Saturday, February 4, 2017

One Tiny Widget’s Dizzying Journey Shows Just How Critical Nafta Has Become

By Thomas Black, Jeremy Scott Diamond and Dave Merrill of Bloomberg.
"Global trade involves a complex web of cross-border journeys, seamless and often invisible to American consumers. As President Donald Trump seeks to rewrite Nafta and other trade accords in an effort to bring jobs back to America, he would do well to follow the meandering path of a single lowly capacitor, a pinkie tip-sized component that stores electrical energy.

Its journey illustrates how U.S. manufacturers rely on numerous border crossings and thousands of miles of travel to produce goods at the low cost and high quality that customers demand. Nafta, in particular, allows goods to travel back and forth to Mexico with minimal delay and at no cost.

In this case, we begin with a small Michigan company called Firstronic, which makes printed circuit boards for autoparts, such as automotive seat controls.
       
Firstronic, based in Grand Rapids, Michigan, buys the capacitor itself from a Centennial, Colorado, supplier called Arrow Electronics Inc., which imports the components from multiple suppliers in Asia.

The capacitor is shipped to Ciudad Juárez, Mexico, where it is inserted into a circuit board.

Then it heads to a U.S. warehouse just across the border in El Paso, Texas. Because the parts had been sent “in bond,” or temporarily imported into Mexico, they must return to the U.S. to avoid taxes.

The component then returns to Mexico, hauled to a Kongsberg Automotive factory in Matamoros. Kongsberg, a Norwegian company, assembles the circuit board into a seat actuator – a mechanical device that folds the seat with the press of a button.

Once the circuit board has been installed in the actuator, the control unit ships to, among other sites, a Lear Corp. seat-manufacturing plant in Arlington, Texas, and a Magna Inc. seat plant in Mississauga, Ontario.

Now traveling inside the finished seat, the capacitor is shipped a short distance to an auto assembly plant. It is installed in the Ford Flex SUV at its factory in the Toronto suburb of Oakville and GM’s Escalades, Suburbans, Tahoes and Yukons in Arlington, Texas.

Countless other component parts weave their way through border-crossing supply chains each day. So as Trump pledges to scrap, or at least overhaul, Nafta, the story of the little capacitor shows how intricately interconnected North American manufacturing operations have become. Backing out of the trade accord — while a move that could eventually help U.S. workers in some industries — would immediately wreak havoc on this supply chain and, in the process, drive up consumer prices and put jobs at companies like Firstronics at risk."

No comments:

Post a Comment