H-1B, International Students and US Auto Industry
Sunday, April 22, 2007 Permanent link to this post
H-1B Visas: Problems All Around
Its old news that this year the annual quota for H-1B visas filled twice over in just two days (Link to CNN story). This has given rise to all kinds of discussion on whether H-1B cap should be raised; whether H-1B should even exist and what effect does H-1B has on wage levels in US. There is a bipartisan bill on table in congress that is expected to make matters worse.
Among all the noise, there is one group of people who are finding themselves in the middle of the crossfire - International students in US Universities. The H-1B visas are no longer available for students who will graduate at the end of the current academic year. Most of them have job offers with US companies, provided that they are get their H-1B visa. This really is a double whammy for them - first of all - employment opportunities for international students are severely limited in US. Here in Ross School of Business, University of Michigan, during the past internship season for the MBA class of 2008, only 255 of the total 490 job listings accepted applications from international students. On top of that, even these jobs are in jeopardy because of visa restrictions. Just to be sure - these are students from one of the top MBA programs in the world and any country/company should welcome them with open arms as they will script the future of the business world tomorrow - and here they are rebuffed and rejected.
Increasingly US universities are looking abroad to get qualified students. In most top MBA programs, international students make up more than one third of the student body. These students pay higher out of state tuition and take huge loans (more than $120K) and are willing to legally pay taxes and contribute to the US society and economy - there is no reason to not allow them to work and prosper in US.
Update: International PhD students that take up a job with a US University are not counted as part of the usual H-1B limit. This is good news for all aspiring faculty members like me! (More information available at Carnegie Mellon's excellent page on the subject.)
US Competitiveness: Auto Industry
Already many people including Bill Gates and Harvard Crimson have raised their voices. Bloggers have even suggested that restricting companies from hiring foreign workers will actually lead them to go to the source of talent and outsource more work. In the middle of these, New York Times has written an excellent piece on increasing skill levels of outsourcing firms in India. Combine this with excellent engineering innovation like the sub-$2,500 car I mentioned in my last post - and the indicators are not good for long term competitiveness of the US economy.
If someone really needs some hard data after all this, here are the latest automobile sales figures for US market for March 2007 (market share means share among the producers mentions, not total market share, sales mean unit sales not dollar sales). Look at how the Detroit Three are doing against the Asian Three:
Since I live in Michigan, the auto industry is always top of the mind - and the figures above are so disappointing for any true fan of Detroit's auto history. Not only are GM, Ford and Chrysler losing market share, they are doing worse even in their supposedly strong area - trucks and SUVs. In cars its not even a competition anymore - its a rout! Toyota is already the largest car maker in US and is third if we include both cars and trucks. With gas prices and emission requirements pushing the market towards smaller and more efficient Toyotas and Hondas, its only a matter of time before Toyota and Honda take the leadership position in US auto market from GM and Ford.
Toyota and Honda are both excellent value with forward PE in 13.50 range. I own Honda as I am slightly concerned with Toyota's ability to sustain growth with the large base that it has. Plus I expect Honda to take back the green leadership that it seems to have lost to Toyota Prius.
Its old news that this year the annual quota for H-1B visas filled twice over in just two days (Link to CNN story). This has given rise to all kinds of discussion on whether H-1B cap should be raised; whether H-1B should even exist and what effect does H-1B has on wage levels in US. There is a bipartisan bill on table in congress that is expected to make matters worse.
Among all the noise, there is one group of people who are finding themselves in the middle of the crossfire - International students in US Universities. The H-1B visas are no longer available for students who will graduate at the end of the current academic year. Most of them have job offers with US companies, provided that they are get their H-1B visa. This really is a double whammy for them - first of all - employment opportunities for international students are severely limited in US. Here in Ross School of Business, University of Michigan, during the past internship season for the MBA class of 2008, only 255 of the total 490 job listings accepted applications from international students. On top of that, even these jobs are in jeopardy because of visa restrictions. Just to be sure - these are students from one of the top MBA programs in the world and any country/company should welcome them with open arms as they will script the future of the business world tomorrow - and here they are rebuffed and rejected.
