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UP CEO Lance Fritz on Trade Disruptions and Risk to the Economy
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<p>[quote user="jeffhergert"]It's probably all acedemic anyway. I don't expect much production to return. No one really wants to see that happen. Companies don't want to have to pay higher wages, even if there wouldn't be as many employees as in years past.[/quote]</p> <p>I wouldn't hold my breath either. A 25% tariff wouldn't make many products expensive enough to make production in the USA (or in my case Europe) economical especially with union wages.</p> <p>Jason Shron, the owner of the model railroad manufacturer Rapido Trains Inc. in Canada, once made up the calculation for an HO scale passenger car. The China made car was sold for around CAN $100. Produced in Canada with non-union workers the needed to cost CAN $400. And with union workers? Who would buy at that price?</p> <p>That might be an extreme example with a lot of assembly work but it shows the tendency</p> <p>The rising wages in China might change the picture over time. But the companies will move on to othe low wage companies like India, Bangladesh, or Vietnam to keep costs in check for consumer and maximise their profit.</p> <p>I think the railroads might suffer because less is imported and exported leading to a downturn of the economy. And railroads might suffer from the relatively small difference between shipping cost from China to West and East Coast.</p> <p>A 40 ft container from Shanghai to Long Beach costs about $1,600, to New York $2,800 changing daily. To Rotterdam, Netherlands it is $1,300. That is the influence of the 20,000 TEU mega carriers.<br />Regards, Volker</p> <p> </p> <p> </p>
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