If people and organizations are good at anything, it’s gaming a system or finding workarounds.
From a recent WSJ article comes a tale of how Ford works around import tariffs:
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.
Muda muda muda. Adding features just so the van can technically be categorized differently, features that will never be used by the customer, just to avoid taxes.
What happens to this material?
The fabric is shredded, the steel parts are broken down, and everything is sent off along with the glass to be recycled.
It least Ford can claim this as a “Green” initiative? What a waste. The article details some of the wasted motion (muda) that does nothing to benefit the customer.
The tax is supposed to protect U.S. truck production, but Ford can import these vehicles (whatever you call them) from Turkey by jumping through hoops:
The company’s wiggle room comes from the process of defining a delivery van. Customs officials check a bunch of features to determine whether a vehicle’s primary purpose might be to move people instead. Since cargo doesn’t need seats with seat belts or to look out the window, those items are on the list. So Ford ships all its Transit Connects with both, calls them “wagons” instead of “commercial vans.” 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.
Where there’s a will to avoid a tax, there’s a way!
This detail made me laugh, that Ford basically could have REALLY recycled the seats, re-using the same seats over and over:
Rob Stevens, chief engineer for Ford’s commercial vehicles, says the auto maker decided against shipping the seats back to Turkey for use in the next wave of vans for the U.S.
“We thought going through the recycling process was best,” he said. “The steel is valuable.”
Thanks for reading! I’d love to hear your thoughts. Please scroll down to post a comment. Click here to receive posts via email. Learn more about Mark Graban’s speaking, writing, and consulting.