Ford Motor Co., one of the three largest U.S.-based carmakers, posted a $5.8 billion third-quarter loss as U.S. sales slumped. Ford's chairman, William Ford Jr., said in Beijing that the company was going to buy between $2.5 billion and $3 billion auto parts from China in order to reduce the costs.
There is no question that Ford needs cheaper components from China. China’s manufacturing unit labor cost is about ten percent of an equivalent union job in the U.S.
Some say Ford’s new cost policy is fueling the concerns that American jobs will be lost to cheaper factories in China.
Well, Ford buys approximately $9 billion in parts in the entire Asia-Pacific region annually. Globally, the company buys between $80 billion to $90 billion in parts a year, so buying 3 billion auto parts from China isn’t really a big deal.
Comment Preview