Tuesday, September 22, 2009

Creative Destruction

I am not referring to the Schumpeterian kind, but rather the let's-find-a-way-to-avoid-tariffs kind. From the WSJ:
Several times a month, Transit Connect vans from a Ford Motor Co. factory in Turkey roll off a ship here shiny and new, rear side windows gleaming, back seats firmly bolted to the floor.

Their first stop in America is a low-slung, brick warehouse where those same windows, never squeegeed at a gas station, and seats, never touched by human backsides, are promptly ripped out.

The fabric is shredded, the steel parts are broken down, and everything is sent off along with the glass to be recycled.

Why all the fuss and feathers? Blame the "chicken tax."

The seats and windows are but dressing to help Ford navigate the wreckage of a 46-year-old trade spat.
The bottom line:
Installing and removing unneeded seats and windows costs the company hundreds of dollars per van, but the import tax falls dramatically, to 2.5 percent, saving thousands.
American ingenuity at it's best, no?

1 comment:

Anonymous said...

I guess it costs more to ship the seats back to the factory and reuse them rather than destroying them.