other bureaucratic nonsense and coming soon, Ontario Pension Plan and Cap and Trade Carbon scam...it's a perfect storm of mismanagement, incompetence and ignorance which will rear its ugly head at the next election...the damage will take not months, not years, but generations to repair.

[rrocket]

If you take Toyota at their word, this makes sense and Canadian operations will continue. On the other hand, if it's cheaper to produce the Corolla in Mexico, then it's probably cheaper to produce all other vehicles their too.

While true, it's mostly because the econoboxes have less profit margin in them.

[JohnM]

"it's not surprising at all considering the hard work our provincial government has done to make Ontario a have-not province"

You can better place this baby at the feet of the free trade agreements and the dutch disease inducing petro dollar.   Exchange rates are completely manipulated and along with lower labour and environmental standards have been allowed to hollow out our middle class while our photo-op governments at all levels are happy to cut ribbons and sign more open border agreements with nations which actually do have national strategies aimed at improving the well-being of their citizens.

Cheers,
John M.

[dirtyjeffer]

You can better place this baby at the feet of the free trade agreements and the dutch disease inducing petro dollar.   

i will agree that Mexico should never have been included in NAFTA, but i disagree with the petro dollar comment...oil and gas only accounts for 4-6% of our nations GDP...it's an important sector, yes, but it isn't the "all eggs in one basket" some people seem to trumpet.

[JohnM]

Check the graph on this page.  No more need be said.

http://www.investopedia.com/articles/forex/06/commoditycurrencies.asp#axzz1uTRyc1VR

Cheers,
John M.

[Snowman]

Check the graph on this page.  No more need be said.

http://www.investopedia.com/articles/forex/06/commoditycurrencies.asp#axzz1uTRyc1VR

Cheers,
John M.

Good read.

[Noto]

BY THE WAY, "Interesting thing seen on the way to work"
On a rail bridge at Dufferin/Steeles (just north of Weitzes Toyota), there's a banner that shows a Corolla and a Rav4.  It denotes "Red Tag" sale event, but then says:

Proudly and locally built in Cambridge!

I had to wipe away my tears - I was laughing so hard.  Guess they're going to have to cut the Corolla out of that pic.

I wish I had a dash cam so that I could show ya'll.

Edit: street view of another shameless Weitzes Toyota ad, but sadly, not the one that I saw this morning.

[dirtyjeffer]

Check the graph on this page.  No more need be said.

http://www.investopedia.com/articles/forex/06/commoditycurrencies.asp#axzz1uTRyc1VR

Cheers,
John M.

that graph doesn't show CAD, it shows CAD & USD together...regardless, oil and gas is only 4-6% of our GDP...that's a fact.

[JohnM]

Check the graph on this page.  No more need be said.

http://www.investopedia.com/articles/forex/06/commoditycurrencies.asp#axzz1uTRyc1VR

Cheers,
John M.

that graph doesn't show CAD, it shows CAD & USD together...regardless, oil and gas is only 4-6% of our GDP...that's a fact.

Profuse apologies for pointing at the wrong graph!

Here are some relevant stats showing oil as 27% of total exports, two and a half times larger than the #2 export item, autos.  That is certainly enough to modulate the dollar. Somewhat in the short term and absolutely in the long term.

Norway's oil and gas exports are 52% of total exports but they have a system in place to keep their currency stable so they don't inflict Dutch disease on the rest of the economy.  They also have a working sovereign investment fund with the equivalent of $200,000 in assets for every Norwegian.  For Alberta, their fund is I think $17 billion or about $4,000 for every citizen.   Strategy and the long view pay off.

Cheers,
John M.

Canada’s Top Exports

The following export product groups represent the highest dollar value in Canadian global shipments during 2014. Also shown is the percentage share each export category represents in terms of overall exports from Canada.

