Question

Emerson is a global manufacturing company headquartered in St. Louis, Missouri. The company employs almost 130,000 workers at its 250 manufacturing facilities located on five different continents. Emerson manufactures a wide range of products including air-conditioning compressors, garbage disposers, and automotive parts. Emerson's Asian operations employ over 50,000 people at manufacturing facilities in Asia. Emerson needs to build a new manufacturing facility to produce automotive parts for cars manufactured in Detroit. Emerson executives are considering whether to build the new facility in China or in the United States. Which of the following, if true, undermines the argument to build a new Emerson facility in China?

A. China has committed over $500 billion to infrastructure projects.
B. U.S. firms continue outsourcing service jobs despite the economy.
C. Fuel costs in China have risen sharply and are not expected to drop.
D. China is the world's largest exporter of manufactured goods.

Answer 1

Fuel costs in China, which are rising and expected to stay high, undermine the argument to build Emerson's new facility in China, as this would increase production and transportation costs to the U.S. significantly. The option (C) is correct.

Step-by-step explanation:

The argument to build a new Emerson facility in China could be undermined by the fact that fuel costs in China have risen sharply and are not expected to drop. This would directly increase the cost of production and transportation of automotive parts to Detroit, affecting Emerson's operational costs. Moreover, understanding global assembly lines is important; while products like Apple's next-generation Mac are designed in a core country and assembled in various peripheral nations, the significant retooling of the American automobile industry shows a pattern of establishing production facilities closer to where parts and consumers are, which in Emerson's case, are in the United States, near Detroit.

Lastly, corporate practices and multinational corporations (MNCs) face criticism for moving jobs out of the US, which has led to political pressure and public demand for keeping jobs within American borders, a factor that should be contemplated by Emerson's executives in their decision. Therefore, option (C) is correct.