j p o wrote:
TimeIsUp wrote:
A-A-Ron wrote:
I know, I know, we are supposed to let the Canucks start all the Trump threads, but I came across an article this morning and had to share.
production-of-the-ram-heavy-duty-is-returning-to-the-united-states.html
Ram heavy duty pickups have been made in Mexico for a long time now, the Cummins engine is manufactured in the US but the rest of the truck is assembled in Mexico. According to the Italian CEO of Fiat Chrysler, due to the new tax law that the Trump admin got through, they will be moving manufacturing of the trucks back to Michigan. They are investing a ton of money in the Michigan plant to get it up to speed, will be creating 2,500 new jobs in the Detroit area, and will be giving $2,500 bonuses to 60,000 of their US employees. All thanks to the new tax law.
Alright, go ahead and call me a ball washer and explain to me how this is a bad thing.
It's about time American companies move manufacturing back to the states. The foreign car companies have been doing it for years. Thanks Obama!
Does that work?
Seriously though, think is most definitely a good thing.
For years the most American truck has been Toyota. Both in terms of parts manufacturing and assembly. Ford has had a lot in both Mexico and Canuckistan.
Assuming the Fiat guy is telling the truth (and you have to take it with a grain of salt), if I were a corporation I would be reluctant to make big moves yet based on the tax changes. Presidents change and parties change and tax policies change. I'd give it a while to become entrenched.
But well paying jobs in the US are rarely going to be a bad thing.
primarily 3 items corporately were just changed relative to the OP
1) corporate rate from 35% to 21%. Conceivably admins could change and these rates could go right back to where they were. But it would require wholesale change of 3 areas to get it to pass. And even then we have seen how that works in trying to repeal ACA. And you would have to "win" on a platform of effectively doubling the corporate tax rate. But I grant you this is an operating decision
2) Sec 179 on how much a company can write off of new cap ex. Was $500,000 now $1,000,000 per year
3) depreciation/write off of cap ex (that which isn't written off immediately in 2 above) goes from basically a complicated system over many years to 5 years (over simplistic but point is very accelerated).
if you repeal/change 2 or 3 it will take effect for things that were not placed in service or committed to be placed in service before a particular date after change
my point is if you are going to make big moves now is the time to do it. Not wait until it has the potential to change. Despite Sanuk's belief that big companies don't/wont make and implement decisions quickly based on these changes, if I were you I would look at your willingness to "take advantage" of these things from a different perspective.
When you add in the amount of pent up demand there is for growth in companies (after a long recession, regardless of the reasons you make for it), and the cash available of some balance sheets (or the prospect of rising interest rates if you don't have cash and have to borrow) I think the next 24-36 month change is going to be significant.
If you have the ability to lock in financing for a plant addition and machinery over 5-15 years of LT financing at <5% (depending on loan or bond) and have the ability to write the bulk of the investment off against profits over 5 years or less (with the remaining profits you haven't written things off against now taxed at 21 vs. 35 %) and you were planning a business for the next decade, IMO you would be making and implementing decisions as quickly as possible.
EDIT: by the way IMO these are exactly the changes that should have been made in conjunction with the bank bail outs in 2008 (along with more stringent rules for banks to begin to lend money) vs. the stimulus and shovel ready jobs plans implemented by the previous 2 administrations. IMO this would have made our recovery faster and steeper than it was.