    1.  Oil: US$128,926,515,000 (27.2% of total exports)  -  I assume this is oil and gas.
    2.  Vehicles: $59,753,479,000 (12.6%)
    3.  Machines, engines, pumps: $32,600,025,000 (6.9%)
    4.  Gems, precious metals, coins: $21,518,760,000 (4.5%)
    5.  Electronic equipment: $13,639,592,000 (2.9%)
    5.  Plastics: $13,192,128,000 (2.8%)
    7.  Wood: $12,686,263,000 (2.7%)
    8.  Aircraft, spacecraft: $12,409,459,000 (2.6%)
    9.  Aluminum: $8,865,363,000 (1.9%)
    10. Cereals: $8,774,059,000 (1.8%)

[KD]

One of the tags on the Tilley Hat I bought today...

[dirtyjeffer]

Here are some relevant stats showing oil as 27% of total exports, two and a half times larger than the #2 export item, autos.  That is certainly enough to modulate the dollar. Somewhat in the short term and absolutely in the long term.

i'm not talking about exports, i'm talking about GDP...it's still only 4-6% of our GDP...you're arguing points i haven't made.

Norway's oil and gas exports are 52% of total exports but they have a system in place to keep their currency stable so they don't inflict Dutch disease on the rest of the economy.  They also have a working sovereign investment fund with the equivalent of $200,000 in assets for every Norwegian.  For Alberta, their fund is I think $17 billion or about $4,000 for every citizen.   Strategy and the long view pay off.

you can't compare Norway's oil and gas reserves with Canada's...their ownership structure is much different...secondly, Norway's economy isn't a pillar of stability nor model we should emulate...not saying we're perfect, i don't think comparing Norway with us is a valid comparison.

[JohnM]

Exports vs imports is what modulates exchange rates.***  The size of the economy doesn't matter in this question.  If the exports are dominated by one good then fluctuations in the volume and value of that good will have a large impact on exchange rates.

Norway is a different case for sure but it isn't unstable as far as its citizens' welfare is concerned.  Do the math - effectively no government debt, large reserve assets per capita, unemployment rates which haven't gone over 4.9% in two decades (currently 3.9) and the highest standard of living in the world added to one of the lowest levels of inequality in the world.

The point is, they put thought into a national strategy and one of those thoughts was avoiding Dutch disease when it became apparent that they would be exporting a huge amount of oil.  So policies were developed to avoid destroying the other industries in the country.

Cheers,
John M.

***  ok, that is the theory.  The whole foreign exchange system is highly rigged by you-pick-a-country.  The US $ would be worth 10 cents Canadian if it weren't for the fact their dollar is the international reserve currency and Arab countries are required to accept US $ for their oil.   China, of course, has kept their currency low to build their industrial sector and then to buy control of foreign energy and food producing assets.  These countries have strategies.

[dirtyjeffer]

Exports vs imports is what modulates exchange rates.***  The size of the economy doesn't matter in this question.  If the exports are dominated by one good then fluctuations in the volume and value of that good will have a large impact on exchange rates.

the size of their economy likely doesn't matter, what does matter is the diversity of it...which is why i said that oil and gas only accounts for 4-6% of our GDP, meaning that fluctuations in that industry will be felt, but won't be crippling...as well, like most things, many industries have cycles, and some industries grow when others fall...so if oil prices drop, that may create increases in other sectors.

my point was simply that people who claim the sky is falling and that Canada "has its eggs in all one basket", or is a petro state is ridiculous.

regarding Norway, oil and gas is a very large part of that nation's economy, it the lower prices are really hurting them:


http://business.financialpost.com/news/energy/end-of-oil-and-gas-boom-shakes-oil-rich-norwegians-out-of-utopian-reverie?__lsa=c9d9-53a4

lastly, i'm not saying what we do is perfect, and that Norway's system is crap...i like many parts of what Norway has done, but we are two very different countries, and comparing them is very difficult.

[JohnM]

Fair enough.  My complaint is that Canada does not have a strategy for establishing or maintaining a broad based economy or for maximizing the long term welfare of its citizens.  Rather we jump at any fast buck deal and deal with the structural consequences with wallpaper.  Other countries have clear national goals and strategies.

Continuing to just watch manufacturing capacity and its high paying jobs erode is a sign of baffled and bewildered government at all levels.  The loss of the Corolla production is just another dead canary on the floor.

Cheers,
John M.