Inexpensive Hyundai Automobiles, Jobs in Memphis and "Pointes"

Why are Hyundai Automobiles So Low Priced

Three Red Flags

2013 Hyundai Sonata

Have you noticed the number of Hyundai automobiles on the road over the past few years?  I have compared them with similar domestic, Japanese and European vehicles and found that they offer a similar product at a significantly lower price.   Until now, I have not been able to find a reason for this.  But I have continued to look for one, and I believe that I have found it!

About sixteen months ago, when North Korean President Kim Jong il died (and was succeeded by his son, Kim Jong un), I noted that among the South Korean guests at the funeral was Hyun Jeong-eun, chairwoman of the Hyundai group, which at that time, I was unaware was a major investor in North Korea.  Similarly, I was not then aware that North Korea had recently seized Hyundai’s assets at a resort in North Korea jointly operated by North and South Korea, and that the chairwoman was interested in discussing this with North Korea.  Had I been aware of these things,  this would have been the first “red flag.”

More recently, I have become aware of the Kaesong Industrial Zone, which clearly qualifies as the second “red flag.”  Located in North Korea, just north of the border and about an hour’s drive from Seoul, South Korean firms manufacture various products there, using low-cost North Korean labor, which works for far less than workers in South Korea or even in China.  Of course, North Korea has been happy to get the influx of South Korean money which the Zone provides, and North Koreans, many of whom are believed to subsist on minimal diets, are eager to fill jobs in the Zone, regardless of how low the pay there is.  

Kaesong Industrial Zone Shown in Red

Until last week, when the North Koreans pulled their labor force of over 50,000 workers from the Zone and told many of the 800 South Korean managers to leave, the Zone was being used by hundreds of South Korean manufacturers to make a variety of items, including automobile and electronic parts.   

If you wish to learn more about the Kaesong Industrial Zone, a recent BBC article might be helpful.  Find it at http://www.bbc.co.uk/news/business-22011178,  There are many other sites on the internet with such information as well.

And here, my friends, is the final “red flag.”  The North Korean government has a contract with Hyundai Asan, a subsidiary of the Hyundai conglomerate which includes the company which manufactures those spectacularly low-priced Hyundais (as well as Kias) that you see flooding our streets, to develop the Kaesong Industrial Zone!


LET ME REPEAT THAT PARAGRAPH IN CASE YOU MISSED IT!

And here, my friends, is the final “red flag.”  The North Korean government has a contract with Hyundai Asan, a subsidiary of the Hyundai conglomerate which includes the company which manufactures those spectacularly low-priced Hyundais (as well as Kias) that you see flooding our streets, to develop the Kaesong Industrial Zone!

Bottom Line:  To some undetermined extent, the pricing of Hyundai and Kia automobiles, and probably of LG and Samsung products as well, is made attractive to Americans because of the cheap labor made available to these companies by the North Korean government.  Because so much of what goes on in North Korea is shrouded in mystery, knowledge of precisely how great this factor is in the pricing of South Korean products is very difficult to come by.  We do know, however, (1) that Hyundai has developed the Zone, (2) that auto parts are made by the South Korean companies operating there, and (3) that Hyundai manufactures automobiles in South Korea.  You should draw your own conclusions.   

Right now, the Kaesong Industrial Zone is temporarily shut down, but when the present crisis abates, I am certain it will be back in business, using cheap North Korean labor to make South Korean products to sell throughout the world, including in the United States, bringing much needed currency into North Korea, some of which can be used to fund their nuclear program, the same program they have threatened to to use to attack the United States and South Korea.  

 
TV Viewing of Recent North Korean Nuclear Test (ABC News)

It occurs to me that the present nuclear sabre-rattling of the North Korean government possibly may be no more than an effort to milk even more money out of the sweet deal they have in the Kaesong Industrial Zone than they presently are getting. 