Increasingly US universities are looking abroad to get qualified students. In most top MBA programs, international students make up more than one third of the student body. These students pay higher out of state tuition and take huge loans (more than $120K) and are willing to legally pay taxes and contribute to the US society and economy - there is no reason to not allow them to work and prosper in US.
Update: International PhD students that take up a job with a US University are not counted as part of the usual H-1B limit. This is good news for all aspiring faculty members like me! (More information available at Carnegie Mellon's excellent page on the subject.)
US Competitiveness: Auto Industry
Already many people including Bill Gates and Harvard Crimson have raised their voices. Bloggers have even suggested that restricting companies from hiring foreign workers will actually lead them to go to the source of talent and outsource more work. In the middle of these, New York Times has written an excellent piece on increasing skill levels of outsourcing firms in India. Combine this with excellent engineering innovation like the sub-$2,500 car I mentioned in my last post - and the indicators are not good for long term competitiveness of the US economy.
If someone really needs some hard data after all this, here are the latest automobile sales figures for US market for March 2007 (market share means share among the producers mentions, not total market share, sales mean unit sales not dollar sales). Look at how the Detroit Three are doing against the Asian Three:
Since I live in Michigan, the auto industry is always top of the mind - and the figures above are so disappointing for any true fan of Detroit's auto history. Not only are GM, Ford and Chrysler losing market share, they are doing worse even in their supposedly strong area - trucks and SUVs. In cars its not even a competition anymore - its a rout! Toyota is already the largest car maker in US and is third if we include both cars and trucks. With gas prices and emission requirements pushing the market towards smaller and more efficient Toyotas and Hondas, its only a matter of time before Toyota and Honda take the leadership position in US auto market from GM and Ford.Toyota and Honda are both excellent value with forward PE in 13.50 range. I own Honda as I am slightly concerned with Toyota's ability to sustain growth with the large base that it has. Plus I expect Honda to take back the green leadership that it seems to have lost to Toyota Prius.
Labels: Auto, Immigration, India, US
Therer are 2 Comments. Post a Comment
I think that your concerns about Japanese automakers clobbering US automakers are well founded, but don't you think at some point they'll level off?
I think that Toyota will most likely become a victim of it's own success, with all manufacturers endeavoring to become better versions of Toyota. For instance, the big three have seen dramatic quality improvements in the last decade. Couldn't this be continued and collapse many of the advantages Japanese automakers have?
Whatever the answer is, it is fair to say Toyota's decline is probably a few years off (if it ever happens). Witness the new Toyota Tundra -- the response to this vehicle is astounding considering the truck market is so brand conscience. Websites like Toyota Tundra are great examples of the grass roots response to this entry into a traditional American market.
I think that Toyota will most likely become a victim of it's own success, with all manufacturers endeavoring to become better versions of Toyota. For instance, the big three have seen dramatic quality improvements in the last decade. Couldn't this be continued and collapse many of the advantages Japanese automakers have?
Whatever the answer is, it is fair to say Toyota's decline is probably a few years off (if it ever happens). Witness the new Toyota Tundra -- the response to this vehicle is astounding considering the truck market is so brand conscience. Websites like Toyota Tundra are great examples of the grass roots response to this entry into a traditional American market.
Thanks Admin for your comments. I agree with your thoughts on Toyota - and thats the reason that I don't own Toyota stocks. I don't see Toyota growing too much beyond its current size - it will surely take leadership in the US market and will then level off. However, opportunities are much better for Honda which has a smaller sales scale in US but an equal or better capability/perception as far as "green" and fuel efficiency is concerned.
Honda stock has been declining recently and I have been buying on lows. It seems to have bottomed out now and I expect a significant uptrend during summer months.
Honda stock has been declining recently and I have been buying on lows. It seems to have bottomed out now and I expect a significant uptrend during summer months.
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