Archive for June, 2010

Terrorist Attack Results in added costs and slowdowns for U.S. Freight System: A New Kind of Trade Barrier ?

June 22, 2010 Leave a comment

Terrorist attack of the September 11 conducted that shipments were held up for days at the U.S. borders with Canada and Mexico, and at airports around the world. Otherwise, it creates an economic slowdown and limitation of items received from other countries into the U.S borders.

It has also affected the migration of labor from some countries to the U.S and unfortunately lowers the lower wages job for unskilled workers. I think that the new trade deals might at least initially benefit other counties more than U.S. witch conducted many changes into its investment spending. For example, U.S. focuses its investment on developing new technologies of security and providing them to private companies around U.S. It is true that it was a huge investment but in other hand there were few investments for creating jobs opportunities and covering the impact of those September 11 terrorist attacks.

One of the most important changes happened to the U.S international trade is that U.S. Customs Service created the Container Security Initiative (CSI).  The primary purpose of CSI is to protect the global trading system and the trade lanes between CSI ports and the U.S. basically the keys elements of CSI is to identify high-risk containers; prescreen containers before they are shipped and use new technology to make sure that the process can be done rapidly.

It took more than 7 years after September 11 terrorist attacks to set up this new system witch in my opinion would help to make trade effectively more secure and faster than what it was before even if it costs to the U.S economy a trade deficit of $375 billion.

Written by: Redouane Boufous

Categories: International Trade

Detroit’s Big Three Face Obstacles in Restructuring

June 14, 2010 Leave a comment

According to the article discussing the Detroit’s Big Three obstacles, it is shown that General Motors, Ford and Chrysler are losing thousands of dollars on cars produced. Because of the retiree healthcare from which workers are  benefiting from social advantages which conducted Detroit Big Three losing up to $ 1,500 per vehicle.

In my opinion, to be competitive, General Motors, Ford and Chrysler should respond to the market demand by offering diverse products, but it is a hard task to execute when the total dept is still increasing especially the retiree healthcare payments which were for about $ 7.5 billion for GM and $ 6.3 billion for Ford.

I also think that today’s situation is favorable for Detroit Big Three to gain an important increase in both sales and customer trust. Toyota’s last communication problem could help GM, Ford and Chrysler to change its customer perception especially the quality of domestic products by the way to increase national sales.

David Wech has published an article  in Business Week Journal May 31, 2007  discussing the profitability and productivity of Detroit vs Toyota and Honda. When General Motors spent about 32.4 hours to build a car as well Honda, Chrysler was close enough by spending 33 hours in the same circumstances. However, domestic cars produced were as productive as Japanese cars. The difference is that Japanese are using more than 100% of their production capacity to build a car and have low expenses in comparison to Detroit’s Big Three. According to the same General Motors use 93% as well as Honda but Chrysler use only 88%, Ford 77% of its total production capacity.

This situation gives Japanese cars a comparative advantage and let U.S imports from Japan more frequently while domestic cars still in dump, suffering from federal depts and retiree healthcare expenses.

Written by: Redouane Boufous

Categories: International Trade