Our economy has been hard hit by competition from cheap Asian labor, but at least China and other nations there are not threatening us with nuclear war.  Do a little searching, as I did, on your computer to find out more about this sordid story.  I am not making this up.  Congress should be made aware of it.

Jack Lippman

                                                                

How Not to Solve the Unemployment Problem

The other day I heard on NPR news that the Electrolux Company, the largest manufacturer of major appliances after Whirlpool, was opening a plant in Memphis, TN, and creating 1200 jobs there.  They chose Memphis over a location in Mexico!  Hurrah! Jobs are coming back!  Or maybe, Hurrah???  What is there to cheer about???

 

The operation, involving robotic manufacturing of ovens and refrigerators (Electrolux makes Frigidaire and Kenmore products), is being moved to Memphis from Montreal where 1200 jobs paying an average of $18 an hour will be lost.  The jobs in Memphis will pay, according to the NPR report, about a third less!  And Electrolux isn’t guaranteeing how long they will maintain the Memphis plant, once it is opened. 

Jobs at $12 an hour amount to $480 for a 40 hour week or $24,960 annually.  For a family of four, this is $1410 above the poverty line, and for larger families, it is below the poverty line.  If this is America’s road map to solving the unemployment problem, it is a misdirected one, in which Electrolux is counting on government benefits to supplement their measly salaries. 

It means that many spouses will be forced to work as well, bringing about the necessity of costly day care for their children, which may or may not involve a government benefit.  But for unemployed people in Memphis, it is better than nothing.  Nevertheless, I feel that no community should put out their welcome mat, as Memphis has done, for companies not willing to pay a living wage. 

I predict that sooner or later, unions will attempt to organize these new job holders, asking that Electrolux pay at least the living wage they were paying in Montreal.  Of course, they won’t and the jobs eventually will be outsourced to Mexico.

  Mexican worker ready to replace Memphis worker

In 2009, Electrolux (which is a Swedish corporation) closed a plant in Iowa where they were paying an average of $16.50 an hour and moved it to Juarez, Mexico, where the going rate was $2.50 an hour.  That is their track record.  

If a leveling and equalization of workers' wages throughout the world is part and parcel of the globalization of our economy which we have bought into, there has to be an effort on the part of the government to make certain that the standard of living of American workers is maintained at least at the level where it has been over the past few decades.  If this is not done, working class Americans will find no alternative but to turn to radical ideas from both the left and the right, in order to resolve their economic dilemma.  If this happens, democracy may suffer, as it did when workers made such decisions in Russia and Germany early in the twentieth century.  We cannot afford to let this happen.

Jack Lippman

                                                                   

What’s the Pointe?

Real estate developers, over the past few years, have corrupted the use of the word “pointe.”  The dictionary defines “pointe” as the ballet position requiring the dancer to stand on the tips of their toes.  But this isn’t the way the real estate people use it.  They use it as a fancy, affected way of spelling the word “point” when used to describe a promontory of land sticking out into a body of water.  Orient Point, Point Lookout and Montauk Point on Long Island, NY, and Point Judith in Rhode Island are examples of “points” evoking images of windswept heights overlooking surging ocean waters.  Adding the “e” makes the name even more exotic, but no less phony.

Point Judith, Rhode Island

In my local area, I can drive by Boca Pointe, Valencia Pointe, Emerald Pointe and numerous other Pointes all no closer than five miles to any substantial body of water.  And this is not limited to residential real estate.  There is an office building complex in Princeton, NJ, called Canal Pointe.  The only nearby water to this place is the old Delaware and Raritan Canal, now a park, but I can assure you, no promontory of any kind sticks out into the old canal which is about 20 feet wide.

Boca Pointe Country Club, Boca Raton, FL

The only involvement of “points” or “pointes” in such enterprises is the shape of the heads of those who actually purchase or rent such properties in anticipation getting a whiff of a salt water breeze when opening a window.

JL
                                                                   
                                                                                                     

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